Case Study Pizza War

BSB, INC., THE PIZZA WARS COME TO CAMPUS

Company Background

BSB, Inc. is a large nationally operated food-services company. The company serves client organizations on a contract basis. Its business is divided into three (3) market-oriented divisions of corporate, airline and university or college.

Case Summary

Renee Kershaw is BSB's manager of food services at a medium-sized private university in the Southeast. BSB has been operating at the university for the past 10 years and Kershaw has been the manager at BSB for the past 18 months. At the university, BSB caters for 6000 students and 3000 faculty staff and support personnel via its 3 different eateries in the university campus. The three eateries are:

a) The Cafeteria - Open for breakfast, lunch and dinner daily

b) The Dogwood Room - Serves an upscale luncheon buffet on weekdays only

c) The Grill - Open between 11a.m to 10p.m daily and until midnight on Friday and Saturday nights

Initially, after 4 months being in-charge of BSB's operations at the university, Kershaw conducted a survey on customer needs and market trends. The survey revealed that students were not satisfied with the food services at the university. A large amount of the food being consumed by students was not from BSB's facilities mainly due to a lack of variety and unsuitable facilities' serving time for the students.

Below are the data from the survey:

Food prepared in dorm room 20%

Food delivered from off campus 36%

Food consumed off campus 44%

Students with cars on campus 84%

Students with fridges or microwaves in their rooms 62%

Food that students consumed outside BSB, Inc. facilities 43%

As a result of the survey conducted by Kershaw, she decided to include pizzas in the menu. In addition to the new menu, Kershaw also introduced delivery service (by bicycle) for its pizzas. Currently, apart from placing the pizza making facilities at the grill, space is also being allocated at the grill to store pizza ingredients, as well as to prepare and stage pre-made pizza. In order to keep the cost down and provide fast delivery, only a limited number of 'standard pizzas' are offered in the menu.

Challenges and Problems

Despite the rise in sales and profit from the pizza operations, increase in demand for the pizza has led to capacity problems and increase in delivery times. As a result, the pizza's sales began to level off. Furthermore, Kershaw is concerned of the competition from a new food court to be opened in campus which will house Pizza Hut, Dunkin' Donuts and Taco Bell. Specifically, Pizza Hut will be putting up a facility offering a limited menu and pizzas on a "walk-up-and-order" basis.

Question 1

Does BSB, Inc. enjoy any competitive advantages or core competencies?

Answer

Competitive Advantage is the ability of a company to win consistently over the long term in competitive situation.

Core Competencies are the unique resources and strengths that an organization's management takes into account when formulating strategies.

BSB enjoys competitive advantages or core competencies in a number of ways.

a) Specialization - BSB is a specialized food-services operator for universities and colleges.

b) Experiences - BSB has been serving the university for 10 years therefore they have first hand knowledge relating to customer preferences and needs derived from their experiences in the market. For e.g.: survey data.

c) Existing facilities and services provided - new entrants have to start from scratch. For e.g.: location and delivery services in the university are very important due to the lack of parking spaces.

d) Brand Recognition - Familiarity among the campus community of the BSB 'brand' as it has been in existence for some time.

e) Close proximity - Close proximity to the customers is critical for pizza delivery as it allows quicker and lower cost delivery.

Question 2

Initially, how did Renee Kershaw choose to use her pizza operations to compete with off campus eateries? What were her competitive priorities?

Answer

Kershaw decided to use her pizza operations to compete with off campus eateries based on the following reasons:

a) Available resources - Based on time, location and staff available for Kershaw at that time, pizza operation is the most logical choice to be adopted in competing with off campus eateries. Pizza operations do not require much time to be set-up. Furthermore she can run the operation from one of the available eateries (she decided at the Grill) and a minimal amount of staff training is required to run the pizza operations.

b) Food variety - By introducing pizzas in the menu, Kershaw has somewhat addressed the problem of the lack of food variety by only implementing minimal changes in her normal operations.

c) Catering for students' tight schedules - Through delivery services, Kershaw is able to cater for students with tight and erratic schedules. This decision is based on the high percentage of food not purchased from BSB facilities whereby 36% of the food is delivered from off campus. Since pizza can be kept and reheated easily, going into the pizza business seemed like the best option for Kershaw because 62% of students in the university have fridges and microwaves in their rooms.

Competitive Priorities are the critical dimensions that a process must possess to satisfy its internal or external customers both now and in the future. Kershaw's competitive priorities when choosing the pizza operations to compete with off campus eateries were:

a) Cost - Low cost of operating since pizza operations require minimal staff training and delivery is done by bicycle. Limited