Course Code: MGN-502 Course Title: Management Practices and Organizational Behaviour

Course Instructor: Ms. Ritu Diya Kanda (17980)

Academic Task No.: 1 Academic Task Title: Case study about Dunking Donuts

Date of Allotment: 21st August 2013 Date of submission: 31st August 2013

Students Roll no: A12 Students Reg. no: 10805150

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I declare that this Assignment is my individual work. I have not copied it from any other students work
or from any other source except where due acknowledgement is made explicitly in the text, nor has any
part been written for me by any other person.

Students Signature: Arun Kumar ,Sahil Bansal, Alok, Manik, Navdeep Singh

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Dunkin' Donuts is an American global doughnut company and coffeehouse
chain based in Canton, Massachusetts. It was founded in 1950 by William
Rosenberg in Quincy, Massachusetts.

Executive Summary:-
Dunkin' Donuts is a business in food retail. They are the world's largest
coffee and baked goods chain. Dunkin Donuts have been in
business since 1950 and have been franchising since 1955. This
franchise serves more than 2 million customers a day. Dunkin'
Donuts sells 52 varieties of donuts and more than a dozen coffee
beverages as well as bagels, breakfast sandwiches and other baked
goods.

It is important to look at consumer usage and future trends before entering

into the market. Dunkin Donuts is part of the snack shop market. The snack
shop market had almost 10 billion is sales worldwide in 2003 alone. Snack
shops have an advantage because they are popular among all consumer
groups. Dunkin Donuts has retained a consistent database of customers,
while also gaining additional consumers through the progression of time and
emergence of newer markets.
History:-

Dunkin Donuts was begun in 1050 by William Rosenberg with a single shop
in Quincy, Massachusetts. In 1946, he founded Industrial Luncheon Services,
a company that delivered meals and snacks to workers in the Boston area.

The success of Industrial Lucheon Services convinced

Rosenberg to start the Open Kettle, a doughnut shop in Quincy,
Massachusetts. Two years later Open Kettle changed its name to Dunkin
Donuts. He began franchising additional outlets in 1955, and by 1979 there
were a thousand Dunkin; Donuts outlets in the Northeast. Through a series of
transactions in the 1980s and 1990s, Dunkin Donuts became the quick
service restaurant operation of the British firm, Allied Domecq PLC. In 2002,
as Allied Domecq looked for growth opportunities, its Dunkin; Donuts (DD)
business was described as a sleeping giant as much for its fiercely loyal
clientele as its $2.8 billion in sales and more than 3,800 U.S outlets.

Mission Statement:-
Dunkin Donuts will strive to be the
dominant retailer of high quality donuts, bakery products and beverages in
each metropolitan market in which we choose to compete.
 Products

Dunkin Donut serves the following items :

1) Donuts
2) Fritters
3) Crullers
4) Biscuits
5) Munchkins
6) Bagels
7) Muffins
8) Danish pastry
9) Cookies
10) Brownies
11) Bagel Twists
12) Breakfast sandwiches
 13) Hash browns
14) Oven toasted items
15) Coffee beverages

16) Bulk Coffee

17) Espresso, Cappuccino, and Lattes
18) Iced Coffee
19) Iced Lattes
20) Latte Lite Espresso
21) Turbo

Culinary Excellence:-
DunkinDonuts is committed to providing guests with the best-tasting, high-
quality food and beverages. To meet that commitment, we assembled a
culinary dream team of acclaimed chefs to create new and innovative menu
choices to meet the evolving needs of Dunkin Donuts busy, on-the-go
customers, raising expectations about what is possible in a quick service
meal. As people find themselves busier than ever, and are snacking more
frequently throughout the day, DunkinDonuts culinary team is meeting
guests changing eating habits and expectations for fast, satisfying menu
items that can be enjoyed any time of day. In addition to the brands famous
coffees, lattes, donuts, bagels and muffins, Dunkin Donuts has delicious
breakfast sandwiches -- available all day -- with several choices featuring
breakfast favorites such as smoked cherry wood bacon, egg whites, freshly
baked croissants and toasted English muffins. DunkinDonuts has also
introduced new oven-toasted bakery sandwiches, in several varieties
including Texas Toast Grilled Cheese, Chicken Salad and Tuna Salad.
DunkinDonuts also continues to offer a full lineup of innovative snacks and
beverages, including Bagel Twists, Coolatta slush drinks, hash browns,
cookies and more. DunkinDonutsculinary team also directed the
introduction of the brands DDSMART line of better-for-you menu items.
DDSMART includes many delicious food and beverages with fewer than 300
calories, such as Egg White Flatbread Sandwiches and Wake-up Wraps,
coffee and espresso beverages, teas and a Coolatta with skim milk.
DunkinDonutsteam of skilled culinarians is led by Executive Chef and Vice
President of Product Innovation Stan Frankenthaler. Frankenthaler is a three-
time James Beard Award nominee and author of The New York Times best-
seller, The Occidental Tourist. Before joining DunkinBrands, he was owner
and chef of Salamander restaurant in Boston, named by Zagats as one of
the citys "Top Ten Restaurants." Dunkin Donuts culinary team also includes
Executive Pastry Chef Christopher Boos, who represented the United States
in the Coupe du Monde de la Patisserie (the World Pastry Cup), and Sous
Chef Phillip Kafka, former commis chef at Harrods in London.
DunkinDonutsteam also features two of the worlds foremost experts on
coffee, Jim Cleaves and Ellen Rogers. Jim is a licensed Q Grader, having
passed the worlds most rigorous coffee evaluations skills testing program,
while Ellen is an International Coffee Expert in coffee tasting and analysis
and a Coffee Quality Institute Board Trustee. Together, they are responsible
for developing and introducing new coffee beverages and blends.

Dunkin Donut (DD) SMART:-

Eating smart when on the go can be hard. But the DDSMART menu from
DunkinDonuts makes it easy. The selection of better-for-you foods and
beverages ensures our restaurants offer great-tasting choices that fit your
lifestyle and meet your dietary wants and needs. Food and beverages with
the DDSMART Logo are reduced in calories, fat, saturated fat, sugar or
sodium by at least 25% compared to a base product or other appropriate
reference product, and/or contains ingredients that are nutritionally
beneficial.

THE MARKET:-
In the competitive world of the coffee industry
and any industry for that matter its crucial for companies to have a clear
understanding of what they do best, and where they can be the best.
Dunkin Donuts has defined its strategic heartbeat as the everyday, easy
coffee stop that inspires rituals that revive. In other words, Dunkin Donuts
provides food and drink thats fast, fresh, and affordable for busy people,
leading busy lives. These days there is an incredible interest across the
country in premium coffee. The average consumer is now demanding what
Dunkin Donuts has been providing for nearly 60 years. Dunkin Donuts
standards for coffee excellence are among the highest in the United States,
which is no easy feat. Producing coffee takes more steps than producing
wine, and Dunkin Donuts coffee experts travel around the globe to ensure
quality at each step. Dunkin Donuts identified a new restaurant category
called Quick Quality. This represents a promise of fresh food fast and a
higher evolution of the standard quick service experience. Dunkin Donuts
wanted to make a more meaningful promise to deliver on the value
proposition consumers expect, and then some: a promise to offer fresh food,
fast, and to offer more choices, served quickly, in a quality way. That means
lots of innovative new products served fresher and faster than ever
before.
BRAND VALUES:-
Dunkin Donuts customers are
passionate about their Dunkin Donuts experience, which for millions of
customers is an everyday ritual. The company conducted a study where
customers were asked to go without Dunkin Donuts coffee for one week.
The results showed that people felt life was harder, that their day lacked
order without Dunkin Donuts coffee, and that competitors couldnt fill the
social and emotional need they get from a daily visit to a Dunkin Donuts
store. People who work for Dunkin Donuts have a passion for what they do.
And thats because Dunkin Donuts located the passion of the company
the strategic heartbeat which is the thing that the company does best. For
example, Dunkin Donuts defined the strategic heartbeat of the company as
the everyday, easy coffee stop that, by serving the best-tasting coffee,
inspires rituals that revive.

Q.1. what does a Porter's Five Forces analysis reveal about the
industry in which Dunkin' Donuts and Starbuck's compete and what
are its strategic implications for Dunkin' Donuts?

Answer: I think in this case, it reflects the level of rivalry among

organizations in an industry, the potential for entry into an industry and the
threat of substitute products. First, the Starbuck and Donuts they are all
belongs to coffee market and they competing each other. And about the
second factor, the Dunkin Donuts enter the coffee market is later than
Starbuck, but more and more competitors enter this industry make the
industry profits lower.

Although there have a huge coffee market in the world each year, but there
absolutely have some other new substitute products enter it. Such as
Nescafe and McDonald's coffee. But in many consumers' heart, they just
wish to buy only two types of coffee, regular and decaf. But only Dunkin'
Donuts does. This represent its quality is high. This means the Dunkin'
Donuts use niche strategy to earn a big potential market share.

Porter's Five Forces investigates the attractiveness of an industry by focusing

on the threat level of various factors influencing the industry. These forces
include: bargaining power of buyers, bargaining power of suppliers, threat of
new entrants, threat from substitutes and rivalry among existing
players.
 1. Bargaining Power of Buyers

Referring to the chart above, there is a relatively low level of threat from the
bargaining power of buyers. This is due to the fact that there are a large
number of buyers with relatively small purchases. The coffee industry is
based around individual customers buying a cup or two of coffee and
a snack, but usually not much more than that. It is important to note,
however, that customers do not face any significant switching costs when
moving between coffee shops. This gives some power to the buyers.
Furthermore, coffee drinkers could make the product in their own house
rather than buying it, which also gives them more power.

2. Bargaining Power of Suppliers

In reference to the chart above, the bargaining power of suppliers poses a
very low threat. This is due in large part to the fact that the inputs for the
industry are standard as opposed to differentiated. This allows companies to
switch quickly and easily between suppliers. For these reasons, suppliers are
not necessarily locked in to a specific firm in the industry.

3. Threat of New Entrants

As depicted in the chart above, there is a relatively low threat of new

entrants into the U.S. coffee and snack shop industry. One reason for this
low threat level is that existing firms have a cost and performance
advantage. They are well- established and have already learned how to
continually lower costs and improve performance.

Furthermore, these well-established companies with large market shares

have strong brand identities within the industry. A new entrant to the
industry can expect retaliation from existing companies due to the strong
competition for market share. The rivalry among existing companies will be
discussed in more depth later. Although, somewhat difficult, it is still possible
for new entrants to thrive in this market. For example, licenses, insurance, or
other qualifications that may be required are not hard to obtain In addition,
since customers incur minimal switching costs when switching suppliers,
they are able to buy from multiple stores.

4. Threat from Substitutes

As shown in the chart above, there is a very high threat from substitutes in
the coffee and snack shop industry. Many coffee drinkers consider tea, hot
chocolate, and energy drinks to be reasonable substitutes for coffee. In
addition to these coffee substitutes, customers can choose to brew their own
coffee rather than buy it from a shop. Since these substitutes do the same
job as store-bought coffee, customers will not incur costs in switching
products.

5. Rivalry among Existing Players

As the chart above demonstrates, there is a high rivalry among existing
players in the coffee and snack shop industry. One reason for this is that the
industry is no longer growing at a rapid pace; it is considered to be in a
mature market. Since there are not any significant product differences
among competitors customers do not incur high costs if they switch from
one player to another. This is, in part, due to the fact that the products are
not highly complex, nor do they require significant customer-producer
interaction. Brand identity within the industry is also a huge factor for the
rivalry, as two major brands have captured the majority of the market. It is
important to note, however, that the industry does not have over capacity at
the moment.

The strategic implication for Dunkin' Donuts is they need use some SWOT
analysis to find some more profit space.

Q.2 In what ways is Dunkin' Donuts presently using strategic

alliances, and how could cooperative strategies further assist with
its master plan for growth?

Answer: Dunkin' Donuts often partners with a select group of retailers-such

as Stop & Shop and Wal-Mart. This activity has found another new market in
those people who need to have a rest in shopping.
The cooperative strategies is very useful in fierce market, it can low the cost
of open new coffee store and acquire more profit.

From the beginnings as a single restaurant in Quincy, Massachusetts,

DunkinDonuts is now a global brand with more than 10,000 locations in 32
countries. The growth is testimony to the fact that people everywhere
appreciate what DunkinDonuts offers: high quality food and beverages
served all day in a friendly, fast environment at a great value. In the United
States, Dunkin Donuts has maintained steady, strategic and disciplined
growth, opening new restaurants in our core markets in the Northeast and in
cities all throughout MidAtlantic, Southern and Midwestern states. We now
have more than 7,000 restaurants in 36states and the District of Columbia.
From Boston to Buffalo, New York to New Orleans, Philadelphia to Florida,
Chicago to Charlotte, DunkinDonuts is an important part of daily life for
millions of Americans.

And while DunkinDonuts has nationwide brand recognition, we believe we

have significant opportunity to expand our number of restaurants in the
United States as well as around the world. We believe we can double our
footprint in the U.S. to 15,000 DunkinDonuts restaurants over the next 20
years. And its not just America running on Dunkin DunkinDonuts has a
strong presence internationally, with more than 3,000 Dunkin' Donuts
locations in 31 international countries across four continents. The company
maintains steady global expansion, opening new restaurants in Europe, Asia,
the Middle East, and Latin and South America. Asia-Pacific is a particularly
exciting area for growth.

DunkinDonuts has already opened more than 88 locations in Greater China

since launching there in 2007, and has nearly 900 shops in South Korea. In
2010, the brand re-entered Russia with new restaurants in Moscow, and in
2011 we announced plans to open 500 DunkinDonuts restaurants in India. In
2012, the first DunkinDonuts restaurants were opened in India and
Guatemala.

Q.3 Which of the globalization strategies Will work best in

Dunking Donutss global expansion and why?
Answer:-

International/Global environment- The brand Dunkin Donuts does not

have the chain in America only, but also managed to curve out international
niches. It is not only expected markets such as Canada and Brazil but also in
some unexpected areas like Qatar, South Korea, Pakistan, Philippines.

This has various implications for Dunkin Donuts. For instance: diversifying
risk, entry into newer markets, larger customer base and so on.

Socio-Culture - Due to the change in people living style, Dunkin tried to

help people find their product in the reach of the customer. Dunkin Donuts
also caters to the change in demographic characters through their new
range of products.

Therefore socio-cultural norms and consumer tastes affect its the products
made by Dunkin donuts.

Expanding Outlets- It is a goal of DD to be as outreaching as possible to its

customers. Therefore it does so by expanding its number of outlets
throughout America and beyond its borders as well.

Dunkin Donuts has its densest cluster in the Northeastern region of the
country and is now having a growing presence in the rest of the country.
Moreover it is also creating a brand image in other countries though opening
outlets there. Example countries are Canada, Brazil, Qatar, South Korea,
Pakistan and the Philippines.

As a part of its strategy the company plans to expand aggressively. It has a

goal of expanding to 15000 outlets by the year 2020. This goal is further
achievable as the company has a franchise system this makes the
acquisition of capital and operator smoother. It is noteworthy however that
the company wants to limit its expansion to not being too omnipresent.

It is also partnering with large supermarkets to achieve widespread market

prominence. This is done to create a store-within a store concept. The
supermarket has to be large enough to allow DD full expression of its brand.
This is important for enhancing overall performance of the strategic allies.

Expanding Products- Dunkin Donuts also sees an opportunity of grabbing

a new base of customers. The company recognizes the new generation and
is trying to come up with products that appeal to their taste. As a result of
such, the company has expanded its range of products to several types of
hot and cold beverages, baked goods and confectionery items other than
donuts and the new breakfast to go menu. Along with that, Dunkin Donut
maintains its simple and straight-forward morning snacks. This gives it a
competitive edge of distinction against its competitors.

This may enable Dunkin Donuts to persist in the competitive industry with
newer dimensions.

Q.4 FURTHER RESEARCH Gather on industry trends, as well as

current developments with Dunkin Donuts and its competitors. Use
this information to build an up-to-date SWOT analysis for Dunking
Donuts. If you were the CEO of the firm, what would you consider to
be the strategic management implications of this analysis and why?

Answer:-
Competitors:

Dunkin Donuts mainly competes with high end coffee providers like
Starbucks. Starbucks is a major competitor of Dunkin Donuts which creates
competition in the area of upscale coffee. However DD can still compete in
the coffee industry with its simple drip coffees regular and decaf.

Also, having its focus on donuts and other baked goods it also competes with
the likes of Krispy Kreme.
Dunkin' Donuts, McDonald's, Starbucks and other fast-food chains have been
expanding their menus to attract customers who are spending cautiously in a
weak economy. As a result, most chains are selling coffee drinks, blended
beverages like smoothies and frappes, as well as a variety of sandwiches and
other food.

DUNKIN' DONUTS GROWS IN U.S.

Canton, Massachusetts-based Dunkin' Brands, which also owns Baskin-

Robbins ice cream, raised its 2012 profit forecast to $1.25 to $1.27 per
share, from $1.22 to $1.25 previously. The new forecast is on track with
analysts' current estimates.

It expects sales growth at established U.S. Dunkin' Donuts restaurants to be

at the low end of its 4-5 percent target range for the full year.

SWOT analysis for Dunking Donuts

Strength

1. Strong Brand name, recognized world over

2. Brand loyalty amongst customers
3. Over 1000 varieties of doughnuts
4. Popular for a number of bakery products like pastries, bagels, muffins,
biscuits, etc. and hot beverages like coffee, tea
5. Ideal place for having breakfast and coffee
6. Innovative ways to retain customers by issuing coupons and discounts
7. Worlwide chain of franchisees totaling to 10,000 locations across 32
countries
8. one of the most experienced in the industry
9. Association with major sports teams
10. Effective marketing and advertising strategies

Weakness

1. Competition from other international snacking joints means limited market

share growth
2.Constant rift with the franchisee owners and numerous instances of suing
them
3. Still hast penetrated into the emerging economies which can be a huge
segment

Opportunity

1. Increase its presence in newer countries and regions of the world

2.To introduce low calorie snacks
3.Increase in disposable income of people in developing countries
4. Increase its reach through effective online marketing
Threats

1. People moving to healthier ways of eating

2.Competition even from local cafes and bakeries
3.Increase in the cost of raw materials

4. Difficult to change the snacking habits of people in certain countries like

India and China
Competitors

1. Krispy Kreme
2.Mc Donalds
3.Starbucks
4. Mad over Donuts

Three critical hurdles or challenges that management faces in any

repositioning program

1. Design: What type of restructuring is appropriate for dealing with the

specific challenge, problem, or opportunity that the company faces?

2. Execution: How should the restructuring process be managed and the

many barriers to restructuring overcome so that as much value is created as
possible?

3. Marketing: How should the restructuring be explained and portrayed to

investors so that value created inside the company is fully credited to its
stock price?