Essay: Increasing Revenues for Domino’s Pizza Inc
In order for Domino’s Pizza to increase their revenues, there is a strategic need to use its raw materials more efficiently to reduce its cost of goods sold by 5% within the next five years. This will grow the net income higher. From the financials, the net income grew from $54.0M to $79.7M but this did not increase the revenues. The plan details for this strategy would be a reduction in the cost of goods sold by the effective use of raw materials.
This is an already working strategy because in the December of 2008, the cost of goods sold was 1,061.9, then it went down to 1,017.1 triggering a change in revenues from 1,425.1 to 1,404.1. This is an increase of 26.8 million US Dollars. This plan needs to be executed within the next one year so that by the end the current financial year it would be possible to work out whether the strategy works out or not (Young 173). Further, the reduction or minimization of operational expenses. These are general as well as administration and other operating expenses. A reduction on these expenses will also serve to give an increase in revenues and hence increase the profits. This also needs to be implemented within the current year so as to see the impact at the end of the current financial year. This is evident from the financials because we can observe that a reduction in these expenses shows an increase in net income from December 2007 to January 2010. Likewise, this will increase the profit margin. These two recommendations are derived from the financials below:
Millions of U.S. Dollars
|As of:||Dec 31
|Cost of Goods Sold||1,052.8||1,084.0||1,061.9||1,017.1|
|Selling General & Admin Expenses, Total||170.3||179.9||163.7||199.2|
|OTHER OPERATING EXPENSES, TOTAL||170.3||179.9||163.7||199.2|