Chapter 18, Problem 25E

Strategy and Management Accounting Systems

Joe’s Pizzeria was the only delivery-based pizza chain serving a small college town for more than 20 years. Students are very price conscious, so although Joe’s reputation centered on his special crust recipe, he emphasized good pizza at a good price. However, as the college and the surrounding town grew, national competitors Domino’s and Pizza Hut entered the market. Domino’s has cut into Pizza Hut and Joe’s delivery market, which has both delivery and in– store service, but has also acquired some of Joe’s traditional business. Joe has decided that he will abandon the low-price strategy and instead move up-market. He has decided to partner with a local brewpub and open a store that serves specialty pies and crusts with specialty in-house beers.

Required

1. a.      How will the changes in Joe’s business strategy affect the business model and the performance measures that will be important for running the business?
2. b.      How will Joe’s core assets and capabilities need to change as he changes his business strategy?