REGLAMENTO DE SEGURIDAD E HIGIENE EN EL TRABAJO

The possible presence of a process of Transfer Demand appears to be the most noticeable issue influencing firm survival of independent firms in the Hobart Pizza industry. Next, the extent of the investigation was widened to determine the degree to which the above noted observations relate specifically to the Hobart area, or in fact relate to pizza as an industry in general. Three additional areas have been examined, they being the North East (Launceston) and North West (Devonport, Burnie, Ulverstone, etc) of Tasmania and the Geelong region in Victoria. All three additional areas share some fundamental similarities with the Hobart area (see Appendix 2).

The plot size of all four areas is approximately 100km by 100km. All four areas experienced the introduction of pizza in the early 1970s, and they are all serviced by regional television networks. However, as illustrated in Appendix 2, all four areas have major differences in topography, and in the size and distribution of their populations. Whereas the Hobart area has three cities around which a population in excess of 200,000 is distributed, each of these areas can be observed to be quite different. In the North East of Tasmania (i.e. Launceston) the population is centred around a much smaller single city. The major population areas are essentially landlocked. In the North West of Tasmania (i.e. Devonport, Burnie, Ulverstone, etc) the landscape is even more fragmented, with the population spread across many very small towns, with the cities typically a third of the size of the Hobart and Launceston cities. The major population areas are all coastal. In comparison, the Geelong area has a larger population with one major city around three times larger than the Hobart and Launceston cities. The Geelong area is also dominated by coastal towns that experience seasonal population variations during the summer months.

Figure 2.4 – Tasmanian and Geelong Population Densities

(a) (b)

Hobart Independent Pizza

0 10 20 30 40 50 60 1 4 7 10 13 16 19 22 25 28 31 34 37 Entries Exits Overall Pop

North West Independent Pizza

0 2 4 6 8 10 12 14 16 18 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Entries Exits Overall Pop (c) (d)

North East Independent Pizza

0 5 10 15 20 25 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 Entries Exits Overall Pop

Geelong Independent Pizza

0 10 20 30 40 50 60 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 Entries Exits Overall Pop

As illustrated in Figure 2.4 above, there is a common pattern across all four pizza markets. The advent of the first franchised firm into the market has been followed by an increase in population size until the entry of the second franchised operator. The two larger markets (i.e. Hobart and Geelong) clearly demonstrate a consistent rise in population size post entry of the first franchise entrant. Both the North-East and North- West markets were initially developed as a result of the Hobart market creating awareness and to a lesser degree, a need for pizza in those areas. Across all four markets, independent operators consistently claim that the dynamics of the Hobart market are central to their market’s development. Early Italian pioneers aided by the entry of Pizza Hut’s powerful advertising. A dividing of the marketplace into quality producers and lower cost producers. A shake-out immediately following the entry of the second

F1 F2

F1 F2

F1 F2 F1 F2

franchise entrant as local delivery areas were encroached upon by a significantly more aggressive second franchisor. Independent operators in all four markets acknowledge a regular increase in the demand for their pizza immediately following the airing of the franchise operator’s television commercials. Those positioned at the quality end of the product spectrum have typically reduced the nature of their Yellow Pages advertising as they allow others to create daily demand for the pizza, relying instead on preserving and reinforcing their reputation for quality. Alternatively, those independent operators that choose to be positioned as low margin/high turnover operators, have increased their Yellow Pages advertising in an attempt to compete for market share against the franchised operators.

There would seem no doubt that franchised entrants have increased the legitimacy of the pizza in general. However, it would seem that across all four markets the survival of independent operators is only adversely impacted by the presence of a second franchised entrant when they compete for the same customer type in the same niche. All four markets are observed to be a myriad of fragmented niches that eventually, depending upon the local topography, provide both a safe haven and a highly contested resource space. In Launceston, the city’s size is so small that many of the franchised operators are located in suburban areas as well as metropolitan areas. As a consequence, there is less non-contested space for the independents to occupy. The primary means of avoiding direct competition is to occupy a different resource niche. It is observed that independent restaurant style operators and/or those with a reputation for quality survive regardless of a suburban or metropolitan location due to their indirect competition with the franchised

players. In fact, it was claimed that competition between such operators and other types of restaurants/take away food providers (e.g. Chinese) represents a more serious threat than that provided by the franchise operators; such is the difference in customer type pursued.

In contrast, the topography of the North West Coast ensures a highly fragmented environment in which the pizza population is spread across many smaller unconnected locations. The same co-existence between quality producer and franchised firm is observed, but there is less opportunity for multiple independents in these smaller locations. For example, in Ulverstone, a small town with a stable population of 9,600, the local pizza operator happily co-exists with the Dominos outlet. Initially, for two weeks after Dominos commenced operations, turnover at the Red Grasshopper Pizzeria fell dramatically before returning to previous levels and subsequently increasing from previous normal levels due to an overall increased demand for pizza in the town. It would seem that other food producers (e.g. general takeaway food providers) lost out to Dominos, whereas the Red Grasshopper actually benefited without having to use additional resources to counter advertise.

Other independent pizza operators on the North West Coast in smaller towns appear to have benefited from being located in isolated towns that maintain a population lower than the minimum threshold required by the franchised operators. Under such conditions, it does not appear to matter greatly how the independent firm is positioned. It would seem that once local demand is created for pizza by television advertising it produces

consistent benefits for any type of pizza producer not in the same physical/resource space. A possible exception to this proposition may occur in towns experiencing seasonal population expansion and contraction due to tourist activities. Under these circumstances the survival of independent pizza operations appear to caught up the local dynamics of economies that struggle for a resource that is scarcer for up to half of the year.

There would appear to be evidence that the coastal towns in Geelong may represent locations that despite their isolation, experience a different economy. It is possible that the degree to which the population fluctuates determines the potential likelihood that 1) extreme competition may occur between independent firms who struggle survive in the winter months, and 2) pizza looses its attraction as the dynamics of the population change when the underlying preferences of the local community surface as the transient population shrinks. The degree to which other preferences may be important is difficult to ascertain given that this preliminary investigation has not considered the survival prospects of other food sub-populations (e.g. Chinese or Indian).