Papa John’s International

Question 1: Identify 4 (four) different competences of Papa John International and justify your selection of these competences by indicating the type of competences that each of them is. The first and most important core competency of Papa John’s is their emphasis on providing a superior quality traditional pizza. This core competency has been the foundation of their success and it has helped them enter thriving into the pizza industry, which appeared to be matured and saturated. John Schnatter (founder of Papa Johns) key target was to keep their products “simple, consistent and focused”. By keeping this philosophy of providing a better product, Papa Johns was able to penetrate the pizza industry. Their marketing emphasized more on their superior ingredients and locations as compared to competitors like Pizza Hut who focused more on discounts and reduced-ingredient pizzas. In a lawsuit by Pizza Hut, which challenged Papa Johns’ claim to use superior ingredients, Papa Johns was able to prove in court that their ingredients were superior to Pizza Hut. Papa Johns created another core competency with their focus on just making pizzas and eliminating other items from their menus.

Papa Johns was originally designed as a sit in restaurant in which the menu consisted of many different items apart from just the pizzas. Schnatter talked about the difficulty of managing all the different food items in the menu and by listening to customers he adjusted his menu accordingly, essentially decided to discard everything and focus solely on making superior quality pizzas. After Apple became the most valuable firm in the world, Nike CEO Mark Parker asked Steve Jobs for advice and Jobs said, “Nike makes some of the best products in the world. Products that you lust after. But you [Nike] also make a lot of crap. Just get rid of the crappy stuff and focus on the good stuff (Gallo, 2011).” Schnatter applied the same philosophy when he decided to discard all his other food items and focus just on what they did best, which was making pizzas. By removing all the clutter away, Schatter now had the chance to perfect his Pizza. Ultimately, this philosophy led to the huge financial success of Papa Johns.

A distinctive competency that Papa Jones created was their integration of technology to the pizza industry. They improved ordering procurement innovatively by being the first firm to allow online pizza ordering in multiple languages. Additionally, they also incorporated text message ordering and since then, many of their competitors like Dominos have applied the same tactics. Another distinctive competency that they established was by improving their operations, particularly by creating a central commissary. They centralized all dough production in these facilities to reduce average cost and this also allowed them to exercise control over their quality and consistency. This production method helped reduce their costs, essentially allowing Papa John’s to open new stores more easily. They also lowered the number of corporate owned stores by selling them to franchises. Leasing spaces allowed them to switch locations quite easily. Other efforts to reduce costs included vertically integrating with printing companies to reduce marketing costs and make the material in-house.

Question 2: Evaluate each of these 4 (four) competences that you have identified for Papa John International in order to assess their sustainability.

To evaluate the competencies we need to look at the VRIO framework that looks at the Value, Rareness, Imitability and Organization of Papa John’s competencies. Their most important competency of making a superior quality pizza has been the key factor in Papa Johns’ success. In terms of value, their higher quality has been crucial for them to penetrate the pizza market and mitigate the threat posed by other competitors (i.e. Pizza Hut). This can clearly be seen from their large financial success in the market. By being the best at what they do, Papa Johns has clearly established a sense of rarity in their product and this has given them a competitive advantage because not everyone can make the best pizzas. Imitability of their pizzas is not as easy as it might seem. Their standards of quality have allowed them to make better pizzas and it has been difficult for competitors to copy them because they are more focused more making discount pizzas with offers (i.e. buy one get one free) essentially making the cost of imitability high.

Organization is one where Papa Johns has done a great job, especially by establishing a central commissary to control quality and ensure consistency. This core competency is clearly one that can and must be sustained overtime making it durable and hard to imitate. Their other core competency of exclusively making pizzas and eliminating other items is what has paved the way to their success. By focusing just on pizzas, Papa Johns created value by adapting a much more specialized approach and perfecting their pizzas, which for ten out of the last eleven years have been rated number one in customer satisfaction among all national pizza chains in the American Customer Satisfaction Index (Papa John, 2011). Papa John’s was the first pizza chain to only make pizzas and by not cluttering their mind with other food items they have achieved some rarity because their competitors were heavily focused on providing many different items. They are able to give much more attention to make the best pizzas. Imitability of this competency is very hard because it would mean that Papa Johns competitors would have to scrap items on menus and focus on a single product, which it something they are very unlikely to do as their other products contribute significantly to their revenue.

Organization is highly important to sustain this competency. Papa Johns has always been very active in taking suggestions from customers to constantly perfect their pizzas. Staff is given a lot of trading and attends schools to improve their skills. Management is always trying to improve their pizza products and sustain innovative products like their dessert pizza. Technological advancements in their ordering systems was innovative, especially the online ordering. This distinctive competency however is one that may be hard to sustain over time. With this system, Papa Johns has created value because customers now find it easier to order and many potential customers look for convenience. There is rarity because they were the first ones to introduce online ordering for pizzas.

The firm is organized enough to implement this system as well. However, in terms of imitability, this system is one that can and has been easily copied by many competitors (i.e Dominos). Thus this distinctive competency will not be easy to sustain overtime. Their other core competency is their operational efficiency. It creates value because it reduces costs. Rarity is something that this competency doesn’t achieve because in a sense, they are just taking advantage of economies of scale and many competing pizza places have established excellent efficiency methods. Imitability is again very high and almost inapplicable because other pizza places don’t need to copy their operational methods. The firm is organized to exploit this capability because they must in order to keep their costs low and quality high. This competency is essentially the basic requirement to compete with other pizza joints and probably could be sustained for a short period of time.

References:

Gallo , C. (2011). Forbes. Retrieved from http://www.forbes.com/sites/carminegallo/2011/05/16/steve-jobs-get-rid-of-the-crappy-stuff/

Papa john. (2011). Retrieved from http://www.papajohns.com/about/pj_trophy_room.shtm