Krispy Kreme Doughnuts - Strategic Case Analysis

 Name: Neelam Lokwani Madonna I’d: 236488 Course: Business Policy Dae: !"#!4#2"!$ %irs Case &nalysis Case !2: 'ris(y 'reme Dou)*nus Inroducion 'ris(y 'reme Dou)*nus is a )lo+al c*ain o, dou)*nus- co,,ee- sundaes and s*akes *a was ,ounded +y .ernon .ernon /udol(* in 0inon1alem0inon1alem-  in *e year !35 .ernon /udol(* *ad +ou)* a yeas1raised dou)*nu reci(e *rou)* Is*mael &rmsron)- *is uncle +y a New 7rleans %renc* C*e, Is*mael knew and .ernon ernon +e)an sellin) dou)*nus o )rocery sores *e ,irs (roduc sold  +y .er .ernon non was *e *o 7ri)inal 9laed Dou)*nus o cusomers on *e sidewalk *e ,irs 'ris(y 'reme lo)o was desi)ned +y Benny Dinkins- a local arc*iec *e ,irs 'ris(y 'reme +akery ouside *e ou* o(ened in &kron- 7*io in 7*io in !3 ;*(s:##enwiki(ediaor)#wiki#'ris(ye a swee oo* ,or 0esern +rands 2 C*ildren like swee reas 3 ar+ucks is more concenraed on co,,ee *an

0ei)* ""6 "" ""$

/ain) 3 4 3

0ei)*ed core "24 "36 "!$

 +akery iems 4 Dunkin’ Donus don’ sell *o )laed

""4

4

"4"

dou)*nus $ McDonald’s is more concenraed on co,,ee

""8

3

"24

and s*akes *an dou)*nus

6 im Goron’s are ye o e?(and )lo+ally

"!!

3

"33

'ey ?ernal %acors  *reas 5 Dou)*nu marke dominaed +y Dunkin’

0ei)* "!4

/ain) 4

0ei)*ed core "$6

Donus 8 Geal* conscious cusomers  'ris(y 'reme *as less sores com(ared o

"!" "!"

3 2

"3" "2"

ar+ucks and Dunkin’ Donus !" uro(ean culure (re,er local +rands !! uro(ean ,ollow cerain ei@uees !2 Due o lack o, reurns and di>idends-

"" ""6 ""8

2 2 !

"!8 "!2 ""8

s*are*olders *ad o sell ''D socks oal

!

Inernal ren)*s o, 'ris(y 'reme Dou)*nus:

• • • • • • •

i)naure ori)inal *o )laed dou)*nus Brand reco)niion Produces @ualiy (roducs ?isin) worldwide wi* 3$ sores locaions old a me)a1c*ains like 0almar and ar)e and also a )as saions ells 2" >arieies o, dou)*nus- o*er +akery iems and co,,ee &,,orda+le (rice

Inernal 0eaknesses o, 'ris(y 'reme Dou)*nus:

• • • • • • • •

Lack o, reurns and di>idends o s*are*olders due o reducion in sock (rice Dou)*nus are considered *i)*1calorie and un*eal*y  No muc* ,ocus on ad>erisin) cam(ai)ns ron) com(eiors are Dunkin’ Donus and ar+ucks Limied (roduc line Poor com(any mana)emen *e com(any *as ,aced down,all in re>enues and loss in *e (as 3 years Con,lics wi* ,ranc*isees

3!6

Inernal %acor >aluaion ;I%= Mari?: 'ey Inernal %acors  ren)*s ! &,,orda+le (rice and sandard @ualiy

0ei)* ""

/ain) 4

0ei)*ed core "36

2 Cusomers are o, all a)es and incomes 3 &racin) cusomers wi* *e EGo

""8 ""5

4 3

"24 "2!

Dou)*nus NowF si)n +oard 4 9lo+ally e?(andin)J recenly in !6 ,orei)n

"!"

3

"3"

counries $ Produc con>enienly a>aila+le a me)a1

""

2

"!8

c*ains and )as saions 6 .erically ine)raed (roducs

""8

2

"!6

0ei)* "!" ""5

/ain) 2 2

0ei)*ed core "2" "!4

 Lack o, ad>erisin)

""5

!

""5

!" Closure o, ,ranc*isees due o con,lics !! Dou)*nus are considered *i)*1calorie and

""6 ""8

! !

""6 ""8

un*eal*y !2 Down,all in re>enues and loss in *e (as 3

""6

2

"!2

years !3 Poor com(any mana)emen oal

""$ !

2

"!" 222

'ey Inernal %acors  0eaknesses 5 Lack o, reurns o s*are*olders 8 Lack o, di>idends o s*are*olders

ren)*s10eaknesses17((oruniies1*reas ;07= Mari?:

! 2 3 4 $ 6 5

ren)*s Brand reco)niion Produces @ualiy (roducs ells 2" >arieies o, dou)*nus- o*er  +akery iems and co,,ee old a me)a1c*ains like 0almar and ar)e and also a )as saions ?isin) worldwide wi* 3$ sores locaions &,,orda+le (rice i)naure ori)inal *o )laed dou)*nus

! 2 3

4 $ 6 5 8

7((oruniies ! Inno>ain) is  (roducion line in *e cae)ory o, *o dou)*nus 2 Increasin) sores a air(ors and (erol  (um(s in ,orei)n counries 3 Di>ersi,yin) is  (roduc line in >arious cae)ories- ie- ice1 creams- ice1cream cakes and +reak,as meals 4 ?(and domesically $ Increase in co,,ee consum(ion 6 Im(ro>emen in auomaed o(eraions 5 In>ol>emen in social media markein)

0eaknesses Dou)*nus are considered *i)*1calorie and un*eal*y *e com(any *as ,aced down,all in re>enues and loss in *e (as 3 years Lack o, reurns and di>idends o s*are*olders due o reducion in sock  (rice No muc* ,ocus on ad>erisin) cam(ai)ns ron) com(eiors are Dunkin’ Donus and ar+ucks Con,lics wi* ,ranc*isees Limied (roduc line Poor com(any mana)emen

7 rae)ies 07 rae)ies ! Do markein) on social ! Producin) and media a+ou *eir 2"

inno>ain) *eal*y

di,,eren >arieies o,

dou)*nus made o,

dou)*nus ;3- 75= 2 ?(and ,ur*er domesically a(ar ,rom *e 3$ sores world wide ;$- 74= 3 Inno>ae is dou)*nu and co,,ee ran)e +y coninuin) o o,,er on a,,orda+le (rices ;67!= 4 9e more cusomers

,ruis- nus- (roeins and ,rui smoo*ies ;0!- 7!= 2 9ain (ro,is +y e?(andin) domesically and )lo+ally ;02- 74= 3 Increasin) (roduc line  +y di>ersi,yin) ;0573= 4 /esol>e dis(ues wi*

,or co,,ee consum(ion

,ranc*isees +y

 +y o,,erin) a

im(ro>in) is

con>enience sores and

o(eraions ;06- 76= $ Do a))ressi>e

me)a1c*ains ;4- 7$= $ Due o reco)niion in *e marke- *ey can di>ersi,y *eir (roduc

ad>erisin) in order o com(ee wi* Dunkin’ Donus and ar+ucks ;0$- 75=

line ;!- 73=

! 2

3

4

*reas Geal* conscious cusomers Many com(eiors ,or e?am(le- Dunkin Donus- McDonald’s and im Goron’s C*an)in) ases and  (re,erences o, cusomers- more  (re,erence owards or)anic markes due o lon) erm *eal* issues like o+esiy and dia+ees Local dou)*nu +rand com(eiors

 rae)ies ! Com(arin) wi*

0 rae)ies ! Inroduce *eal*ier and

com(eiors wi* *e

low1calorie (roduc

si)naure *o )laed

line in order o kee( u(

dou)*nus and *eir

wi* c*an)in)

cold dou)*nus ;5-

 (re,erences o,

2= 2 Pro>idin) +eer @ualiy (roducs com(ared o local  +rands in *e counry ;2- 4=

cusomers ;0!- 3=

rae)ic Posiion and &cion >aluaion ;P&C= Mari?: %inancial Posiion ;%P= /eurn on in>esmen Pro,i

/ain) 2 !

 Ne Income

3

Le>era)e Cas* ,low &>era)e

3 2 22

Com(eii>e Posiion ;CP= Marke s*are

/ain) 16

Produc @ualiy ec*nolo)ical know1*ow Consumer loyaly &>era)e

1! 13 14 13$

a+iliy Posiion ;P= Produc @ualiy Demand >aria+iliy Com(eii>e (ressure /isk in>ol>ed in +usiness Barriers o enry ino marke &>era)e A1a?is Indusry Posiion ;IP= 9row* (oenial Pro,i (oenial %inancial sa+iliy ase o, enry ino marke &>era)e K1a?is

Direcional .ecor Coordinaes: y1a?is 1!- ?1a?is 1!$

/ain) 1! 12 13 1$ 1$ 132 1! /ain) 3 ! 2 2 2 1!$

5 6 $ 4 3 2 ! " -1.20

1! 12 13 14 1$ 16 15

'ris(y 'reme Dou)*nus s*ould ,ollow a De,ensi>e srae)y as a resul o, *e P&C Mari? *e srae)ies *ey s*ould ,ollow are:

• • •

•

o inroduce *eal*ier and low1calorie o(ions o *eir menu Inno>ae and di>ersi,y (roduc line 9ain +ack *e con,idence o, s*are*olders +y s*owcasin) *e com(any’s rue (oenial and sren)* o )row in suc* a com(eii>e marke ar usin) u(daed ec*nolo)y ,or (roducion Boson Consulin) 9rou( ;BC9= Mari?:

BCG Matrix - KKD 15% 10% 5%

0.16

0.15

0.14

0.13

0.12

0.11

0% 0.1 -5% -10% -15% -20%

rae)ies and lon)1erm o+eci>es: ! ''D s*ould indul)e in markein) and ad>erisin) cam(ai)ns in order o arac cusomers owards *eir si)naure (roduc line o, *o )laed dou)*nus w*ic* *ey are well known ,or 2 *e com(any s*ould ,ocus on e?(ansion in *e  +ecause o, reco)niion and resol>e dis(ues amon) ,ranc*isees and *ey can +e)in *eir ,ranc*isin) a)ain 3 ocial media is a sron) way o ac*ie>e cusomers mainly *e eens and youn) crowd *e +rand s*ould (ro>ide discouns and (romoions *rou)* *e inerne 4 &s ''D is a well reco)nied +rand worldwide- *e com(any can in>ol>e in relaed  (roduc di>ersi,icaion +y inroducin) ice1creams- cakes- *eal*y o(ions like ,rui smoo*ies- ec $ %ur*er *e com(any can also o( marke de>elo(men and (roduc de>elo(men srae)ies in order o ac*ie>e marke )row* and inno>ae a >ariey o, (roducs o o,,er o is cusomers

0.09

6 0*en ,ranc*isin)- *e com(any can e>aluae i’s o +e ,ranc*isees +y knowin) w*e*er *ey *a>e +een an e?(erience under ,ood esa+lis*mens or ,ranc*ised ,ood c*ains 5 Increase *e com(any’s sren)*s in order o (resen *e com(any’s (oenial o +e a  (ar o, *e sock marke and )ain +ack *e con,idence o, is s*are*olders 8 o use *e >erical ine)raion arran)emen o, su((ly c*ains in order o *el( caer o *e needs o, *e *eal* conscious (eo(le as well leadin) o an increase in (ro,is and sales  o de>elo( culure oriened (roducs in order o arac cusomers o, all a)es and incomes- ,or e?am(le- McDonald’s  *e +rand *as cusomied is (roducs de(endin) on *e culure ,rom counry o counry !" e>eral o*er recommendaions would +e re1desi)ned o, (acka)in) maerialsinno>aion in e?isin) (roducs- includin) dou)*nus ,or *e ,esi>e or a (aricular *eme +ased

rae)ies (lanned +y 'ris(y 'reme: &ll sores are re@uired o *a>e a s(eci,ic (oin o, sale ;P7= sysem In addiion o (ro>idin) *e a+iliy o mana)e on1(remises sales- *e P7 sysem (ro>ides *ead@uarers and (ermis sores o communicae wi* eac* o*er 'ris(y 'reme also *as an ener(rise resource (lannin) ;/P= sysem *a su((ors +o* *e ,inancial and o(erain) needs o, *e or)aniaion m+edded wi*in *e /P sysem is a daa ware*ouse *a also su((ors *e Com(any ores and '' u((ly C*ain o ensure *i)* @ualiy- *e ,ollowin) *as +een insiued:

!

o ensure ,res*ness- ruckloads o, *e main in)rediens are recei>ed on a re)ular +asis

2

ac* incomin) s*i(men o, in)rediens is esed

3

ac* +ac* o, mi? is esed

4

'ris(y 'reme also (roduces *e (rimary dou)*nu1makin) e@ui(men %ranc*isees are re@uired o use suc* e@ui(men ;%red Da>id- rae)ic Mana)emen Conce(s and Cases- !3* diion=

Im(lemenaion o, recommended srae)ies:

! ores can +e ra(idly e?(anded +y o(enin) *em in con>enien areas w*ere mos o, *e crowd is ,ound ie- malls- air(ors- (erol (um(s- ec 2 C*oosin) a well e?(erienced candidae ,or ,ranc*isin) 3 Because o, *e +rand reco)niion- ''D can iniiae ad>erisin) cam(ai)ns on *e social media- .- radio and news(a(ers 4 Producin) *eme +ased or ,esi>e season dou)*nus and c*an)in) *e (acka)in) a,er e>ery ,ew mon*s $ ellin) *eir dou)*nus a *e me)a1c*ains worldwide would +e a )ood o((oruniy o e?(and- ,or e?am(le- 0almar- Carre,our- 0airose- ec

%7/C&D B&L&NC G %7/ G A&/ 2"!6- 2"!5 %e+ruary !-

%e+ruary 2-

2"!5

2"!6 ;In *ousands=

& C//N &:

Cas* and cas* e@ui>alens



6$-""



$3-""

/ecei>a+les

2-4

26-4$"

/ecei>a+les ,rom e@uiy me*od ,ranc*isees

8

84"

In>enories

2"-264

!8-$$"

De,erred income a?es

24-$4$

24-$""

7*er curren asses

5-2!"

6-33"