CASE Analysis: Krispy Kreme Doughnut

Assignment Read a case study and if you are the management team of the company in case, what will you do? You have to analyze and send a report with more than 12 Pages A. External Environment Analysis General Environment analysis Political Factor No 1 Opportunities Require little prior experience or education they pay employees minimum wage or slightly above. Threats Specialist eateries industry are few and consist mainly of minimum wage changes and employment law changes.(Of Jan,28,2007,KDD had 4759 employee, down from6982 employee.

2 Economic Factor No 1 Opportunities Krispy Kreme is a nonessential food item this may pressure sales Threats An increase in interest rates will increase the cost of capital and mean more expensive borrowing for Krispy Kreme at a time that they need to expand to compete with their rivals. Restricted cash flow from banks and massive layoffs have stifled the world economy, decreasing discretionary income.

Reputation-Fundraising program has helped nonprofit organization raise millions of dollars in need fund.

Social Factor No 1 Opportunities Going out to eat and drink is a social habit that is unlikely to change in the near future, but consumers can change their habits from eating doughnuts to another sweetbased food Krispy Kreme to remove trans fats from their products. Low carb diet trends can also have an effect on purchasing. (Develops low calories food) South America, Africa, and Southern Asia are market to conquer. Families crave convenience because of busy lifestyles And Asians love sweets and are open to trying foreign food. Threats A social shift to eating full course meals instead of specialty items such as doughnuts or bagels would have an affect but this is unlikely to happen in the near term. Customer against high fat and unhealthy foods.

3.

4.

Britons tend not to have cars, which inhibits drive-thru customers, and their eating habits and office etiquette differ from Americans People are become more health-conscious, which does not bode well for high-sugar, high-fat threat.

Technology Factor No 1 Opportunities technology can be used to a improve efficiency, production, distribution, and monitor the commodity market changes in real time Threats few technological trends influence the industry

Competitive Analysis

Analyze by Five forces Model as following Rivalry among Existing Competitors No 1 Opportunities Differentiate of product brand and value. Threats High concentration of rivals e.g. Starbucks and local chains High fixed costs Perishable products (food and drink) Static market growth

2 3 4 Threats of New Entrants No 1 Opportunities Large capital requirements required to build chain of stores Product and brand differentiation Favorable locations are already occupied

Threats Economies of scale in distribution and raw ingredients (lower per unit costs due to the experience curve)

2 3

Threats of Substitute products No 1 2 Bargaining Power of Suppliers No 1 Opportunities Large number of suppliers to choose from and low switching costs Threats Vertically integrated businesses with only commoditized raw ingredients Opportunities Threats Large choice of alternatives with similar products e.g. energy drinks, cakes, biscuits, ice-cream, chocolate No switching costs

Bargaining Power of Customers No 1 2 Opportunities Many buyers and fragmented. Food and drink market is part of the root of society. Threats No switching costs for the buyer.

Summaries There are many competitors and concentration rivals and the industry is static growth but the product are differentiate and specific brand value. Favorable locations and high cost of investment are making threat of new entrance but low cost per unit. There are many choices of substitute product and no switching cost. Opportunity is many of suppliers but raw material are specific material. The large market of food and drink is opportunity but there is no switching cost to change other brand.

CPM Competitive Profile Matrix

Dunkin Donuts Critical Success Weight Factors Advertising Product Quality Product Diversity Price Competitiveness Management Financial Position Customer Loyalty Global Expansion Market Share Sales Distribution TOTAL 0.11 0.15 0.08 0.08 0.10 0.10 0.10 Rating 4 3 2 3 3 3 4 Weighted Score 0.44 0.45 0.16 0.24 0.30 0.30 0.40

Starbucks Rating 3 3 1 2 3 2 3 Weighted Score 0.33 0.45 0.08 0.16 0.30 0.20 0.30

Tim Hortons Rating 2 2 2 3 2 3 3 Weighted Score 0.22 0.30 0.16 0.24 0.20 0.30 0.30

0.13 0.10 0.05 1.00

3 3 2

0.39 0.30 0.10 3.08

4 3 3

0.52 0.30 0.15 2.79

1 1 2

0.13 0.10 0.10 2.05

External Factor Evaluation (EFE) Matrix Key External Factors Opportunities 1. Busy lifestyles make crave convenience to families. 2. The love of Asians who love sweets and trying foreign foods. 3. The lacks of diversified and distinctive in Starbucks. 4. Its doesnt sell hot doughnuts in Dunkin Doughnut. 5. Sweet treats very popular in many children. 6. Product line doesnt appear to competitive and Tim Hortons has yet to expand beyond U.S. and Canada 7. The markets to conquer are South America, Africa and Southern Asia. Threats 1. In Northeastern U.S., Dunkin Doughnuts be present dominate the doughnut market particularly. 2. People are more healthconscious, which does not bode well for high-sugar, high-fat treats. 3. The amount of stores worldwide that Krispy Kreme Doughnut has approximately as times of Starbucks. 4. Cash flows from bank and massive layoffs have stifled the world economy, decreasing discretionary income. 5. The local brands of doughnuts prefer from Europeans. 6. Britons not have cars, which inhibits drive-thru customers and their eating habit, office etiquette. 7. When lack of return and dividends compared to other similar firms in industry, the shareholders may 0.08 0.05 3 2 0.24 0.10 Weight Rating Weighted Score

0.10 0.07 0.03 0.04 0.09

3 4 2 2 1

0.30 0.28 0.06 0.08 0.09

0.12 0.08 0.08 0.06

1 2 1 2

0.12 0.16 0.08 0.12

0.05

0.10

0.06 0.09

2 1

0.12 0.09

sell Krispy Kreme Doughnut stock. TOTAL

1.00

1.94

B. Internal Environment Analysis This part, you can analyze by Resource Based View/ Value Chan Theory/7S or any Theories related to the case provided and continue working with the same process as EFE For the analyzing by value chain theory can be separate that Supplying fresh doughnut mix to all stores <Make same every process all stores of Krispy Kreme>:

Begins with the secret recipe (formulation and consistency) Make the unique and special taste for customer and make the different from other brands The mix is centrally produced, controlled and consistent and distributed to all stores and franchises

Manufacturing of proprietary doughnut-making equipment:

Plan to design and manufacture of the proprietary doughnut making equipment This is then sold to stores for profit and ensures consistency of end product< try to give the profit to every customer>

Retail distribution channels:

The mixture and equipment that use is distributed to large factory stores from central hubs Mix of factory stores that supply smaller stalls and kiosks Outsourced retail channels in service stations and Wal-Mart < have a part of outsourcing to make opportunity channel>

Fresh doughnut and doughnut theatre store experience:

Worldwide locations <must to have a special location that can be easy to interact with many customer.> Doughnuts are freshly baked and produced each day<produce day by day> Original glazed sign Large capacity for production Simple product line

Cult brand:

Targeted local campaigns (no above the line campaigns) 7

Store demand is driven by word of mouth <The store that use to sell the product, need to be know from many people by mouth to mouth > Very recognizable brand A lot of brand loyalty <The brand royalty very necessary for the brand because its have more effect> Drives demand for franchise opportunities

For the value chain of KRISPY KREME they use value chain and separate that very appropriate to their process. Summaries For the internal environment that analysis by use the value chain can conclude that its separate in many type of process and plan about the process of produce, ways to satisfy, loyalty, etc that planning in each part.

Strengths 1. Signature hot Original Glazed doughnut and people know Krispy Kreme 2. Affordable, high-quality doughnuts with strong visual appeal and "one-of-a-kind" taste 3. Neon "Hot Doughnuts Now" sign encourages people outside the store to make an impulse purchase 4. Market research shows appeal extends to all major demographic groups including age and income 5. "Hot shop" stores save money while keeping KKD customer experience intact 6. Vertical integration helps ensure high quality product 7. Product sold at thousands of supermarkets, convenience stores, and retail outlets through U.S.

Weaknesses 1. Not flexible difficulties reordering when non-Hot light stores are sold out 2. Franchisees close stores. 3. No relations with franchisees (cost of equipment, packaging, ingredient, etc) 4. No other standout product (Weak menu) 5. Weak position in UK and Spain in term of revenues

6. Return on equity, assets, and investments all negative in the trailing twelve months; skill of mgmt is questionable 7. Closing stores when stores should be opening globally at steady rate to keep up with competitors' growth 8. Management states in recent 10-K that it is struggling with how to make stores profitable 9. Product line slow to expand with nothing outside "sweet treats" to draw in healthconscious customers 10. Advertising not aggressive enough to appeal to areas outside southeast of U.S. where most stores are 11. Financial Ratio Analysis (September 2007)

10

11

Growth Rates % Sales (Qtr vs year ago qtr) Net Income (YTD vs YTD) Net Income (Qtr vs year ago qtr) Sales (5-Year Annual Avg.) Net Income (5-Year Annual Avg.) Dividends (5-Year Annual Avg.) Price Ratios Current P/E Ratio P/E Ratio 5-Year High P/E Ratio 5-Year Low Price/Sales Ratio Price/Book Value Price/Cash Flow Ratio Profit Margins Gross Margin Pre-Tax Margin Net Profit Margin 5Yr Gross Margin (5-Year Avg.) 5Yr PreTax Margin (5-Year Avg.) 5Yr Net Profit Margin (5-Year Avg.) Financial Condition Debt/Equity Ratio Current Ratio Quick Ratio Interest Coverage Leverage Ratio

Krispy Kreme -11.90 NA 59.40 -9.97 NA NA

Industry 5.00 34.70 30.20 6.20 14.37 24.05

NA NA NA 0.74 4.26 35.60

17.3 6.7 3.8 2.35 6.29 11.60

13.9 0.3 -0.3 13.4 -15.6 -16.1

35.3 5.1 13.6 36.3 15.1 10.6

0.81 1.5 1.2 0.90 2.8

2.16 1.0 1.0 25.6 4.2 12

Book Value/Share Investment Returns % Return On Equity Return On Assets Return On Capital Return On Equity (5-Year Avg.) Return On Assets (5-Year Avg.) Return On Capital (5-Year Avg.) Management Efficiency Income/Employee Revenue/Employee Receivable Turnover Inventory Turnover Asset Turnover

0.90

11.94

-1.6 -0.5 -0.7 -55.5 -21.7 -29.7

54.2 12.5 14.9 27.8 9.8 12.2

-254 91,067 17.1 18.7 1.9

10,444 98,255 49.5 97.5 1.1

Date 12/07 12/06 12/05

Avg. P/E -13.10 -3.0 -7.60

Price/Sales 1.73 0.61 0.75

Price/Book 10.22 3.03 2.22

Net Profit Margin (%) -9.2 -2.5 -2.22

Date

Book Value/

Debt/Equity

ROE

ROA

Interest 13

Share 12/07 12/06 12/05 1.26 1.76 3.90 1.36 1.13 0.61

(%) -53.5 -124.9 65.2

(%) -12.1 -33.0 -32.7

Coverage -1.4 -5.8 -2.05

Net Worth Analysis

1. Stockholders Equity + Goodwill 2. Net income 3. Share price /EPS x Net Income 4. Number of Shares Outstanding x Share Price Method Average

81.62 -4.06 0.24 16.20 94

2007 Liquidity Ratio Current Ratio Quick Ratio 0.977 0.822

2006 0.955 0.801

2005 1.015 0.772 14

Leverage Ratio Debt to Total Asset Debt to Equity Long term debt to Equity Activity Ratio Inventory Turnover Total Asset Turnover Account Receivable Turnover Average Collection Period Profitability Ratio Gross profit Margin Net Profit Margin Return on Total Asset Return on Total Equity Earning per Share Price Earning Ratio

0.774 3.426 1.342 18.533 1.320 8.076 45.198 0.156 -0.092 -0.121 -0.535

0.735 2.781 1.088 19.974 1.322 7.069 51.630 0.127 -0.581 -0.769 -2.906

0.498 0.993 0.377 20.926 1.474 8.287 44.046 0.155 -0.280 -0.413 -0.823

Internal Factor Evaluation (IFE) Matrix

15

Key Internal Factors

Weight

Rating

Weighted Score

Strengths 1. The strong visual appeal and one-of-akind test is high-quality of doughnuts (Affordable) 2. Sign of Hot Doughnuts Now encourages people outside the store to make impulse purchase. 3. Appeal extends to all major demographic groups including age and income will show in market research. 4. While keeping Krispy Kreme Doughnuts customers experience intact, the Hot shop store can save money. 5. Vertical integration can helps ensure high quality product. 6. Consist now in 16 countries expansion. 7. Product will sell at thousands of supermarkets, convenience stores, and retail outlets through U.S. Weaknesses 1. Have return on equity, asset, and investments all negative in trailing twelve months. 2. The shareholders not received dividend recently and not expect to in near future. 3. When stores should be opening globally at steady rate the store is closing. 4. Management state in recent 10k that its struggling. 5. Product lines slow to expand with nothing outside. 6. Advertising not aggressive enough to appeal. 7. Have net losses in each of past 3 years and revenue down. 8. Per 10-k, continued disputes with franchises. TOTAL 0.09 0.06 0.08 0.07 0.07 0.08 0.06 4 3 4 3 3 3 3 0.36 0.18 0.32 0.21 0.21 0.24 0.18

0.10 0.07 0.06 0.07 0.04 0.03 0.08 0.04 1.00

1 1 2 1 2 2 1 2

0.10 0.07 0.12 0.07 0.08 0.06 0.08 0.08 2.36

C. Existing Strategy Exist Vision (If applicable) 16

To be the worldwide leader in sharing delicious tastes and creating joyful memories.

Exist Mission (If applicable) To touch and enhance lives through the joy that is Krispy Kreme

Exist Strategies and Goal (If applicable) This project is to redesign the website of Krispy Kreme to enhance the visual attraction toward the target audience. Krispy Kreme, a chain of doughnut stores which serves up a variety of doughnuts and coffee. Krispy Kreme has expanded their business throughout the world. Therefore, the website should be enhanced in both interface and usability to attract their target audience and brings in potential user. Redesigned website will able to present the famous international brand in both attractive and informative way to achieve the purpose of promoting their products. Current Sites Analysis & GoalsThe purpose of Krispy Kremes website is to showcase their products and introduce the brand to user. Besides that, it provides clear location information for the user to visit. Krispy Kremes website also provides a platform for user to give comments and suggestions to Krispy Kreme. Other than that, it provides updated news and offers of Krispy Kreme to keep user coming back. Current Krispy Kremes website has good brand identity with the green polka dots background which its the packaging of Krispy Kreme, yet its unpleasant to the eyes. Besides, Krispy Kreme websites color scheme is overall too harsh. Therefore, the color scheme should be reconsidered. Apart from color problem, the quality of the images is bad. Jagged images make the site look unprofessional. Furthermore, the website is inconsistent in layout and grid system. There is double scrollbars which is inconvenient to user. In additional, the malfunction of Doughnuts page failed in conveying the product information. Besides that, the navigation buttons are lack of attractive. In terms of typography, current website doesnt have a consistent typo system. Information structure is unattractive. Hence, improvement of typography system should be done in Krispy Kremes website to increase the interest of user to read on the information. Clients AnalysisBackground Information:Krispy Kreme, a well-known chain of doughnut store that originated in Winston-Salem, North Carolina. It was founded in 1937 by Vernon Rudolph. Krispy Kreme has grew rapidly and expanded to worldwide. For consistent quality, Krispy Kreme developed into a system that delivered the perfect doughnut mix with the new automatic doughnut cutter machine. Krispy Kreme sells Whole Wheat Glazed and 17

lesser trans fat doughnut in attempt to provide a healthier products to customer. Besides, they provide a comfortable environment for dine in customer. Unique Selling Point:The store emphasizes their signature treat Original Glazed doughnut. Besides, the Hot Doughnut Now light is a unique concept to attract customer with warm Krispy Kreme doughnuts. Position & Cultural value:Krispy Kreme has established itself as the quality leader in the doughnut industry. Doughnut is a newly formed trend to public in Malaysia. The colorful and joyful looking doughnuts has brought doughnut to parties and celebrations. Short & Long-term Site GoalsShort-term site goals:Provide interesting information and frequently updated news for users to keep visiting the website. Long-term site goals:Build trust and confidence on users. Target AudienceYoung adults aged from 20-30 years old are the primary target audience of Krispy Kreme, especially female with middle to high income rate. Secondly are families with middle income rate. Potential audience: Teenagers aged from 14-19 years old.

Construct a new one Vision To be the worldwide leader in sharing delicious tastes and creating joyful and value brand. Mission To touch, enhance lives and create trend through the joy that is Krispy Kreme

Long Term Objectives -Action the customer in mind

D. Strategy formulation TOWs Matrix Strengths Weaknesses 18

1. Signature hot Original Glazed doughnut and people know Krispy Kreme 2. Affordable, high-quality doughnuts with strong visual appeal and "one-of-a-kind" taste 3. Neon "Hot Doughnuts Now" sign encourages people outside the store to make an impulse purchase 4. Market research shows appeal extends to all major demographic groups including age and income 5. "Hot shop" stores save money while keeping KKD customer experience intact 6. Vertical integration helps ensure high quality product 7. Product sold at thousands of supermarkets, convenience stores, and retail outlets through U.S.

1. Not flexible difficulties reordering when non-Hot light stores are sold out 2. Franchisees close stores. 3. No relations with franchisees (cost of equipment, packaging, ingredient, etc) 4. No other standout product (Weak menu) 5. Weak position in UK and Spain in term of revenues 6. Return on equity, assets, and investments all negative in the trailing twelve months; skill of mgmt is questionable 7. Closing stores when stores should be opening globally at steady rate to keep up with competitors' growth 8. Management states in recent 10-K that it is struggling with how to make stores profitable 9. Product line slow to expand with nothing outside "sweet treats" to draw in healthconscious customers 10. Advertising not aggressive enough to appeal to areas outside southeast of U.S. where most stores are

Opportunities

SO Strategies

WO Strategies

19

1. Busy lifestyles make crave convenience to families. 2. The love of Asians who love sweets and trying foreign foods. 3. The lacks of diversified and distinctive in Starbucks. 4. Its doesnt sell hot doughnuts in Dunkin Doughnut. 5. Sweet treats very popular in many children. 6. Product line doesnt appear to competitive and Tim Hortons has yet to expand beyond U.S. and Canada 7. The markets to conquer are South America, Africa and Southern Asia. Treats 8. In Northeastern U.S., Dunkin Doughnuts be present dominate the doughnut market particularly. 9. People are more health-conscious, which does not bode well for high-sugar, high-fat treats. 10. The amount of stores worldwide that Krispy Kreme Doughnut has approximately as times of Starbucks. 11. Cash flows from bank and massive layoffs have stifled the world

1. TV, radio, and print ads demonstrating 27 varieties of doughnuts against non-descript pastry offerings by Starbucks 2. All store signs in supermarkets and conveniences where product is sold have picture of young child eating a Krispy Kreme doughnut

1. Make doughnuts filled with fruit, put fruit cups on menu, and develop wide variety of fresh fruit smoothies; offer ways to incorporate nuts and protein into foods 2. Aggressive Internet ads demonstrating the appeal of Krispy Kreme Donut hot doughnuts 3. Open small but profitable "hot shops" in South America, Africa, and Southeast Asia in order to expand globally

3.Continued grand openings of stores in highly-populated cities such as Sao Paulo, Brazil & Johannesburg, South Africa

ST Strategies 1.Compare "hot" doughnut appeal of Krispy Kreme Donut to cold doughnuts of Dunkin' Donuts in TV and Internet ads 2. Do "roadshow" across Europe as means of advertising, driving truck and mobile "hot shop" to major European cities and filming their reactions for European ads 3. Express strengths and outline concrete strategies in clear format within 10-K in order to restore shareholder confidence in future of Krispy Kreme Donut

WT Strategies . 1.Expand product line with lowcalorie foods 2. Recruit top executive talent from other fast-food firms 3. Survey franchisees to discover ways to repair business relationships and retain growth of franchise model; study McDonald's model for tips

20

economy, decreasing discretionary income. 12. The local brands of doughnuts prefer from Europeans. 13. Britons not have cars, which inhibits drivethru customers and their eating habit, office etiquette. 14. When lack of return and dividends compared to other similar firms in industry, the shareholders may sell Krispy Kreme Doughnut stock.

21

SPACE Matrix Strategic Position and Action Evaluation Matrix (SPACE) Financial strength (FS) factors include: Profit (+1); Sales Growth (+2); and Cash Flow (+2) 1 + 2 + 2 = 5; 5/3 = 1.67. Competitive advantage (CA) factors include: Customer loyalty (-2); Product quality (-1); and Market share (-5) -2 + -1 + -5 = -8; -8/3 = -2.67 **For the above, KKD's financials were compared against competitors Dunkin' Donuts, Starbucks, and Tim Hortons. Environmental Stability (ES) factors include: Barriers to entry into market (-4); Risk involved in business (-3); and Ease of exit from market (-4) -4 + -3 + -4 = -11/3 = - 3.67 Industry Strength (IS) factors include: Profit potential (+2); Financial stability (+1); and Technological know-how (+4) 2 + 1 + 4 = 7/3 = 2.33

22

Conservative

(FS) Aggressive +6 +5 +4 +3 +2 +1

CA -6 -1 -1

-5

-4

-3

-2

+1 IS

+2

+3

+4

+5

+6

-2

-3

-4 Co -5 mpetitive

-6 ES Defensive

23

The framework of space matrix recommends that Krispy Kreme pursue integration as well as an intensive strategy albeit we have more confidence in the intensive strategies. The strategy that seems to make the most sense is the product development as it will create the most economic value added, i.e. the build a burger aisle or a healthy fare menu .

Boston Consulting Group Matrix (BCG) Krispy Kreme Donuts has three business segments, and they are presented here along with their annual revenues per Form 10-K filed on January 28, 2007: Company Stores ($290,097), Franchise ($4,602) and Krispy Kreme Supply Chain ($94,680), in total revenues for the year ending January 28,2007 This means that each business segment represented the following percentage in revenues: Company Stores (88.9%), Franchise (21.8%), and Krispy Kreme Supply Chain (84.1%). Profits for each business segment are as follows: Company Stores ($326,199); Franchise ($21,075); and KK Supply Chain ($113,921), for a total of $416,195 in profits. Therefore, Company Stores has 70.7% of the profits; Franchise has about 4.6%; and Krispy Kreme Supply Chain has about 24.7%. Well assume that Company Stores has 3% of the market share and a 19% growth rate; Franchise has 3% of the market share and a -17% growth rate; and Krispy Kreme Supply Chain has 3% of the market share and -60% growth rate. High 1.0 Low 0.0 High +20 Medium 0.5

24

Stars (II)

Question Marks (I)

Cash Cows (III)

Dogs (IV)

Low-20

Grand Strategy (GS) Matrix RAPID MARKET GROWTH Quadrant II 1. Market Development 2. Market Penetration 3. Product Development 4. Horizontal Integration 5. Divestiture 6. Liquidation Quadrant I 1. Market Development 2. Market Penetration 3. Product Development 4. Forward Integration 5. Backward Integration 6. Horizontal Integration 7. Related Diversification Quadrant IV 1. Related Diversification 2. Unrelated Diversification 3. Joint ventures

WEAK COMPETITIVE POSITION

STRONG COMPETITIVE POSITION

Quadrant III 1. Retrenchment 2. Related Diversification 3. Unrelated Diversification 4. Divestiture 5. Liquidation

25

SLOW MARKET GROWTH

Quantitative Strategic Planning Matrix (QSPM) In the QSPM two strategic alternatives were compared: whether KKD should discontinue its Company Store segment and concentrate solely on building the Franchise segment via the "hot shop" model, or whether it should continue the slow and steady growth of its Company Stores and Franchise business segments through its traditional business model. STRATEGIC ALTERNATIVES 1. Discontinue company stores and concentrate solely on building Franchise via "hot shop" stores 2) Continue slow and steady growth of Company Store and Franchise business segments through traditional business model (without "hot shops") AS TAS 26

Opportunities 1. Busy lifestyles make crave convenience to families.

Weight 0.08

AS -

TAS

2. The love of Asians who love sweets and trying foreign foods. 3. The lacks of diversified and distinctive in Starbucks. 4. Its doesnt sell hot doughnuts in Dunkin Doughnut. 5. Sweet treats very popular in many children. 6.Product line doesnt appear to competitive and Tim Hortons has yet to expand beyond U.S. and Canada 7.The markets to conquer are South America, Africa and Southern Asia. Threats 1. In Northeastern U.S., Dunkin Doughnuts be present dominate the doughnut market particularly. 2. People are more health-conscious, which does not bode well for highsugar, high-fat treats. 3. The amount of stores worldwide that Krispy Kreme Doughnut has approximately as times of Starbucks. 4. Cash flows from bank and massive layoffs have stifled the world economy, decreasing discretionary income. 5. The local brands of doughnuts prefer from Europeans. 6. Britons not have cars, which inhibits drive-thru customers and their eating habit, office etiquette. 7. When lack of return and dividends compared to other similar firms in industry, the shareholders may sell Krispy Kreme Doughnut stock. TOTAL

0.05 0.10 0.07 0.03 0.04 0.09

3 3 4 3 0.16 0.27 0.30 0.21

1 2 3 2 0.12 0.18 0.10 0.14

0.12 0.08 0.08 0.06 0.05 0.06 0.09

3 2 3

0.36

1 -

0.12

0.16

1 -

0.08

0.27

0.18

1.00

27

28

Strengths 1. The strong visual appeal and one-of-a-kind test is high-quality of doughnuts (Affordable) 2. Sign of Hot Doughnuts Now encourages people outside the store to make impulse purchase. 3. Appeal extends to all major demographic groups including age and income will show in market research. 4. While keeping Krispy Kreme Doughnuts customers experience intact, the Hot shop store can save money. 5. Vertical integration can helps ensure high quality product. 6. Consist now in 16 countries expansion. 7. Product will sell at thousands of supermarkets, convenience stores, and retail outlets through U.S. Weaknesses 1. Have return on equity, asset, and investments all negative in trailing twelve months. 2. The shareholders not received dividend recently and not expect to in near future. 3. When stores should be opening globally at steady rate the store is closing. 4. Management state in recent 10k that its struggling. 5. Product lines slow to expand with nothing outside. 6. Advertising not aggressive enough to appeal. 7. Have net losses in each of past 3 years and revenue down. 8. Per 10-k, continued disputes with franchises. TOTAL

Weight 0.09 -

0.06 0.08 0.07 0.07 0.08 0.06

4 4 -

0.24

3 -

0.18

0.28

1 -

0.07

0.10 0.07 0.06 0.07 0.04 0.03 0.08 0.04 1.00

3 3 4 3 1 43

0.30

1 -

0.03

0.18 0.28

1 1 -

0.06 0.07

0.24 0.04 3.29

1 2 22

0.08 0.08 1.49

29

E. Explain Implementation Plan Topic 1. Strategy: Market Penetration Strategy 1.To increase customer traffic and create customer awareness of Krispy Kreme Doughnuts products 2.Promote repeat purchases and word of mouth for existing products in present market 3.Focus marketing strategies to find out what the customers tend to buy 4.Develop incremental product revenue opportunities 5.Strengthen and broaden the Krispy Kreme Doughnuts brand name 6.Forge a joint venture with companies Remark 1.Improving customer experiences 2.Greater for the trust of customers have placed in Krispy Kreme Doughnuts 3.Higher and stable market share 4.Increase in popularity

30

2.Strategy: Market Development

1.Expand in new areas and geographic regions to Krispy Kreme Doughnuts business 2.Create Multilingual website 3.introducing new other products categories 4.improving the companys operating efficiencies 5.Research and development program

1.Krispy Kreme Doughnuts customers can search the information related to the products and the company easily. 2.Reach new population segments and fastest growing trends and tendencies 3. Can pass along the associated savings to their customers in the form of lower prices. 4.Increase the innovation and the quality of products provide

For the implementation plan Krispy Kreme use the strategy to develop in each function of their product including increase customer traffic and create customer awareness of Krispy Kreme Doughnuts products, develop incremental product revenue opportunities, expand their market or other activity of strategy. These are the process of planning that use to develop their product.

31

Market Development Strategy

1. Expand to European Market

For this Strategy, The Company has to prepare as following

Activity
1. To increase customer traffic and create customer awareness of Krispy Kreme Doughnuts products

Jan

Feb

Mar

Apr

June

July Remark

2.Promote repeat purchases and word of mouth for existing products in present market

3.Focus marketing strategies to find out what the customers tend to buy

4.Develop incremental product revenue opportunities

5.Strengthen and broaden the Krispy Kreme Doughnuts brand name

6.Forge a joint venture with companies

32

-Improving customer experiences -.Greater for the trust of customers have placed in Krispy Kreme Doughnuts -.Higher and stable market share -.Increase in popularity 2. Strategy: Market Development

For this Strategy,

The Company has to prepare as following

Activity
1.Expand in new areas and geographic regions to Krispy Kreme Doughnuts business 2.Create Multilingual website

Jan

Feb Mar

Apr

June

July Remark

3.introducing new other products categories

4.improving the companys operating efficiencies

5.Research and development program

-Krispy Kreme Doughnuts customers can search the information related to the products and the company easily. -Reach new population segments and fastest growing trends and tendencies -Can pass along the associated savings to their customers in the form of lower prices. -Increase the innovation and the quality of products provide

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Hire Employee: 250 more staff should prepare in new market

When the crispy crme want to open in new market, its necessary that company need to have many staffs that have knowledge and skill to make the process in organization. 250 more staff of crispy crme need to prepare and improve their knowledge and skill to cope with situation in new market and this things very important that company can get the accept from new market by preparing 250 more staff of their company.

Invest in Domestic Market

For the investment in domestic market of Krisy Kreme, Krispy Kreme has to survey about the demand and supply of customer. Because of Krispy Kreme is a special brand of doughnut they make the high quality product by make a differentiation of taste in doughnut and advertise in many type of advertising. Customer can be impression with the service and taste of doughnut from Krispy Kreme, that its mean Krispy Kreme focus and give the important to their domestic market.

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Reference http://krispykreme.comhttp://www.spokesmanreview.com/allstories-news-story.asp? date=051304&ID=s1519337http://www.businesspundit.com/krispy-kreme-part-ii-a-badstrategy/http://www.businesspundit.com/krispy-kreme-and-walmart/http://www.allbusiness.com/marketing-advertising/branding-branddevelopment/46753391.htmlhttp://www.philly.com/inquirer/business/20101114_Krispy_Kreme_back_in_Philly_w ith_new http://www.scribd.com/doc/53181069/final-krispy-kreme http://www.google.co.th/#hl=th&q=Krispy+Kreme&oq=Krispy+Kreme&aq=f&aqi=&aql=& gs_sm=s&gs_upl=0l0l6l6802l0l0l0l0l0l0l0l0ll0l0&fp=11d55a8060337d05&biw=1280&bih= 619 http://www.google.co.th/#hl=th&q=Krispy+Kreme+planning&oq=Krispy+Kreme+planning &aq=f&aqi=&aql=&gs_sm=e&gs_upl=7457l9937l8l10717l9l8l0l0l0l0l0l0ll0l0&fp=11d55a 8060337d05&biw=1280&bih=619 http://krispykreme.com http://moneycentral.msn.com/investor/invsub/results/compare.asp?symbol=kkd http://www.spokesmanreview.com/allstories-news-story.asp?date=051304&ID=s1519337 http://www.businesspundit.com/krispy-kreme-part-ii-a-bad-strategy/ 35

http://www.businesspundit.com/krispy-kreme-and-wal-mart http://www.allbusiness.com/marketing-advertising/branding-brand-development/46753391.html http://www.wikinvest.com/stock/Krispy_Kreme_Doughnuts_(KKD)

CASE Analysis: Krispy Kreme Doughnut

Group 12
1. 2.

Wijittra Nuttisitkarn

Chaiprapa Sukchum

5131203046 5131203114
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3. 4. 5.

Rawiwan Saithip Suthida

Sunpakaew Kaewarpai Luesan Thanompongchat

5131203126 5131203143 5131203150 5131203183

6. Kochaporn

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