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Krispy Kreme Doughnuts
CASE STUDY
Harun KAYA
BU-524 Strategic Management
Prof. Chris NAJERA
8/24/2011
Krispy Kreme Doughnut
1) Identify the firm’s existing vision, mission, objectives, and strategies.
Vision
To be the worldwide leader in sharing delicious tastes and creating joyful memories.
Mission
To touch and enhance lives through the joy that is Krispy Kreme.
Objectives and Strategies
Consumers are our lifeblood, the center of the doughnut
There is no substitute for quality in our service to consumers
Impeccable presentation is critical wherever Krispy Kreme is sold
We must produce a collaborative team effort that is unexcelled
We must cast the best possible image in all that we do
We must never settle for "second best;" we deliver on our commitments
We must coach our team to ever-better results
2) Develop vision and mission statements for the organization.
Vision
To be a trusted worldwide leader in providing tasty and healthy doughnuts .
Mission
Krispy Kreme Doughnut strives to provide the best doughnuts along with consideration of
safety regulations for our valued customers.
Objectives
The objectives of the organization should be to make people see the healthy side of doughnuts
and thus increase its sales and revenue through customer attraction.
Strategies
The strategy of the organization should be to work on increasing customer based brand equity
in order to enhance competitive advantage in the organization. For this a mixture of advertising
and other marketing tactics needs to be employed and the customers need to start realizing
that the doughnuts served by KKD are not as detrimental to their health as perceived.
External Opportunities:
Development into diversified product
markets
Detection of the problem occurring in
the management of the business and
thus the fall in business and
profitability
Develop the social outreach programs
to promote the doughnuts and to
promote the customer based
objectives and mission of the
organization.
Reaching the market to really know
what the customers want and then to
develop the marketing and strategic
policy in accordance to that.
Moving into healthier alternatives for
example sugar free doughnuts
Capitalization of the holiday seasons
and availability of KKD in recreational
places.
External Threats:
Tough competition and increasing
global recognition of Starbucks and
Dunkin Donuts.
Global presence of the competitors
Fall in the number of company stores
and rise in franchises and thus a fall in
the authority over strategies and
management of the organization as a
whole
More health conscious customer base
Development of organic markets
3) Identify the organization’s external opportunities and threats.
4) Construct a Competitive Profile Matrix (CPM)
KKD Dunkin Starbucks
CRITICAL
SUCCESS
FACTORSWeıght Ratıng Score Ratıng Score Ratıng Score
Customer
Loyalty
0.1 2 0.2 3 0.3 4 0.4
Large Market
Share
0.2 2 0.4 2 0.4 4 0.8
Advertising 0.2 2 0.4 2 0.4 4 0.8
Global
Markets
0.05 2 0.1 3 0.15 3 0.15
Market
Share
0.1 2 0.2 3 0.3 3 0.3
Management
Experience
0.1 2 0.2 3 0.3 4 0.4
Social
Recognition
0.2 2 0.4 3 0.6 4 0.8
Strong
Business
Partners
0.15 2 0.3 3 0.45 4 0.6
Total 1.1 2.2 3 4.25
5) Construct an External Factor Evaluation (EFE) Matrix.
Key External factors Weight Rating Weighted Score
Opportunities
Diversification of
Product
0.20 1 0.2
Detection of Problem
in management
0.1 3 0.3
Social Outreach
Programs
0.1 2 0.2
Market Research 0.15 2 0.3
Development of
healthier doughnuts
0.05 3 0.15
Capitalization of
holiday season and
recreational spots
0.05 2 0.1
Threats
Tough Competition 0.2 3 0.6
Global presence of
competitors
0.05 3 0.15
Health conscious
customers
0.05 4 0.2
Fall in number of
company stores
0.02 1 0.02
Rise in organic foods 0.03 2 0.06
Total 1 4.48
6) Indentify the organization’s internal strengths and weaknesses.
Strengths
- Globally recognized brand name
- Having over 70 years long history as an American icon
- Having quality and well educated workforce
- Increasing market share in the United States
- Recognized as being healthy and tasty doughnuts company in the United States
Weaknesses
- Krispy Kreme does not spend much for marketing its products and on media advertising
while its competitors do.
- The price of different ingredients and raw materials especially high quality coffee beans is
increasing.
- Krispy Kreme needs to introduce low calorie doughnuts and other food items
7) Construct an Internal Factor Evaluation (IFE) Matrix.
Key Internal factors Weight Rating Weighted Score
Strengths
Production Capacity 0.20 3 0.6
Human Resource
Power
0.1 2 0.2
Price Differentiation 0.1 2 0.2
Different Channels of
distribution
0.2 4 0.8
Diversification of
Product
0.1 1 0.1
Supply Chain
Management
0.05 3 0.15
Weaknesses
Reliance on single
product
0.05 1 0.05
Dropping sales 0.05 3 0.15
Apparently
unhealthy product
0.05 3 0.15
Fall in number of
company stores
0.05 1 0.05
Single location
production
0.05 2 0.1
Total 2.55
8) Prepare a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, Strategic Position
and Action Evaluation (SPACE) Matrix, Internal-External (IE) Matrix, Grand Strategy Matrix,
and Quantitative Strategic Planning Matrix (QSPM) as appropriate. Give advantages and
disadvantages of alternative strategies.
Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix
Strengths
Brand loyalty
Selling internationally
Special secret recipe for doughnuts
Placing in Middle East market where
sweet products consumption is high
Baking doughnuts freshly in factory
stores
Innovative development through the
franchise stores
Weaknesses
Losing in profit
Non-various product segment
Decreasing in reputation
Decreasing in hold of company stores
Weak advertising
Problems on reaching customers
Opportunities
Development in brand name
Market diversification
Getting into organic markets
Customer oriented marketing and sales
policy
Threats
Competition with Starbucks and
Dunkin Donuts
Risk of increasing sugar prices
Increasing in demand of organic foods
Falling profitability
Strategic Position and Action Evaluation (SPACE) Matrix
FP
+6
-6 6
CP IP
-6
SP
Financial Position Industry Position
ROI 2 1. Growth Potential 3
Liquidity 3 2. Profit Potential 5
Working Capital 2 3. Consumer Trust 4
Cash Flow 3
4. Investment
Reliability 3
Earnings Per Share 2 5. Productivity 4
12 2.2 19 4
Stability Position
Competitive
Position
1. Economic
Changes -2 Market Share -1
2. Government
Control -2 Product Quality -1
6. Competition -2 Product Life Cycle -2
4. Price Elasticity -5 Customer Loyalty -1
5. Entry Barriers -4 Capacity Utilization -1
-15 -2.8 -6 -1.2
y axis -0.6 x axis 2.8
Internal-External (IE) Matrix
IFE 2.55
EFE 2.28
IFE Total Weighted ScoresStrong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99EFE Total
Weighted
Score
High 3.0 to 4.0
Medium 2.0 to .99 xxxxx
Low 1.0 to 1.99
Implications from table: Generic Goal: Hold and Maintain
Implied Market Penetration
Strategies: Product Development
Rapid Market Growth
Quadrant II Quadrant I
K.K.
Doughnuts
Weak
Completive
Strong
Completive
Position Position
Quadrant III Quadrant IV
Slow Market Growth
Grand Strategy Matrix
Quantitative Strategic Planning Matrix (QSPM)
Product
Development
Market
Penetration
Market
Development
Key Factors Weight AS TAS AS TAS AS TAS
EXTERNAL
Strengths
Diversification of
Product
0.20 3 0.6 3 0.6 3 0.6
Detection of Problem
in management
0.1 3 0.3 3 0.3 3 0.3
Social Outreach 0.1 2 0.2 4 0.4 2 0.2
Programs
Market Research 0.15 4 0.6 4 0.6 4 0.6
Development of
healthier doughnuts
0.05 3 0.15 1 0.05 2 0.1
Capitalization of
holiday season and
recreational spots
0.05 2 0.1 3 0.15 3 0.15
Threats
Tough Competition 0.2 3 0.6 2 0.4 3 0.6
Global presence of
competitors
0.05 2 0.1 2 0.1 2 0.1
Health customers 0.05 3 0.15 4 0.2 3 0.1
INTERNAL
Strengths
Production Capacity 0.2 4 0.8 2 0.4 2 0.4
Human Resource
Power
0.1 2 0.2 3 0.3 2 0.2
Price Differentiation 0.1 3 0.3 2 0.3 3 0.3
Channels of
distribution
0.2 4 0.6 2 0.4 3 0.6
Diversification of
markets
0.1 2 0.2 3 0.3 4 0.4
Supply Chain
Management
0.05 3 0.15 2 0.1 2 0.1
Weaknesses
Reliance on single
product
0.05 3 0.15 1 0.05 2 0.1
Dropping sales 0.05 3 0.15 3 0.15 3 0.15
Unhealthy product 0.05 2 0.1 2 0.1 3 0.15
Fall in number of
company
0.05 2 0.1 2 0.1 2 0.1
5.95 5.2 5.1
9) Recommend specific strategies and long-term objectives. Show how much your
recommendations will cost. Clearly itemize these costs for each project year. Compare your
recommendations to the actual strategies planned by the company.
1.) Redirect Employees – Reduce Work Pool if necessary = 3 million $
2.) Implement A new Algorithm = 250 million $
3.) Refocus Advertising Network= 90 million $
10) Specify how your recommendations can be implemented and what results you can
expect. Prepare forecasted ratios and projected financial statements. Present a timetable or
agenda for action.
Strategy Implementation
KK Doughnuts should establish a financial and operational audit committee within the
corporation, both company-owned and franchised to determine causes of negative ratio of
revenues to expenses.
The strategic implementation will follow this rank:
1. Redirect Employees 2012 Q1
2. Implement the new doughnuts 2012 Q3
3. Refocus the Advertising Network 2013 Q1
11) Recommend specific annual objectives and policies.
KK Doughnuts has a major competitor which is Dunkin Donuts, they should try to impose the
market as being number one doughnut store by beating Dunking Donuts. It is possible if KK
Doughnuts implement new marketing strategies against to its competitors. The company
should get rid of inefficient job titles, and the administrators of the company should pay
attention for every recommendations and ideas within the organization.
12) Recommend procedures for strategy review and evaluation
First of all, a ‘new offer’ should be occurred for strategy review and evaluation. This ‘offer’
should be carried by a ‘senior manager’. Strategic management planning team needs to carry
out the information-collecting tasks. A successful strategic plan is executed when employees,
advisors, and freelancers contribute to every phase of the planning procedure. ‘Department
manager’ should also focus on the plan and try to develop strategies with his/her team, and
than, respectively; the plan should be audited by Executive Vice President and CEO.