Dominos Pizza Transparency Strategy & Digital Offering Case Analysis In Max. 2 pages in a Word document, answer the following:1. What is Domino’s Pizza’s p

Dominos Pizza Transparency Strategy & Digital Offering Case Analysis In Max. 2 pages in a Word document, answer the following:1. What is Domino’s Pizza’s product or service? Provide a well thought short answer before you move on to questions 2-3.2. Characterize and evaluate Domino’s Pizza’s transparency strategy to customers (see my article on “Transparency Strategy”).3. Provide at least one idea or recommendation on how Domino’s Pizza can enhance its digital offering (product/service or informational components) for its customers. For the exclusive use of O. Rushanyan, 2019.
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DOMINO’S PIZZA1
Paul Bigus wrote this case under the supervision of Jana Seijts solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written
permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies
or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University
of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
Copyright © 2011, Richard Ivey School of Business Foundation
Version: 2011-09-06
INTRODUCTION
On Wednesday, April 15, 2009, Tim McIntyre, Vice-president of Communications for Domino’s Pizza
International (Domino’s) had been placed into a difficult situation. Two days earlier a blogger from a
consumer affairs website called The Consumerist sent McIntyre an email, notifying him of a YouTube
video he must watch.2 The video had been posted online by a Domino’s employee. It showed two
Domino’s employees at a Conover, North Carolina, Domino’s location tampering with customers’ pizza
and sandwich orders. McIntyre watched the employee stick cheese up his nose before placing it on a piece
of garlic cheese bread. He sneezed on the food and boxed it up to complete the order. The employee
operating the video camera was heard laughing in the background and commenting, “In about five
minutes, they’ll be sent out to delivery, where somebody will be eating these, yes, eating them.”
To make matters worse, as a result of subsequent postings to Twitter and Facebook, the YouTube video
had gone viral, amassing more than 500,000 views. Moreover, with each comment that was posted to the
web about the video, the company’s reputation suffered. Patrick Doyle, Domino’s president was flying
back early from his family vacation in Florida as a result of the growing scandal3. He had been briefed and
was already communicating to senior management. In a few hours there would be an emergency meeting
in the boardroom. He knew the social media team would need to devise a plan to respond to the viral video
to protect Domino’s strong brand image before it was too late.
THE OFFENDING VIDEO
In the small city of Conover, North Carolina, loyal customers visited and called the local Domino’s pizza,
placing their orders, unaware of the mischief going on behind the scenes. On the evening of Monday, April
1
This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of Domino’s Pizza International or any of its employees.
2
Amy Jacques, “Domino’s delivers during crisis: The company’s step-by-step response after a vulgar video goes viral,” The
Public Relations Strategist, August 17, 2009, www.prsa.org/Intelligence/TheStrategist/Articles/view/8226/102/
Domino_s_delivers_during_crisis_The_company_s_step, accessed June 18, 2011.
3
Ibid.
This document is authorized for use only by Orzhen Rushanyan in ISTM 665.1OL Summer 2019 taught by ERIK KROGH, Pepperdine University from Apr 2019 to Oct 2019.
For the exclusive use of O. Rushanyan, 2019.
Page 2
9B11C016
13, 2009, two rogue employees, Kristy Hammonds and Michael Setzer, decided to film a prank during
their shift in the franchise kitchen. As Hammonds held the video camera, Setzer began by stuffing cheese
up his nose, then, moments later, sneezed onto a customer’s order. As Setzer continued to contaminate
customer orders, Hammonds could be heard laughing and narrating behind the camera, “Michael is a star,
yes he is.” Setzer continued his disgusting actions by sneezing out nasal mucus onto a customer’s pizza
and poking his unsanitary fingers randomly into the food. “Now that’s how we roll at Domino’s,”
commented Hammonds, as Setzer’s actions became even more graphic, violating numerous health code
standards. The most disturbing part of the video was when Setzer wiped a dish sponge on his backside, and
then proceeded to start washing the pots and pans. Over the course of the video, numerous customer orders
were tampered with before being boxed up for unsuspecting customers who had no idea what had just
taken place. Clearly amused, Hammonds continued to comment on their actions, “In about five minutes,
they’ll be sent out to delivery, where somebody will be eating these, yes, eating them.” After the pair
finished recording their nauseating actions, Hammonds decided to post the prank video on YouTube4.
Twenty-four hours later, the video had already attracted half a million views on YouTube and many other
websites, blogs and vlogs had uploaded copies of the video to their sites. To make matters worse,
references to the prank video were among the first five search results when Domino’s was entered into
Google’s search engine. The video was the focus of numerous social media discussions on Twitter and had
received attention from both local and national media channels.
COMPANY HISTORY
Domino’s Pizza started out in 1960, when two brothers, Tom and James Monaghan, paid $500 to purchase
a pizza store named “Domi-Nick’s” in Ypsilanti, Michigan. A year later, James traded his half of the
business to Tom for a Volkswagen Beetle. In 1965, Tom changed the name to Domino’s Pizza Inc. and
soon after started opening franchise stores. Through successful expansion, Domino’s had reached 200
franchise stores by 1978. During the 1980s, the company continued to experience growth, expanding
internationally to Canada, England, Japan and Australia. By the 1990s, Domino’s had established itself as a
global pizza food chain with more than 1,000 franchises and more than $1 billion in yearly sales. By the
year 2000, Domino’s had earned the reputation as one of the top 10 franchise opportunities to invest in. As
of March 2010, Domino’s had opened its 8,500th store worldwide and employed more than 120,000
employees in 60 countries5. Over its 50-year history, Domino’s had earned the reputation and association
as a true American fast-food legend, along with the likes of McDonald’s, Taco Bell and Kentucky Fried
Chicken.
TURNING A BLIND EYE
News of the viral video first reached Domino’s corporate headquarters when a blogger from The
Consumerist (a website that allows consumers to share information on the most current consumer issues)
contacted McIntyre. At first, Domino’s senior management decided to do nothing publically, hoping the
video nightmare would blow over or be replaced by the next “video of the moment” in cyberspace.
However, over the course of a single day, viewership of the video continued to grow. On April 14, 2009,
the YouTube video went viral with 562,627 views at 8 a.m., to 930,390 views by 9:30 p.m. (see Exhibit 1).
4
“Workers fired for Domino’s prank video,” April 17, 2009, www.youtube.com/watch?v=g-Z2x4SClaE&NR=1, accessed June
18, 2011.
5
“About Domino’s Pizza,” www.dominosbiz.com/Biz-Public-N/Site+Content/Secondary/About+Dominos/History/, June 18,
2011.
This document is authorized for use only by Orzhen Rushanyan in ISTM 665.1OL Summer 2019 taught by ERIK KROGH, Pepperdine University from Apr 2019 to Oct 2019.
For the exclusive use of O. Rushanyan, 2019.
Page 3
9B11C016
Domino’s contacted YouTube and was successful at having the original video removed, but the damage
had already been done. Numerous sites had already downloaded the video and reposted it, making the
video impossible to contain.
Internally, Domino’s corporate headquarters took action. Using the names of the two rogue employees
captured from the video, the franchise location was sourced. The owner was contacted, and the two
employees were immediately terminated. Additionally, the local police department charged both
Hammonds and Setzer with contaminating food distributed to the public. In response, both Hammonds and
Setzer claimed the video was just a prank and that the unsanitary food was never delivered. To make
matters worse, the television media released information that Hammonds was a registered sex offender.
Details revealed that her criminal history included a conviction for sexual battery, possession of stolen
property and breaking into a vending machine. This information added fuel to the fire, and questions
loomed about Domino’s hiring practices. Still silent to the growing media frenzy, Domino’s head office
brought in the local health department, which advised the franchise owner to discard all open containers of
food and then sanitize the location.
Two days after Hammonds first posted the original video on YouTube, it was clear the issue would not
fade away, as senior management had originally anticipated. Because social media, newspapers and
television had all provided coverage of the story, it was clear that Domino’s needed to respond publicly
before a brand that had taken 50 years to create was destroyed because of two immature employees and a
video camera. McIntyre stated “You know what, this is a bad one…They’re in uniform, they’re in the
store. We need to do something about it.”6 As he prepared for the emergency meeting called by Domino’s
president, Patrick Doyle, one thing was clear. The longer Domino’s management waited to respond
publicly, the greater the risk that loyal customers might start packing a lunch, or ordering from
competitors, before ever calling Domino’s again.
6
Amy Jacques, “Domino’s delivers during crisis: The company’s step-by-step response after a vulgar video goes viral,” The
Public Relations Strategist, August 17, 2009, www.prsa.org/Intelligence/TheStrategist/Articles/view/8226/102/
Domino_s_delivers_during_crisis_The_company_s_step, accessed June 18, 2011.
This document is authorized for use only by Orzhen Rushanyan in ISTM 665.1OL Summer 2019 taught by ERIK KROGH, Pepperdine University from Apr 2019 to Oct 2019.
For the exclusive use of O. Rushanyan, 2019.
Page 4
9B11C016
Exhibit 1
VIEWERSHIP OF DOMINO’S PIZZA YOUTUBE PRANK VIDEO
APRIL 14, 2009
Number of Views
Time of Day
562,627 views
8:00 a.m.
636,000 views
11:15 a.m.
690,000 views
1:00 p.m.
728,816 views
3:00 p.m.
745,679 views
5:00 p.m.
930,390 views
9:30 p.m.
Source: Neville Hobson, “Domino’s Pizza Deals with YouTube Nightmare,” WebProNews, April 16, 2009,
www.webpronews.com/dominos-pizza-deals-with-youtube-nightmare-2009-04, June 18, 2011.
This document is authorized for use only by Orzhen Rushanyan in ISTM 665.1OL Summer 2019 taught by ERIK KROGH, Pepperdine University from Apr 2019 to Oct 2019.
SPECIAL ISSUE: DIGITAL BUSINESS STRATEGY
TRANSPARENCY STRATEGY: COMPETING WITH
INFORMATION IN A DIGITAL WORLD1
Nelson Granados
Graziadio School of Business and Management, Pepperdine University, 6000 Center Drive,
Los Angeles, CA 90045 U.S.A. {nelson.granados@pepperdine.edu}
Alok Gupta
Information and Decision Sciences Department, Carlson School of Management, University of Minnesota,
321 19th Avenue South, Minneapolis, MN 55455 U.S.A. {alok@umn.edu}
We contend that in order to compete effectively in a digital business environment, firms should develop a
transparency strategy by selectively disclosing information outside the boundaries of the firm. We make the
case for transparency strategy by showing why it is relevant in the digital business world, and the consequences
of not having such a strategy. We then provide some foundations to develop the strategy and make a call for
research.
Keywords: Digital business strategy, electronic markets, transparency strategy
Background1
The Internet and mobile technologies have brought markets
closer to the utopian state of perfect information by reducing
the information asymmetries between sellers and buyers. For
buyers to make a purchase decision, it is a lot easier to search
online for product alternatives, prices, product performance
(e.g., reviews), and vendors.
In turn, firms have unprecedented flexibility to conceal or
disclose information to competitors, customers, and suppliers.
That is, they are increasingly able to implement transparency
strategies. In fact, by pushing a mobile application to potential customers or with simple changes in a website’s design,
a seller can reveal more or less information about its product
offerings. Also, information is increasingly consumed via
online news, blogs, and social networks, where viral effects
can significantly increase speed to market and communication
effectiveness.
1
Anandhi Bharadwaj, Omar A. El Sawy, Paul A. Pavlou, and N.
Venkatraman served as the senior editors for this special issue and were
responsible for accepting this paper.
End consumers increasingly expect to be very well informed,
spoiled, and empowered by the Internet and by mobile
devices that provide instant access to information. This
creates pressure for all players upstream in a supply chain to
be more transparent, not just about the features, price, and
quality of a product, but also about its provenance (New
2010). How should firms strategize in this environment?
Some argue that the best approach is to satisfy this demand
for information by becoming more transparent (Tapscott and
Ticoll 2003). In this article, we contend that the answer is not
so straightforward. Instead, we argue that firms should
strategically and selectively disclose information, and we
make the case for the need to develop research and best
practices on transparency strategy.
Why Does Transparency
Strategy Matter?
In the past, legacy systems, industry norms, or firms with
market power dictated the level of transparency that was
present in a market, leading to the existence of stable trans-
MIS Quarterly Vol. 37 No. 2/June 2013
637
Granados & Gupta/Competing with Information in a Digital World
parency regimes (Granados et al. 2010). In the last few
decades, the Internet and mobile technologies have disrupted
these regimes, making some players better off and others
worse off. For example, online travel agencies brought higher
transparency of product offerings to travelers, which led to the
disintermediation of traditional travel agencies. In financial
markets, the transition from floor trading to electronic trading
made stock trade history more transparent, which benefitted
individual investors but threatened the viability of intermediaries (Clemons et al. 2002).
In such turbulent environments, the effective use of IT
becomes a strategic imperative for firms (El Sawy et al. 2010)
as they develop dynamic capabilities to be alert, predict the
future, and effectively compete (Sambamurthy et al. 2003).
We argue that one set of capabilities that a firm must develop
is to design policies for selective information disclosure and
to deploy technologies that enable them. But competitors are
bound to respond with their own innovations. This dynamic
process will lead to new transparency regimes that differ
across industries, depending on the nature of the product sold
and on the industry’s competitive and regulatory forces
(Granados et al. 2006).
In the end, those who are able to foresee and adapt to the
effects of technological breakthroughs on transparency will be
better able to compete. However, the uncertainty associated
with technological progress can blur the vision on how to
develop these capabilities. We have observed two common
myopic reactions (Granados 2008):
•
•
Defensive denial. In increasingly transparent markets,
some firms retrench to protect their turf, fighting against
an inevitable trend. This reaction is partially motivated
by the fear of losing information advantages. For
example, widespread availability of information about
prices in electronic markets can lead to more competition
and lower market prices. So in the 1990s, faced with this
threat, established firms across industries (e.g., music,
travel, financial services) initially avoided Internet-based
distribution.
The passive reaction. Perhaps a better—yet not good
enough—approach is when firms acknowledge the transformation, but they assume that there is not much that
can be done to manage and control information. For
example, with the proliferation of customer reviews and
other third-party information in social networks, firms
often fall short in developing effective social media
strategies to protect and improve their reputation.
The consequence of these reactive approaches has been that
existing competitors and new entrants find fertile ground to
638
MIS Quarterly Vol. 37 No. 2/June 2013
develop innovative business models and establish long-term
competitive positions. For example, Blue Nile, an online
jewelry store, was launched by an entrepreneur to educate
consumers on how to discern quality and features of jewels,
and today it is still one of the leading online jewelry stores.
Not all winners are start-ups. In the 1990s, Microsoft
launched Expedia, an online travel agency with a web-based,
transparent interface to display to consumers the travel
offerings from traditional reservation systems. To date,
Expedia is the leader in online travel distribution. Progressive, an insurance company, has been successful with a
transparency strategy to attract customers, by showing a
comprehensive matrix of all competitive product offerings.
Not all successful strategies are about higher transparency.
Hotwire and Priceline.com emerged early on to become
leaders in the market niche of opaque travel offers, which
conceal travel itineraries and supplier identities prior to
purchase.
The interplay between strategy, IT, and the environment is
complex, messy, and chaotic (El Sawy et al. 2010), which
may derail business executives from developing a vision to
strategize with information. But this is no excuse for complacency. Firms should be proactive and deliberate in understanding how IT impacts transparency in their respective
industries, in order to develop sound transparency strategies.
We next provide some preliminary foundations and guidelines.
Foundations for Transparency
Strategy
The traditional definition of information strategy is a firm’s
strategy to produce and manage information. It has long been
a topic of research and practice in the IS field. We contend
that in this digital world, firms need to move beyond this
scope to also develop a strategy to disclose information.
Firms have to make decisions about information disclosure
both inside and outside the firm, but it is the latter one which
we contend needs increasing attention from researchers and
practitioners. Therefore, for the purpose of this article, we
define transparency strategy as the strategy to selectively
disclose information outside the boundaries of the firm, to
buyers, suppliers, competitors, and other third parties like
governments and local communities.
There are four possible strategic options (Granados et al.
2010): To disclose, distort, bias, or conceal information (see
descriptions and example in Table 1). Any of these may be
valid depending on a firm’s business strategy, its competitive
Granados & Gupta/Competing with Information in a Digital World
Table 1. Example of a Firm’s Transparency Strategy
Strategic
Option
Informational
Element
Product features
Product quality
Disclose
Full revelation,
information is available
and easy to interpret
Distort
Information is outdated,
incomplete, inaccurate,
or obfuscated
Bias
Preferential display of
information to the
detriment of competitors
Conceal
Full opacity,
information is
not available
X
X
Price
X
Cost
Inventory
X
X
Proce…
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