BUSINESS PROBLEM

Revenue diversification is lacking.

In 2019, the United States segment accounted for nearly half of total revenue. This means
that if the US economy suffers a downturn, the company will be severely harmed (Team,
2019).

The targeting strategy could be strengthened.

Dunkin' Donuts is currently having difficulty effectively targeting key consumers in a number
of countries, most notably India and other emerging markets. This is due to their inability to
understand foreign cultures, which leads to poor decisions (Sigalos, 2018).

The product range is limited.

As previously stated, Dunkin' Donuts specialises in coffee and baked goods. As a result,
their presence in the food industry is limited to a very small segment, limiting the number of
potential customers.

Growth has slowed.

Dunkin' Donuts has a very limited expansion strategy when compared to its main
competitors, Burger King (click here for Burger King SWOT Analysis) and McDonalds (click
here for McDonalds SWOT Analysis). This is a flaw because the company will only enter
new markets once its competitors have established themselves (Goldman, 2017).

In financial terms, underperformance.

Financial constraints severely limit expansion options. To pursue more ambitious expansion
plans and compete for market share, Dunkin' Donuts needs more capital. This is especially
important in 2020.
FIVE FORCES MODEL

Threat of New Entrants:

The coffee and snack industry will grow as the middle class grows. In this industry, the
capital requirements for starting a business similar to Dunkin Donuts are low, making it a
more accessible business to start. New entrants pose a significant threat due to the low
entry barriers. One restaurant's products are very similar to those of another. Customers in
this industry have a low switching cost due to the similarity of the products, so more entrants
would be willing to enter this market. Large restaurant chains would pose a challenge to new
entrants, potentially discouraging their entry.

Threat of Substitutes:

In the market, there are numerous local and international restaurant chains. In the coffee
and snack industries, substitute items are viewed negatively. Dunkin Donuts is one of many
coffee shops that sell doughnuts and other snacks. In a market with many substitutes, a
company can gain a competitive advantage by focusing its strategy on customer satisfaction
and brand loyalty. Dunkin Donuts has prioritised providing a high-quality customer
experience due to the increased risk of item replacement. Furthermore, the company has
invested in developing a simplified version of the menu for the benefit of its customers.

Bargaining Power of Customers:

Customers have a lot of negotiating power because there are so many restaurants selling
the same thing in the market. Customers are unable to bargain due to a high concentration
of buyers but low purchasing volumes. In the restaurant industry, customers' switching costs
are low, resulting in competitive restaurant pricing. Because they have access to a wealth of
information through online channels, buyers can easily compare prices and move on to a
suitable product. Customers at Dunkin Donuts value quality, so the company can charge a
premium for their products. Customers are willing to pay more for a brand's overall
experience rather than just the food.
Bargaining Power of Suppliers:

Continental Mills, Rice Products Crop, and Dean Foods are among the companies involved
in the Dunkin Donuts procurement process. All of these are large corporations with well-
established supply chain networks. There are numerous raw material suppliers, but the
success of the coffee and snacks business is dependent on the quality of the ingredients, so
the company must seek out suppliers who can meet these high standards. Suppliers who
can form contracts with large businesses in this industry, such as Dunkin Donuts, must
compromise on price structure and adjust to the large firms' demand. The buyer's switching
cost is low in this industry because the suppliers' products are not differentiated or
customised. Forward integration poses little risk. Creating a brand similar to Dunkin Donuts
would be extremely difficult.

Competitive Rivalry:

Starbucks, McDonald's, Baskin-Robbins, Subway, Pizza Hut, and Dunkin Donuts are among
the major competitors. Local and national companies compete fiercely in the beverage and
snack industry. There are numerous equally balanced competitors in the hot beverage
category, such as Starbucks. The initial investment required to open a Dunkin Donuts-style
restaurant would be enormous. Customers in this industry have a low switching cost
because the products are not dissimilar.