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Executive summary

The study analyzes Doordash Technologies Australia Pty. Ltd, a leading online food ordering and delivery platform and provides strategic recommendations for the company. The study outlines the market presence of the company and its operational excellence that also supports the vision and mission of the company. There are several key sources of competitive advantages for Doordash including, financial health and global HRM. There is also intense rivalry in the market. The report suggests market diversification and international growth to help Doordash adapt to the market challenges.

1. Introduction

Doordash Technologies Australia Pty Ltd is an online food ordering and delivery platform. The company was founded in 2013 and operates in more than 25 countries including Australia (Doordash, 2023a). The brand is one of the market leaders, having one of the highest shares (27.9%) in the Australian market along with brands like UberEats (38.1%) and Menulog (34%) (Statista Research Department, 2023). Furthermore, its storefronts like Wolt Drive have experienced significant success in the market (Silberstein, 2023).

img 1

Figure 1: Market share of the top three online food ordering and delivery companies in Australia in terms of market capture (%) 

(Source: Statista, 2023)

The aim of this report is to analyze the internal and external environment of Doordash Technologies Australia Pty Ltd and thereby identify its sources of competitive advantage, rivalry in the industry and how the organizational strategies address the mission and goals of the organization.

2. Internal Environment of the Organisation

2.1 Organization context 

According to Kasahara (2015, p4-5) understanding the company and context can help to analyze the compatibility between the situation and the company's activities. The business activity of DoorDash is related to logistics operations and the company tries to deliver last mile logistical support that connects local merchants to its customers. The company offers on demand pickup and delivery services. The company operates in more than 25 nations with its major presence being in Australia, USA, Canada and New Zealand (Doordash, 2023a).

The main market for Doordash in Australia is Online Food Ordering and Delivery, however the operations have also expanded to online ordering and delivery of convenience items, groceries, flowers, pet care products and alcohol (Doordash, 2023a).

As of September, 2023, the company has generated revenues of 2164 million AUD (compared to 1701 million AUD in 2022) with gross profits of 962 million AUD (compared to 714 million AUD in 2022) and gross margin of 44.5% (compared to 42% in 2022) (Doordash, 2023c). 

2.2 Vision

The vision of the organization is to create a robust platform of last mile logistics and a set of services that can improve the sales of the marchants and thereby allow the consumers to connect with the merchants in a sustainable manner. The vision is based on the core values of the company like commitment to the customers, employees, industry leadership, continuous learning and teamwork (Doordash, 2023b).

In Australia, the demand for last mile or integrated logistics has grown significantly over the past years, especially supported by online shopping creating revenues of more than 121 billion AUD (Ibisworld, 2023a)

2.3 Goals

The goal of the organization is to empower local; communities by connecting the local with the customers and in doing so, create new opportunities for economic growth. The company also has the goal of providing its employees a healthy, inclusive and supportive environment for the employees (Doordash, 2023b).

These goals and vision are aligned with the industry context of increasing demand for last-mile delivery thus showing compatibility between the business and its context as argued by Kasahara (2015, p35-40).

3. External Environment of the Organisation

3.1 Two Elements of PESTEL

3.1.1 Element 1: Economic

According to OECD, the economy of Australia significantly rebounded since the 2019 pandemic. However, there has been a rise in inflation and possibilities of fiscal pressures (Shabaz et al., 2020). This is mainly due to the aging population and the impacts of global climate change. It is likely that the monetary policies would remain restrictive until the current inflation is managed (OECD, 2023). Moreover, the annual revenue of the sector is 22.1 billion AUD (Statista, 2023b). Furthermore, the online delivery industry in Australia generates revenues of 1.3 billion AUD and has grown by almost 26% from 2018 to 2023 and continues growing for the next 5 years showing the strong economic potential of the sector (Ibisworld, 2023b)

3.1.2 Element 2: Social

There is an increasing popularity of online food ordering and delivery service apps like DoorDash and UberEats. In 2022, these apps were voted the two most popular methods of ordering food (Bates et al., 2020). Moreover it was also found that more than 50% of Australians prefer food delivery over picking up food (Statista, 2023b). There is also an increasing demand for healthy diet options, including plant based diets among Australians by almost 5 times since 2015, compared to just 30% for non plant based products (like meat and fish) (National Tribune, 2023).

4. Sources of sustainable competitive advantage

4.1 Porter's Value Chain Analysis

Hanson et al., (2021) posited that Value Chain Analysis can help to understand the core competencies of an organization by examining the parts of the operations that create value. This shows the importance of using value chain analysis to explore the effectiveness of Door dash's contemporary strategies and identify sources of competitive advantage (Grant, 2022, 141-172).

4.1.1 Support Functions 

Finance: The financial health of Doordash has shown significant improvements from previous year in terms of revenues, gross profit and profit margins.

Human Resource Management: The company has a global HRM that has helped to establish one of the best workplaces, winning several awards that adds to the brand image.

Management Information System: The company also has a highly technology driven system that allows them to easily manage all its data and information.

(Doordash, 2023b, c, d)

4.1.2 Value Chain Activities

Supply Chain Management: Strong network and relationship with merchants and a wide network of riders.

Operations: International operations and simplified operations for users.

Distribution: The large market share along with relations with more than 30,000 local businesses and a wide network of more than 40,000 drivers allow a robust distribution system 

Marketing: The company strongly invests in its marketing activities and technologies like Machine Learning to reduce marketing expenses and increase sales performance. The company also markets the availability of fresh, healthy, and plant-based food to attract environment and health-conscious customers (Doordash, 2023 e). (Doordash, 2023 e). 

Follow up service: The company has dedicated support teams who collect feedback and reviews and follow up with them and gain customer loyalty.

(Doordash, 2023d, e, f)

From the assessment of the support and value chain functions, the main competencies that could be identified were brand image, financial health, global HRM, technology driven, strong merchant and driver network, international operations, robust distribution system, technology use, follow-up and customer loyalty (Hill, 2022). These competencies allow Doordash to engage in the last mile logistics in a cost-efficient manner and achieve optimal profit margins. These competencies can be supported using the argument that the competencies of Doordash align with the value to cost metrics principle by Luehrman (1998, 89-99).

Competencies

Valuable

Rare

Imitable

Non-Substitutable

Brand Image

Yes

Yes

No

Yes

Financial Health

Yes

Yes

Yes

Yes

Global HRM

Yes

No

Yes

Yes

Technology Driven

Yes

No

Yes

Yes

Strong Merchant Network

Yes

Yes

Yes

Yes

Strong Driver Network

Yes

Yes

Yes

Yes

International Operations

Yes

Yes

Yes

Yes

Robust Distribution System

Yes

Yes

Yes

Yes

Use of ML in Marketing

Yes

Yes

Yes

Yes

Dedicated Follow up Teams

Yes

Yes

Yes

Yes

Customer loyalty

Yes

Yes

No

Yes

5. Competitive rivalry in the industry

5.1 Porter's Forces Model

Porter (2008, 78) identified 5 competitive forces that have a direct effect on the strategies used by business, these are: 

Threat of New Entrants (Low): Competitors cannot easily enter into the market due to the need for robust infrastructure and supply chain expertise.

Bargaining Power of suppliers (Low): Presence of a large number of suppliers and efficient supplier relationship management helped to limit their bargaining power.

Bargaining Power of Buyers (Moderate): Even though the market is driven by customer needs, the limited number of existing businesses limits the bargaining power of buyers due to oligopoly effect.

Rivalry among existing competition (High): There is strong rivalry and competition between the top three companies who capture the entire market of Australia.

Threat of Substitute (Low): There are low chances of substitution of online food ordering and delivery services.

(Ahuja et al., 2021)

5.2 Industry Map

The two major competitors of DoorDash are Uber Eats and Menulog.

Uber Eats: Positioned as high quality high price service. Its market is narrow and differentiated.

Menulog: Is also positioned as high quality and high price. However, its prices are lower and its service ratings are poorer than Uber Eats and Doordash. It also operates at lower cost and serves a narrow market.

DoorDash: Is positioned as high quality and high price while operating at lower cost and targeting a narrow market.

Figure 2

Figure 2: Industry Map

(Source: Self illustrated)

figure 3

Figure 3: Industry Map

(Source: Self Illustrated)

5.3 Intensity and types of competitive rivalry 

Price Rivalry: There is an intense price rivalry in the industry as the competitors constantly readjust the pricing as per market demands and prices of other competitors (Zhang, 2021).

Advertising Rivalry: Intense rivalry also exists in terms of the use of advertisements to constantly place the brands above other rivals.

Service Differentiation: There exists moderate intensity of service differentiation rivalry as the competitors' services are already differentiated (Zhang, 2021)

5.4 How competitive rivalry influences organization strategy 

The intense rivalry within the industry of online food ordering and delivery has a strong impact on the organizational strategies of DoorDash. Responding to the competition from major competitors like Menulog and UberEats, DoorDash incorporated more differentiation to its services and aimed to achieve best quality and pricing while constantly reducing operational costs and increasing profit margins. The company constantly adjusts its prices and gives various promotional offers to stay ahead of competition (Hill, 2022).

6. Strategy formulation and choice

6.1 Timeline of major events and initiatives

By 2021, Doordash announced that it was successful in increasing the number of women in the workforce. It gives the employees flexible working opportunities that allow scope for women to promote financial independence while allowing increasing workplace diversity as a part of its corporate strategy (Doordash, 2021)

As a part of its industry-level and business-level strategy, the company has an accelerator program for local vendors which started in 2022 to educate the merchants, develop important infrastructure, and promote inclusive growth of the industry. Project DASH started in 2018 and works towards increasing food access and powers the delivery of subsidized and charitable food to people in need (Doordash, 2023g). This helps the company to address its CSR goals (Rabello et al., 2018, 27-41). The company also engages in disaster relief programs around the world as a part of its International strategy to help small businesses and maintain a positive image in the industry to gain competitive advantage (McClerry, 2023). The Wolt Drive storefront has also made significant progress in digitizing its operations to capture the e-commerce growth using the Wolt app and support local businesses (Silberstein, 2023)

6.2 How the strategies helps the organization to fulfill its vision and goals

These activities could be seen to promote the vision of the organization to help the merchants and work towards community development and social welfare (why). The company also has established goals to increase representation of women in the workforce, increasing the resource availability of the merchants and helping communities (what) using the above initiatives (how), this is the golden circle model (Straker & Nusem, 2019)

The company ensures strategic alignment of the operations to achieve its vision and mission. This explains how the successful marketing and product strategies of DoorDash can be seen as a series of options and decisions based on the market context as suggested by Luehrman (1998, p89-99). They exhibit the success of the strategic approaches of the company which in turn helps to address the vision and mission of the organization (Hall, 2022). This has allowed Doordash to rapidly grow and increase its market share, contributing to its success (Ibisworld, 2023c).

7. Recommendations

Based on the above assessment, I can say that DoorDash's policies so far have been successful in improving organizational performance. However, the brand still remains at the third position in the market in terms of market share. To overcome this, the brand can use market diversification to further diversify into other products such as pharmaceutical products. I would al;so recommend the brand to strengthen its international expansion efforts to increase its global presence and international market share (Paley, 2021).

7.1 Rationale to support the strategy 

Diversifying the market would reduce dependency on a single segment and promote sustained growth. The approach will also support the vision of the company to cater to the needs of a wide range of customers such as pharmaceutical products (Paley, 2021).

Increasing global presence can not only help to increase international market share but also enter into new markets where there is a growing popularity of online food ordering and delivery. This will also allow the organization to empower more communities around the world (Osano, 2019). Furthermore, the diversification can also reduce reliance on the Australian market and risks of further increase in inflation or economic fluctuations in Australia.

7.2 Rationale to critique the strategy 

One key challenge related to market diversification can be the increased investments in infrastructure, marketing and logistics. This can increase the financial burden on the organization greatly. Furthermore, market diversification might lead to more fierce competition from local competitors and thereby adversely impact performance (Holzmayer & Schmidt, 2020).

A critique of international expansion would be cultural barriers between different countries. This can be a challenge if the organization is unable to adjust its operations with the culture of the host nation (Abdulmajid, 2019).

8. Conclusion

The aim of this report was to create a strategic roadmap for DoorDash based on an assessment of the organizational capabilities, factors in the external environment that impacts the organization and develop recommendations on how its can further improve performance. DoorDash is one of the leading companies in the industry, and has global operations. The vision of the company is to develop a robust network of last mile logistics which it uses in the online food order and delivery business sector. The company has been able to achieve considerable competitive advantage by improving its financial health, using global HRM using technology and focusing on employee and community welfare. Market competition is very high but the ability to respond to the competitors have also allowed DoorDash to maintain its position in the market and be a global leader in the online food ordering and delivery sector. These competencies therefore are the sources of competitive advantage for the brand.


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