This action might not be possible to undo. Are you sure you want to continue?
Objectives Case Abstract Introduction Mission Statement Competitive profile matrix EFE Matrix IFE Matrix TOWS Matrix SPACE Matrix Grand Strategy Matrix Matrix Analysis And TOWS Summary QSPM EBIT/EPS Analysis Profitability Ratios .
Case Abstract Main issues faced by KKD is decline in their sales form their franchise and international stores decreased by 10 % in the year 2010 International stores buy the ingredients from local merchants by KKD .
1940s-1950s .Continue expansion that include stores in New York and California. KK opens first store in North Carolina.Krispy Kreme begins to expand their stores. .Introduction 1937 ² Founded by Vernon Rudolph. 1960s-1970s . 1990s .Build own mixing plant and distribution system.
45 million USD (2006) Employees ² 4. soft drinks (espresso.250 .Krispy Kreme Profile Founded In 1937 Headquartered in Winston-Salem.21 million USD (2006) Net Income .88. chillers). hot drinks (coffee) Revenue ² 510. North Carolina Products ² Doughnuts (30 kinds).
We opened our doors on July 13. 1937 8 .
History 40s & 50s improving the doughnut making process through innovations 9 .
History 60s & 70s Our stores are familiar gathering places for friends 10 5 .
History 80s & 90s the hot doughnut experience everyone was talking about us! 11 .
TODAY Expansion. extending the Krispy Kreme experience 12 . innovation.
KKD Products 13 .
Our Vision To be the global leader in doughnuts and complementary products while creating magical moments worldwide. .
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 .Our Values Consumers are our lifeblood.
MISSION STATEMENT We create the tastes for good times and warm memories for everyone. With our Original Glazed doughnut as our signature and standard. we will continually improve our customer¶s experience through: Innovative ideas Highest quality Caring services . everywhere.
SWOT MATRIX Strengths Weaknesses Opportunities Threats .
S.STRENGTHS Affordable. high-quality doughnuts with strong visual appeal and ³one. and retail outlets through U. . convenience stores. now in 16 countries Product sold at thousands of supermarkets.of-a-king´ taste Neon ³Hot Doughnuts Now´ sign encourages people outside the store to make a impulse purchase market research shows appeal extends to all major demographic groups including age and income ³Hot shop´ stores save money while keeping Krispy Kreme Donuts customer experience intact Vertical integration helps ensure high quality product consistent expansion.
where most stores are Revenue down. assets. skill of management is questionable Shareholders have not received dividends recently. and investments all negative in the trailing twelve months. stock price in state of flux Closing stores when stores should be open globally at steady rate to keep up with competitor¶ growth Management states in recent 10-K that it is struggling with how to make stores profitable Product line slow to expand with nothing outside ³sweet treats´ to draw in health-conscious customers Advertisement not aggressive enough to appeal to areas outside southeast of U.WEAKNESSES Return on equity.S. net losses in each or past three years Per 10-K. continued dispute with Franchisees could hurt future business . and are not expected to in near future.
Starbucks lack of diversified and distinctive pastry line Dunkin Donuts does not have hot doughnuts to sell Many children love sweet treats. . Tim Horton¶s has yet to expand beyond U.OPPORTUNITIES `Families crave convenience because of busy life style Asian love sweet and are open to trying foreign foods.S. South America. Africa and south Asia are market to conquer. and Canada and its products line does not appear to be competitive.
S People are becoming more health conscious. high fat treats Starbuck has approximately 25 time amount of store worldwide that Krispy Kreme donuts has Restricted cash flow from banks and massive layoff have stirred the world economy and decreasing discretionary income European prier their local brand of doughnuts Britons tend not to have car. which does not bode well for high sugar. which inhabits drive thru customer and their eating habits and office technique differ from Americans Shareholder may sell Krispy Kreme donuts for lack of returns and dividends compared to other similar firm in the industry .THREATS Dunkin donuts presently dominate the doughnuts market particularly in south eastern U.
.SWOT ANALYSIS The following SWOT analysis is intended to examine KKD¶s internal strengths and weaknesses and link them to external opportunities and threats with the aim of selecting a strategy to pursue.
EFE matrix External Factor Evaluation (EFE) matrix method is a strategic-management tool often used for assessment of current business conditions. The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing. .
the EFE matrix is concerned solely with external factors. While the IFE matrix deals with internal factors. .Difference b/w EFE MATRIX & IFE MATRIX The major difference between the EFE matrix and the IFE matrix is the type of factors that are included in the model.
hand held computers for delivery drivers) . paperless ordering.External factors Increasing popularity of coffee shops and bakery cafés Popularity of American foods and fashion in overseas markets Growth in two-income households Americans continue to experience time-starvation Entertaining opportunities moving from home to work environment Technological advancements (i. predictive modeling software..e.
organic. Channel expansion possibilities (i. healthy eating trends Cultural differences in breakfast and snack foods Increase in eating at full-service restaurants combined with a decrease in the use of fast-food . Internet preordering) Competitors like Dunkin Donuts and Starbucks Low-crab trend in eating preferences All-natural.EXTERNAL FACTORS CONTD«..e.
0. Asian love sweet and are open to trying foreign foods.07 4 0. Families crave convenience because of busy life style 0.S.09 .06 0.05 2 0. Tim Horton¶s has yet to expand beyond U. 1. South America.30 1. Dunkin donuts does not have hot doughnuts to sell 0. Many children love sweet treats. Africa and south Asia are market to conquer. and Canada and its products line does not appear to be competitive.08 3 0.03 0.09 1 0.10 1.10 3 0. 0.08 1.28 1. Starbucks lack of diversified and distinctive pastry line 0.04 2 2 0.24 1. 0.KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE OPPORTUNITIES 1.
Dunkin donuts presently dominate the doughnuts market particularly in south eastern U. 0.12 1.06 2 0. which inhabits drive thru customer and their eating habits and office technique differ from Americans 0. Shareholder may sell Krispy Kreme donuts for lack of returns and dividends compared to other similar firm in the industry 0. which does not bode well for high sugar.00 1.08 2 0.06 2 0.05 2 0.94 .12 1. Starbuck has approximately 25 time amount of store worldwide that Krispy Kreme donuts has 0.09 TOTAL 1.THREATS 1. European prier their local brand of doughnuts 0.12 1 0.10 1. high fat treats 0.S People are becoming more health conscious.16 1.12 1.09 1 0.08 1 0. Britons tend not to have car.08 1. Restricted cash flow from banks and massive layoff have stirred the world economy and decreasing discretionary income 0.
.Internal factors Strong brand recognition and recall Wide appeal of signature glazed doughnuts Vertical integration Development in international markets Strong channel of distribution Quality of product Expanded assortment of offerings at KKD stores including beverages Doughnut machine technology. Montana Mills acquisition) Lack of locations in some areas Pricing in some locations .e. Perish ability of product Limited product line (heavy reliance on doughnut sales) Overextended (i.
06 3 3 3 0.21 5.18 3. Vertical integration helps ensure high quality product 6. market research shows appeal extends to all major demographic groups including age and income 0.21 0. high-quality doughnuts with strong visual appeal and ³one.36 2.18 .06 3 0.08 4 0.24 0.Key internal factors weight Rating Weighted score STRENGTHS 1. consistent expansion. and retail outlets through U.08 0.of-a-king´ taste 0.32 4. Neon ³Hot Doughnuts Now´ sign encourages people outside the store to make a impulse purchase 0. ³Hot shop´ stores save money while keeping Krispy Kreme Donuts customer experience intact 0.affordable.07 3 0.09 4 0. now in 16 countries 7.07 0. Product sold at thousands of supermarkets. 0.S. convenience stores.
WEAKNESSES 1.10 1 0. Product line slow to expand with nothing outside ³sweet treats´ to draw in health-conscious customers 0. Per 10-K.07 5.04 1 2 0.03 2 0. where most stores are 0.08 6.10 2. Shareholders have not received dividends recently.36 .S. Management states in recent 10-K that it is struggling with how to make stores profitable 0. assets.07 1 0. continued dispute with Franchisees could hurt future business 0. skill of management is questionable 0. stock price in state of flux 0.06 2 0.04 2 0.08 Total 1. Return on equity. Advertisement not aggressive enough to appeal to areas outside southeast of U. and are not expected to in near future.08 0. net losses in each or past three years 8.12 4. and investments all negative in the trailing twelve months.06 7.07 3.08 0. Revenue down.07 1 0.00 2. Closing stores when stores should be open globally at steady rate to keep up with competitor¶ growth 0.
CPM (Competitive Profile Matrix) .
00 3.05 .52 1 0.30 3 0.24 2 0.30 1 0.16 1 0.16 3 0.13 3 0.08 2 0.45 3 0.08 3 0.30 Customer loyalty 0.15 3 0.20 0.33 2 0.30 3 0.30 0.11 4 0.39 4 0.16 Price competitiveness 0.05 2 0.30 Product diversity 0.40 3 0.10 3 3 0.10 4 0.30 Global expansion 0.30 3 2 0.10 total 1.44 3 0.30 0.15 2 0.08 2.DUNKIN DONUTS STARBUCKS TIM HORTONS Critical success factor weight rating score rating score rating score Advertising 0.08 2 0.10 Sales distribution 0.10 3 0.79 2.20 2 3 0.10 0.13 Market share 0.45 2 0.10 3 0.24 Management Financial position 0.22 Product quality 0.
SPACE MATRIX .
.SPACE MATRIX It is a management tool used to analyze a company. It is used to determine what type of a strategy a company should undertake The SPACE matrix can be used as a basis for other analyses. such as the SWOT analysis BCG matrix model industry analysis assessing strategic alternatives (IE matrix).
Conservative FS +6 +5 +4 +3 +2 +1 Aggressive CA -6 -5 -4 -3 -2 -1 -1 -2 -3 -4 +1 +2 +3 +4 +5 +6 IS Defensive -5 -6 Competitive ES .
Strategic Position & Action Evaluation Matrix Aggressive Conservative Defensive Competitive .
±Two Internal Dimensions Financial Strength (FS) Competitive Advantage (CA) ±Two External Dimensions Environmental Stability (ES) Industry Strength (IS) .
Internal Strategic Position External Strategic Position Financial Strength (FS) Return on investment Leverage Liquidity Working capital Cash flow Environmental Stability (ES) Technological changes Rate of inflation Demand variability Price range of competing products Barriers to entry Competitive pressure Price elasticity of demand Ease of exit from market Risk involved in business .
capacity utilization .Internal Strategic Position External Strategic Position Competitive Advantage CA Market share Product quality Product life cycle Customer loyalty Competition¶s capacity utilization Technological know-how Control over suppliers & distributors Industry Strength (IS) Growth potential Profit potential Financial stability Technological know-how Resource utilization Ease of entry into market Productivity.
Financial strength factor include: profit(+1), sales growth(+2), cash flow(+2) 1+2+2; 5; 5/3=1.67 Competitive advantage factor include; customer loyalty(-2) product quality(-1), market share(-5) -2+-1+-5; -8/3= -2.67 From the above KKD¶s Financial were compared against competitor Dunkin Doughnuts, Star Bucks and Tim Horton¶s Environment Stability factors: Barriers to entry into Market (-4); risk involved into business (-3); and ease of exit from market (4) -4+-3+-4= -11/3= -3.67 Industry strength factors include: profit potential (+2); financial stability (+1); technological knowhow (+4) +2+1+4= 7/3= 2.33
Four Types of Strategies
Strengths-Opportunities (SO) Weaknesses-Opportunities (WO) Strengths-Threats (ST) Weaknesses-Threats (WT)
SO STRATEGIES SO Strategies use a firm¶s internal strengths to take advantage of external opportunities .
Strengths Weaknesses Opportunities Threats SWOT SO Strategies Use a firm¶s internal strengths to take advantage of external opportunities .
WO STRATEGIES WO strategies aim at improving internal weaknesses by taking advantage of external opportunities .
Strengths Weaknesses Opportunities Threats SWOT WO Strategies Improving internal weaknesses by taking advantage of external opportunities .
ST STRATEGIES ST Strategies use a firm¶s strengths to avoid or reduce the impact of external threats. .
Strengths Weaknesses Opportunities Threats SWOT ST Strategies Use a firm¶s strengths to avoid or reduce the impact of external threats .
.WT STRATEGIES WT Strategies are defensive tactics directed at reducing internal weakness and avoiding external threats.
Strengths Weaknesses Opportunities Threats SWOT WT Strategies Defensive tactics aimed at reducing internal weaknesses & avoiding environmental threats .
O3) All store signs in supermarkets and conveniences where product is sold have picture of young child eating a Krispy Kreme doughnut (S7. T7) . South Africa (S6. T5. T6) Express strengths and outline concrete strategies in clear format within 10-K in order to restore shareholder confidence in future of Krispy Kreme Donut (S1-S7. S4. driving truck and mobile "hot shop" to major European cities and filming their reactions for European ads (S2. SO STRATEGIES TV. Continued grand openings of stores in highlypopulated cities such as Sao Paulo. Brazil & Johannesburg.T1) Do "road show" across Europe as means of advertising. radio. and print ads demonstrating 27varieties of doughnuts against nondescript pastry offerings by Starbucks (S3. O7) ST STRATEGIES Compare "hot" doughnut appeal of Krispy Kreme Donut to cold doughnuts of Dunkin Donuts in TV and Internet ads (S1. O5) 3.
and develop wide variety of fresh fruit smoothies. Africa. T7) Recruit top executive talent from other fastfood firms (W1. T7) Survey franchisees to discover ways to repair business relationships and retain growth of franchise model. T1. study McDonald¶s model for tips (W8. offer ways to incorporate nuts and protein into foods (W5. O7 WT STRATEGIES Expand product line with low-calorie foods(W5. 03) Aggressive Internet ads demonstrating the appeal of Krispy Kreme Donut hot doughnuts (W6. and Southeast Asia in order to expand globally (W3. T3) . put fruit cups on menu. WO STRATEGIES Make doughnuts filled with fruit. O4) Open small but profitable "hot shops" in South America.
GRAND STRATEGY MATRIX .
Competitive position All quadrant contain all possible strategies . Market growth 2. This is also an important matrix of strategy formulation frame work. Grand strategy matrix it is popular tool for formulating alternative strategies. In this matrix all organization divides into four quadrants and two dimensions which are 1.
market development and products development are appropriate strategies. .Quadrant-I It contains that company¶s strong having competitive situation and rapid market growth. These firms must focus on current market and appropriate to follow market penetration. Firms located in Quadrant I of the Grand Strategy Matrix are in an excellent strategic position.
Strategies in Quadrant-I Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric diversification .
Quadrant-II It contains that company¶s having weak competitive situation and rapid market growth. . they are unable to compete effectively. Although their industry is growing. Firms positioned in Quadrant II need to evaluate their present approach to the marketplace seriously. and they need to determine why the firm's current approach is ineffectual and how the company can best change to improve its competitiveness.
Strategies in Quadrant-II Market development Market penetration Product development Horizontal integration Divestiture Liquidation .
. These firms must make some drastic changes quickly to avoid further demise and possible liquidation.III It contains that company¶s weak competitive situation and slow market growth. An alternative strategy is to shift away from the current business into different areas. The firms fall in this quadrant compete in slowgrowth industries and have weak competitive positions.Quadrant. Extensive cost and asset reduction (retrenchment) should be pursued first.
.Final options in quadrant-III The final options for Quadrant III businesses Divestiture Liquidation.
Strategies in quadrant-III Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification Liquidation .
Quadrant . Quadrant IV firms also may pursue joint ventures . or conglomerate diversification successfully. Quadrant IV firms have characteristically high cash flow levels and limited internal growth needs and often can pursue concentric.IV These firms have the strength to launch diversified programs into more promising growth areas. horizontal.
Finally.Quadrant ± IV (CONTD«) It contains that company¶s strong competitive situation and slow market growth. . Quadrant IV businesses have a strong competitive position but are in a slow-growth industry.
Strategies in QUADRANT.IV Concentric diversification Horizontal diversification Conglomerate diversification Joint ventures .
Recommended Strategies & Others .
Recommended strategies Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification .
RECOMMENDATION Reduce operating expenses (Down-size individual stores)Lower Costs of Doing Business reduce operating costs per individual store by changing average size of stores from 2500-4500 sq. ft. range to 1500-2000 sq ft. . Potential for 30 ± 50 % decrease in operating cost on a cost per square foot basis.
thus lowering per store operating costs to a more appropriate level for sales volume .Change entire manufacturing and distribution strategy Implement prebaked manufacturing operation to allow individual stores to decrease in size.(contd) i.
Implications of transition to par bake operation New Plant Equipment ± freezers. doughnuts still to befried and glazed on site. R&D for unique par bake operation. freezer trucks for distribution/delivery.) Increased efficiency ± smaller workforce per store. oven for various par baked goods. Store Equipment ± freezers.(contd«. . parbake allows for minimal Waste ± inventory as needed (important b/c fresh goods ± low shelf life Par bake will allow for ³hot doughnuts now´ all of the time. production equipment. fryers for doughnuts.
2-Develop stronger relations and control of franchisees Short-term period of one year ± postpone new franchise agreements/new store openings Implement Franchise Support Systems Communication ± between corporate and franchisees Support ± training. . advertising Utilize recommendation #1 in order to lower operating expenses for franchisees.
R&D ± product development .3.Implement Marketing Strategies Advertising ± national t television and radio advertising campaign based on ³hot doughnuts now´ Marketing research ± periodic research to stay abreast of trends.
Fundraising ± helped schools raise over $30 million last year (selling doughnuts. and partnership cards). mugs. TV ad campaign Gifts/Accessories ± shirts. . free doughnut while waiting in line. coffee. coffee. sweatshirts. boxers.Advertisement / Marketing Free doughnut strategy ± ³Hot Now´. certificates. hats. toys.
4. Par baked will allow for ³Hot Bagels Now´ . Continue to utilize ³hot doughnuts now´ Expand product line Account with A&S ³New York´ Bagels (parbaked).Strengthen Competitive Advantage Strengthen Competitive Advantage through differentiation in products and services.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.