Krispy Kreme Doughnuts

CASE STUDY

Harun KAYA

BU-524 Strategic Management

Prof. Chris NAJERA

8/24/2011
 Krispy Kreme Doughnut

1) Identify the firms 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: External Threats:

Development into diversified Tough competition and

product markets increasing global recognition of

Detection of the problem Starbucks and Dunkin Donuts.

occurring in the management of Global presence of the

the business and thus the fall in competitors

business and profitability Fall in the number of company

Develop the social outreach stores and rise in franchises and

programs to promote the thus a fall in the authority over

doughnuts and to promote the strategies and management of

customer based objectives and the organization as a whole

mission of the organization. More health conscious customer

Reaching the market to really base

know what the customers want Development of organic

and then to develop the markets

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.
3) Identify the organizations external opportunities and threats.

4) Construct a Competitive Profile Matrix (CPM)

KKD Dunkin Starbucks

CRITICAL
SUCCESS
Weght Ratng Score Ratng Score Ratng Score
FACTORS

Customer 0.1 2 0.2 3 0.3 4 0.4

Loyalty

Large 0.2 2 0.4 2 0.4 4 0.8

Market
Share

Advertisi 0.2 2 0.4 2 0.4 4 0.8

ng

Global 0.05 2 0.1 3 0.15 3 0.15

Markets

Market 0.1 2 0.2 3 0.3 3 0.3

Share

Managem 0.1 2 0.2 3 0.3 4 0.4

ent
Experienc
e

Social 0.2 2 0.4 3 0.6 4 0.8

Recogniti
on

Strong 0.15 2 0.3 3 0.45 4 0.6

Business
Partners

Total 1.1 2.2 3 4.25

5) Construct an External Factor Evaluation (EFE) Matrix.

Key External Weight Rating Weighted Score

factors
Opportunities

Diversification of 0.20 1 0.2

Product

Detection of 0.1 3 0.3

Problem in
management
Social Outreach 0.1 2 0.2
Programs

Market Research 0.15 2 0.3

Development of 0.05 3 0.15

healthier
doughnuts
Capitalization of 0.05 2 0.1
holiday season
and recreational
spots
Threats
Tough 0.2 3 0.6
Competition
Global presence 0.05 3 0.15
of competitors

Health conscious 0.05 4 0.2

customers

Fall in number of 0.02 1 0.02

company stores

Rise in organic 0.03 2 0.06

foods
Total 1 4.48

6) Indentify the organizations 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 Weight Rating Weighted Score

factors
Strengths

Production 0.20 3 0.6

Capacity

Human Resource 0.1 2 0.2

Power

Price 0.1 2 0.2

Differentiation

Different 0.2 4 0.8

Channels of
distribution
Diversification of 0.1 1 0.1
Product
Supply Chain 0.05 3 0.15
Management

Weaknesses

Reliance on 0.05 1 0.05

single product
Dropping sales 0.05 3 0.15

Apparently 0.05 3 0.15

unhealthy
product
Fall in number of 0.05 1 0.05
company stores

Single location 0.05 2 0.1

production
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 Weaknesses

Brand loyalty Losing in profit

Selling internationally Non-various product segment

Special secret recipe for Decreasing in reputation

doughnuts Decreasing in hold of company

Placing in Middle East market stores

where sweet products Weak advertising

consumption is high Problems on reaching

Baking doughnuts freshly in customers

factory stores

Innovative development

through the franchise stores

Opportunities Threats
Development in brand name Competition with Starbucks and
Market diversification Dunkin Donuts
Getting into organic markets Risk of increasing sugar prices
Customer oriented marketing Increasing in demand of organic
and sales policy foods
Falling profitability
Strategic Position and Action Evaluation (SPACE) Matrix
FP

+6

-6 6
CP IP

-6
SP

Financial Industry
Position Position
1. Growth
ROI 2 Potential 3
2. Profit
Liquidity 3 Potential 5
3. Consumer
Working Capital 2 Trust 4
4. Investment
Cash Flow 3 Reliability 3
 Earnings Per
Share 2 5. Productivity 4

12 2.2 19 4

Stability Competitive
Position Position
1. Economic
Changes -2 Market Share -1
2. Government
Control -2 Product Quality -1
Product Life
6. Competition -2 Cycle -2
Customer
4. Price Elasticity -5 Loyalty -1
Capacity
5. Entry Barriers -4 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

Scores
Strong Average Weak
2.0 to
3.0 to 4.0 2.99 1.0 to 1.99
EFE 3.0 to
Total High 4.0
Mediu 2.0 to .
Weight m 99 xxxx
ed
x
 1.0 to
Low 1.99
Score
Implications from
table: Generic Goal: Hold and Maintain

Implied Market Penetration

Strategies: Product Development

Rapid Market
Growth

Quadrant II Quadrant I

K.K.
Doughn
uts
Weak Strong
Completive Completive
Positi
Position on

Quadrant
III Quadrant IV

Slow Market
Growth
Grand Strategy Matrix

Quantitative Strategic Planning Matrix (QSPM)

Product Market Market
Development Penetration Developme
nt

Key Factors Weig AS TAS AS TAS AS TAS

ht

EXTERNAL

Strengths

Diversification of 0.20 3 0.6 3 0.6 3 0.6

Product

Detection of 0.1 3 0.3 3 0.3 3 0.3

Problem in
management

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 0.05 3 0.15 1 0.05 2 0.1

healthier
doughnuts

Capitalization of 0.05 2 0.1 3 0.15 3 0.15

holiday season and
recreational spots
 Threats

Tough Competition 0.2 3 0.6 2 0.4 3 0.6

Global presence of 0.05 2 0.1 2 0.1 2 0.1

competitors

Health customers 0.05 3 0.15 4 0.2 3 0.1

INTERNAL

Strengths

Production 0.2 4 0.8 2 0.4 2 0.4

Capacity

Human Resource 0.1 2 0.2 3 0.3 2 0.2

Power

Price 0.1 3 0.3 2 0.3 3 0.3

Differentiation

Channels of 0.2 4 0.6 2 0.4 3 0.6

distribution

Diversification of 0.1 2 0.2 3 0.3 4 0.4

markets

Supply Chain 0.05 3 0.15 2 0.1 2 0.1

Management

Weaknesses

Reliance on single 0.05 3 0.15 1 0.05 2 0.1

product
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 0.05 2 0.1 2 0.1 2 0.1

company

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.