Pizza2go Case Study

Analysis Case Study

Pizza2Go case study

I. Introduction

Pizza2Go, founded in 2005, is a successful company which is known for its huge network of franchisees and 50 retail stores across nationwide. Since 2005, Pizza2Go shares have increased more than 2500%, making company a leader in Vietnam market and offering a decent job for people. According to the case study, with over 1 million pizzas have been sold every year, Pizza2Go had achieved a total 202,747,000,000 VND in 2016. In this case study, the problems of Pizza2Go will point out along with analysis and recommendations based on management theory.

II. Analysis

1. Franchisors

Pizza2Go had a gigantic menu with 2,000 options which have a high diversity which is not only meeting customer demand but also creating a pressure on company supply chain and storage. Buying and keeping tons of fresh ingredients ready to deliver nationwide also need a huge network of transportation and worker. The other need to be considered is about Pizza2Go business model. Taking fee form franchisees growing sales is only benefit for head office due to the fact that maybe franchisees have sold cheap pizza for low cost and bonus increasing company policies, labor cost, running system fee and especially parent company which lead franchisees to a dilemma. Moreover, with these extra fees from company policies about employee, franchisees may exert some benefits such as employee happiness and commitment. With the same core strategy about human resources, Pizza2Go CEO Mrs. Nguyen whose have a thought that optimistic attitude may a game-changing element in business. According to the case study, although franchisees will suffer the huge increase in labor cost over the next four or five years, Mrs. Nguyen has a faith that the higher salary, the longer company can hold its skilled employees. To support Nguyen’s idea about salary, the evidence is mentioned in the case. It said that not only there is 4-minutes reduction in delivery times, but also there is fewer mistake in store and more active staff. Similarly, Mrs. Nguyen whose plans a trip to the Silicon Valley in USA annually to motivate her staff with new technology along with training program.

Despite a rewarding environment Mrs. Nguyen and parent company have offer to their worker, there are some major problems. Firstly, when franchisees sale are low, although there is an objective reason affected business, franchisees have to take full responsibility for bad business management. Secondly, it seemed to be inconsistent between manager leading to such a weak communication and chain management. Taking Mr. Long situation as a persuaded example, it had been 3 years until the head office official aware of the labor policy about working conditions, working hours and underpayment.

2. Franchisees:

According to the case, Pizza2Go franchisee who carefully selected by parent company are “genuinely believe Pizza2Go is highly profitable business” (case study). These franchisees not only operating their profitable store, but also contribute percentage on sales, not profit to the head office. It means that franchisees should consider a position as a vantage point and a stakeholder as well. Although they have a vast contribution to head office, they seem to receive nothing except disappointment. Firstly, it is apparent that head offices are taking advantage of them. As mentioned in the case, Pizza2Go only pay attention to some parts which they interested especially profit and worker wealthy instead of franchisee business situation and the changing in fast-food market with lots of new brand and tough competitors. As a result, an intense competition is inevitable. Low price pizza and increasing operating costs are both force franchisee to flight alone in highly contested market. For example, Vietnamese people had popular with KFC, Lotteria, Jollibee. Recently, Vietnam market welcomed more foreign brands such as McDonald’s and Burger King. All of them do not seem to be meeting their expectations in Vietnam market before investment (The Tran, 2016). They have worked in pressure in order to make record sales in bad condition but ‘the head office was only concerned about the welfare of people at the corporate level’ (case study). In order to solve this dilemma, franchisees choose to ignore company agreement and have a breach of labor law.

3. Consequences:

With all problems have been pointed out above, employee clearly the most vulnerable person from any changes While Mrs. Nguyen who prefers reward power to satisfy her employee with training program or field trip rather than coercive power like her corporative level. This inconsistency in leadership has created an ugly and awful performance in franchisees perspective. Moreover, coercive power is the curse of the universe (Mary P. Follett, Management Theory). From the case, I can point out some example like hard-working staffs who are made few tips and often suffered abuse and danger while delivering food to stranger (case study).

Another great example for worker exploitation is Mr. Long, he force to work between 50 hours and 60 hours, under pressure near 200-degree oven with no air condition. The store ; not only forced to work in bad condition, but also only count 40 working hours a week to avoid penalties. According to Article 104 of the Labor Law, company may in trouble if they force worker more than 8 hours per day and over 48 hours per week. With this action, company can save an extra cost from worker but this may burn that bridge. After 3 years suffering from working without any advantage, Mr. Long quit his job and report Mr. Thap, his manager who also run 10 stores in Ho Chi Minh City to headquarter. However, after all Mr. Long still not receive his full payment and any apology about anything. Due to his manager irresponsibility, employee has lost their faith and promise from a successful Vietnamese pizza chain network since 2005.

III. Application

From the problems analysis above, Pizza2Go have many serious problems in chain management as well as organization culture. In order to find and fix any weak link in a chain, company should have their signature style of working or professional, modern atmosphere. Top manager should focus on reward, legitimate and referent power as well as chain marketing and better communication toward company stakeholder, instead of coercive power and outcome. Lastly, parent company should fairly treat their worker and franchisees as an important stakeholder as well as pay attention in forecasting the changing of the fast-food market.

IV. Recommendations

Pizza2Go have 3 major problems about top management, employee satisfaction and franchisees business model.

It is crucial for Pizza2Go to rebuild their organization