Telepizza Case Analysis

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The case discusses the strategies that were adopted by Telepizza, which has grown to become the largest pizza chain in Spain with 399 stores and an estimated market share of 62% at the end of 1997 and also underwent international expansion while additionally introducing new concepts such as TeleGrill and TeleOriental (soon to be launched). Telepizza has grown from a single store in 1988 to the largest pizza chain in Spain. There were various success factors that contributed to the rapid growth of TelePizza under the leadership of Leopoldo Fernandez. The same can be summarized as follows:  • TelePizza has always set demanding growth targets and achieved them, which also gave the company a high valuation at the stock market. Under all of the strategies adopted by TelePizza lies an obsessive commitment to grow at every phase. The fact that employees also have stock options further motivated growth. • TelePizza has followed a very unique management philosophy. It focusses on hiring only the best of the lot even for food preparations and delivery inspite of the fact that they generally have high manpower turnover rates. The idea is to hire young inexperienced individuals and provide them with the necessary training and development with related incentives to succeed and move up the ladder in the organization. This is a very different concept from the traditional approach of hiring well experienced employees, which also enables loyalty and motivation as everybody is given an opportunity to rise to top management positions. It also leads to an outstanding commitment and high flexibility. People who prove to be capable climb up or become even franchisees, which further enhances productivity as franchisees also become capable and skilled as well. The fact that Telepizza also has a high organizational flexibility, which meant changing roles and responsibilities also avoided monotonous tasks and further contributed to this philosophy.   • The HR management working further contributes to the management philosophy of TelePizza. The idea again is to hire the best young people and provide them with the necessary training and development to enable them to grow. Telepizza has a modern three step approach with recruiting, training and evaluating. This system involves anonymous evaluations of a manager by 50 individuals, which enables effective feedback. It also involves continuous contact between senior management and line personnel, which results in open door communication and a feeling of being part of one team. They try to match the managers’ mentality to the Telepizza strategy. The philosophy of firing unproductive employees even at management level results in retention of only the best talent at TelePizza. • Unlike the competitors TelePizza did not try to make pizza delivery as easy as possible. In order to avoid the high manpower turnover that comes with delivery jobs, TelePizza has provided opportunities to move up the ladder for entry level employees with incentives. In order to cope with a high employee replacement, TelePizza instead sought to upgrade both its entry-level employees and the responsibilities they handled. Together with performance measurement systems (couponing system), employees could be evaluated.  • After sales service forms a very important part of TelePizza’s management philosophy. As an example, employees at TelePizza thank every tenth customer who visited their store for their order and also provide special discounts and schemes to customers who have not ordered a pizza for the past 6 months. TelePizza came up with new methods to satisfy customers. Furthermore, employees got trained on acting in customers favour.  • By replacing the word “pizza” with “TelePizza”, TelePizza sought to build the brand strongly in the mind of the customer. TelePizza also builds up a distinct identity in the customers’ mind by consistent clothes and mopeds. Focus is also given to on-time delivery and customer service, wchih...
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