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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 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: Development into diversified

External Threats: Tough competition and

product markets Detection of the problem

increasing global recognition of Starbucks and Dunkin Donuts. Global presence of the

occurring in the management of the business and thus the fall in business and profitability Develop programs the to social outreach 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 markets of organic

promote

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.

3) Identify the organizations external opportunities and threats.

4) Construct a Competitive Profile Matrix (CPM)

KKD CRITICAL SUCCESS FACTORS Customer Loyalty Large Market Share Advertisi ng Global Markets Market Share Managem ent Experienc e Social 0.2 2 0.4 0.1 2 0.2 0.1 2 0.2 0.05 2 0.1 0.2 2 0.4 0.2 2 0.4 Weght 0.1 Ratng 2 Score 0.2

Dunkin

Starbucks

Ratng 3

Score 0.3

Ratng 4

Score 0.4

0.4

0.8

0.4

0.8

0.15

0.15

0.3

0.3

0.3

0.4

0.6

0.8

Recogniti on Strong Business Partners Total 1.1 2.2 3 4.25 0.15 2 0.3 3 0.45 4 0.6

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

Key factors

External

Weight

Rating

Weighted Score

Opportunities Diversification of Product Detection Problem of in 0.1 2 0.2 0.1 3 0.3 0.20 1 0.2

management Social Outreach Programs Market Research Development healthier doughnuts Capitalization holiday and spots of of

0.15 0.05

2 3

0.3 0.15

0.05

0.1

season

recreational Threats

Tough Competition Global presence of competitors Health conscious customers Fall in number of company stores Rise foods Total in organic

0.2 0.05

3 3

0.6 0.15

0.05

0.2

0.02

0.02

0.03 1

0.06 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 factors

Internal

Weight Strengths

Rating

Weighted Score

Production Capacity Human Resource Power Price Differentiation Different Channels of distribution Diversification of Product

0.20

0.6

0.1

0.2

0.1

0.2

0.2

0.8

0.1

0.1

Supply

Chain

0.05

0.15

Management Weaknesses Reliance single product Dropping sales Apparently unhealthy product Fall in number of company stores Single location 0.05 2 0.1 2.55 0.05 1 0.05 on 0.05 0.05 0.05 1 3 3 0.05 0.15 0.15

production Total

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

Weaknesses Losing in profit Non-various product segment Decreasing in reputation Decreasing in hold of company stores

doughnuts Placing in Middle East market where sweet products

Weak advertising Problems customers on reaching

consumption is high Baking doughnuts freshly in

factory stores Innovative development

through the franchise stores

Opportunities

Threats

Development in brand name Market diversification Getting into organic markets Customer oriented marketing and sales policy

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 CP

6 IP

-6 SP

Financial Position ROI Liquidity Working Capital Cash Flow 2 3 2 3

Industry Position 1. Growth Potential 2. Profit Potential 3. Consumer Trust 4. Investment Reliability 3 5 4 3

Earnings Per Share 2 12 Stability Position 1. Economic Changes 2. Government Control 6. Competition 4. Price Elasticity 5. Entry Barriers -2 -2 -2 -5 -4 -15 y axis
Internal-External (IE) Matrix

5. Productivity 2.2 Competitive Position Market Share Product Quality Product Life Cycle Customer Loyalty Capacity Utilization -2.8

4 19 4

-1 -1 -2 -1 -1 -6 -1.2

-0.6

x axis

2.8

IFE 2.55 EFE 2.28

IFE Total Weighted Scores


Strong 3.0 to 4.0 EFE Total High Mediu Weight m ed 3.0 to 4.0 2.0 to . 99 Average 2.0 to 2.99 Weak 1.0 to 1.99

xxxx x

Score

Low

1.0 to 1.99

Implications from table: Generic Goal: Implied Strategies: Hold and Maintain Market Penetration Product Development

Rapid Market Growth

Quadrant II K.K. Doughn uts Weak Completive Position

Quadrant I

Strong Completive Positi on

Quadrant III Slow Market Growth Quadrant IV

Grand Strategy Matrix


Quantitative Strategic Planning Matrix (QSPM)

Product Development

Market Penetration

Market Developme nt

Key Factors

Weig ht

AS

TAS

AS

TAS

AS

TAS

EXTERNAL Strengths Diversification Product Detection Problem management Social Programs Market Research Development healthier doughnuts Capitalization of 0.05 2 0.1 3 0.15 3 0.15 0.15 of 0.05 4 3 0.6 0.15 4 1 0.6 0.05 4 2 0.6 0.1 Outreach 0.1 2 0.2 4 0.4 2 0.2 of 0.1 in 3 0.3 3 0.3 3 0.3 of 0.20 3 0.6 3 0.6 3 0.6

holiday season and recreational spots

Threats Tough Competition 0.2 3 2 0.6 0.1 2 2 0.4 0.1 3 2 0.6 0.1

Global presence of 0.05 competitors Health customers 0.05

0.15

0.2

0.1

INTERNAL

Strengths

Production Capacity Human Power Price Differentiation Channels distribution Diversification markets Supply Management Weaknesses

0.2

0.8

0.4

0.4

Resource 0.1

0.2

0.3

0.2

0.1

0.3

0.3

0.3

of 0.2

0.6

0.4

0.6

of 0.1

0.2

0.3

0.4

Chain 0.05

0.15

0.1

0.1

Reliance on single 0.05 product

0.15

0.05

0.1

Dropping sales

0.05

0.15

0.15

0.15

Unhealthy product

0.05

0.1

0.1

0.15

Fall in number of 0.05 company

0.1

0.1

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 = 2.) Implement A new Algorithm =
3.) Refocus Advertising Network=

3 million $

250 million $
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 2. Implement the new doughnuts 3. Refocus the Advertising Network

2012 Q1 2012 Q3 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.

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