Reference no: EM132295547

Problem Statement

The problem at Papa John’s is the toxic culture. While the industry has shown growth, Papa John’s has experienced a decline that started back in 2017 with the controversy around Schnatter’s comments about the National Football League (NFL) hurting Papa John’s sales to most recently his use of derogatory terms on a conference call.

Strategic analysis

To Improve and solve Papa John’s problem the business needs to pursue objectives and strategies that analyze both the competitive environment and internal organization, to ensure the organization’s resources are fully utilized to achieve its goals and objectives.

The toxic culture at Papa Johns has made its financial performance both at the stock market and business level to deteriorate, and the public spat between Schnatter and the board also means investors are shying away from the stocks. To overcome the problem Papa Johns’ investors faces, return measures should be enforced with the Price/Earnings Multiple strategy which shows what the market is willing to pay today for a stock based on its past or future earnings and how much investors are willing to pay per dollar of earnings . When Papa Johns’ stocks are undervalued buy-and-hold investors buy the stocks and wait for the stock market to improve and use the investments to fix the business and improve its financial needs.

From a corporate reputational risk perspective, Papa Johns’ needs to put this issue behind them and fast. BCG matrix analysis won’t do much because not only is the problem an internal affair but also the restaurants growth rate and its relative market share are not only the indicators of profitability. The strategy ignores and overlooks other indicators of profitability such as value created by the products or service produced to satisfy its customers.

Papa John’s SWOT Analysis

Strengths

Strength 1: They focus on only using fresh ingredients when making their pizzas.

Strength 2: Papa John’s pizza is referred as a family pizza not just any other pizza business. The company has a strong employee training program.

Strength 3: Papa John’s marketing strategy is the efficiency of their restaurant layout. Their restaurant’s layout is design for customers to see what is going on behind the counter which exhibit customer and employee friendly.

Weaknesses

Weakness 1: Papa John’s has limited number of stores.

Weakness 2: Papa John’s menu is another thing that they need explore more in adding more items, even though they have good quality pizzas.

Weakness 3: Papa John’s has limited coupons compare to their competitors.

Opportunities

Opportunity 1: Papa John’s has certainly made their business from using the best high-quality ingredients that there can be in the world.

Opportunity 2: Papa John’s business is still considered new in the pizza market.

Opportunity 3: Papa John’s need to take the opportunity that they have in marketing areas which they have already established store locations with more coupons by attracting more customers to their business to boost their sales.

Having the Price/Earnings Multiple Strategy is one that can make anyone that has ownership over the company either stay or sell their shares. The customers are the key business makers in purchasing the products. Papa John’s has several pizza giant competitors like Mr. Gatti’s, Pizza Hut and Dominos. The competition can be a factor of how the pizza business does such as an example with vendors. A vendor can either make or break your business. If Papa John’s does not have a quality working relationship with the vendors who provide quality ingredients for their menu, then the business will lose money which will trigger stockholders/investors to sell their shares of the company because they are losing money. One thing that also can seriously affect Papa John’s business or any business is having serious negative publicity that can affect the value of the stockholders. This tool shows that consumers react to any negative publicity, either from televised news, social medias such as Twitter, Instagram, and Facebook. If consumers notice of any negative publicity, they will be less likely to buy the product which result in loss of sales and investors. If there are positive publicity news of certain pizza shops, consumers will be motivated to purchase the pizza. Which will result in the increase of business sales and attracts investors to invest money into the company and secure profitable gains.

Develop multiple alternatives/options for actions to solve the problem . Evaluate the alternatives by considering if the company can afford it; whether it will evoke a response from competitors; how employees/customers/ stakeholders are likely to view the change; and how the alternative fits with organizational culture, vision, mission, and goals.