KRISPY KREME MATRICES/REPORTS
Current Strategies and Objectives
Per pages 26 and 27 of its Form 10-K (annual report) filed April 17, 2009, Krispy Kreme Donuts has listed the following as its current objectives:
1. Reduce the investment required to produce a given level of sales and reduce operating costs by operating smaller satellite stores instead of larger, more expensive factory stores .
2. Achieve greater production efficiencies by centralizing doughnut production to minimize the burden of fixed costs.
3. Achieve greater consistency of product quality through a reduction in the number of doughnut-making locations.
4. Enable store employees to focus on achieving excellence in customer satisfaction and in-shop consumer experience.
5. Stimulate an increase in on-premises sales of doughnuts and complementary products by increasing the number of retail distribution points to provide customers more convenient access to the companys products.
Regarding strategies, the Form 10-K filed April 17, 2009 notes a few:
1. Open up new (or convert traditional factory stores to) “hot shops” that provide a hot doughnut experience for customers throughout the day, instead of the traditional experience of having the hottest, freshest doughnuts available only at certain times of the day—these “hot shops” would be added to the traditional fresh shops and kiosks as the primary methods for market penetration while reducing operating costs.
2. Open up new company-owned satellite stores for additional market penetration.
3. The company also plans to extend its testing of soft serve dairy products into additional locations in fiscal 2010 as part of its product development.
4. Close stores that are not performing to company standards.
Vision
Krispy Kreme Donuts “Vision and Values” can be found on their web site (http://investor.krispykreme.com/includes/stupop.html).
“We Believe…
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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”
Vision Statement
From Krispy Kreme Donut’s “Vision and Values” provides the following Vision Statement: “To be the global leader in doughnuts and complementary products, while creating magic moments worldwide.”
Competitive Profile Matrix (CPM)
Dunkin’ Donuts
Starbucks
Tim Hortons
Critical Success
Weight
Rating
Score
Rating
Score
Rating
Score
Factors
Advertising
0.11
4
0.44
3
0.33
2
0.22
Product Quality
0.15
3
0.45
3
0.45
2
0.30
Product
0.08
2
0.16
1
0.08
2
0.16
Diversity
Price
0.08
3
0.24
2
0.16
3
0.24
Competitiveness
Management
0.10
3
0.30
3
0.30
2
0.20
Financial
0.10
3
0.30
2
0.20
3
0.30
Position
Customer
0.10
4
0.40
3
0.30
3
0.30
Loyalty
Global
0.13
3
0.39
4
0.52
1
0.13
Expansion
Market Share
0.10
3
0.30
3
0.30
1
0.10
Sales
0.05
2
0.10
3
0.15
2
0.10
Distribution
Total
1.00
3.08
2.79
2.05
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1. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.
External Factor Evaluation (EFE)
Key External Factors
Weight
Rating
Weighted Score
Opportunities
1.
Families crave convenience because of busy lifestyles
0.08
3
0.24
2.
Asians love sweets and are open to trying foreign foods
0.05
2
0.10
3.
Starbucks lacks a diversified and distinctive pastry line
0.10
3
0.30
4.
Dunkin’ Donuts does not have hot doughnuts to sell
0.07
4
0.28
5.
Many children love sweet treats
0.03
2
0.06
6.
Tim Hortons has yet to expand beyond the U.S. and Canada, and
0.04
2
0.08
its product line does not appear to be competitive
7.
South America, Africa, and Southern Asia are markets to conquer
0.09
1
0.09
Threats
8.
Dunkin’ Donuts presently dominates the doughnut market,
0.12
1
0.12
particularly in northeastern U.S.
9.
People are becoming more health-conscious, which does not bode
0.08
2
0.16
well for high-sugar, high-fat treats
10. Starbucks has approximately 25 times the amount of stores
0.08
1
0.08
worldwide that Krispy Kreme Donut has
11.
Restricted cash flow from banks and massive layoffs have stifled
0.06
2
0.12
the world economy, decreasing discretionary income
12.
Europeans prefer their local brands of doughnuts
0.05
2
0.10
13.
Britons tend not to have cars, which inhibits drive-thru customers,
0.06
2
0.12
and their eating habits and office etiquette differ from Americans
14.
Shareholders may sell Krispy Kreme Donut stock for lack of
0.09
1
0.09
returns and dividends compared to other similar firms in the industry
Total
1.00
1.94
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2. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.
Internal Factor Evaluation (IFE)
Key Internal Factors
Weight
Rating
Weighted Score
Strengths
1.
Affordable, high-quality doughnuts with strong visual appeal and
0.09
4
0.36
“one-of-a-kind” taste
2.
Neon “Hot Doughnuts Now” sign encourages people outside the
0.06
3
0.18
store to make an impulse purchase
3.
Market research shows appeal extends to all major demographic
0.08
4
0.32
groups including age and income
4.
“Hot shop” stores save money while keeping Krispy Kreme Donuts
0.07
3
0.21
customer experience intact
5.
Vertical integration helps ensure high quality product
0.07
3
0.21
6.
Consistent expansion; now in 16 countries
0.08
3
0.24
7.
Product sold at thousands of supermarkets, convenience stores,
0.06
3
0.18
and retail outlets through U.S.
Weaknesses
1.
Return on equity, assets, and investments all negative in the
0.10
1
0.10
trailing twelve months; skill of management is questionable
2.
Shareholders have not received dividends recently, and are not
0.07
1
0.07
expected to in near future; stock price in state of flux
3.
Closing stores when stores should be opening globally at steady
0.06
2
0.12
rate to keep up with competitors’ growth
4.
Management states in recent 10-K that it is struggling with how to
0.07
1
0.07
make stores profitable
5.
Product line slow to expand with nothing outside “sweet treats” to
0.04
2
0.08
draw in health-conscious customers
6.
Advertising not aggressive enough to appeal to areas outside
0.03
2
0.06
southeast of U.S. where most stores are
7.
Revenues down, net losses in each of past three years
0.08
1
0.08
8.
Per 10-K, continued disputes with franchisees could hurt future
0.04
2
0.08
business
Total
1.00
2.36
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3. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.
Strengths-Weaknesses-Opportunities-Threats Matrix (SWOT)
Strengths
Weaknesses
1. Affordable, high-quality
1. Return on equity, assets,
doughnuts with strong visual
and investments all
appeal and “one-of-a-kind” taste
negative in the trailing
twelve months; skill of
2. Neon “Hot Doughnuts Now” sign
mgmt is questionable
encourages people outside the
store to make an impulse purchase
2. Shareholders have not
received dividends recently,
3. Market research shows appeal
and are not expected to in
extends to all major demographic
near future; stock price in
groups including age and income
state of flux
4. “Hot shop” stores save money
3. Closing stores when
while keeping KKD customer
stores should be opening
experience intact
globally at steady rate to
keep up with competitors’
5. Vertical integration helps ensure
growth
high quality product
4. Management states in
6. Consistent expansion; now in 16
recent 10-K that it is
countries
struggling with how to make
stores profitable
7. Product sold at thousands of
supermarkets, convenience stores,
5. Product line slow to
and retail outlets through U.S.
expand with nothing outside
“sweet treats” to draw in
health-conscious customers
6. Advertising not
aggressive enough to
appeal to areas outside
southeast of U.S. where
most stores are
7. Revenues down, net
losses in each of past three
years
8. Per 10-K, continued
disputes with franchisees
could hurt future business
Opportunities
SO Strategies
WO Strategies
1. Families crave convenience
1. TV, radio, and print ads
1. Make doughnuts filled with
because of busy lifestyles
demonstrating 27 varieties of
fruit, put fruit cups on menu,
2. Asians love sweets and are
doughnuts against non-descript
and develop wide variety of
pastry offerings by Starbucks (S3,
fresh fruit smoothies; offer
open to trying foreign foods
O3)
ways to incorporate nuts and
3. Starbucks lacks a diversified
protein into foods (W5, O3)
2. All store signs in supermarkets
and distinctive pastry line
and conveniences where product is
2. Aggressive Internet ads
4. Dunkin’ Donuts does not have
sold have picture of young child
demonstrating the appeal of
hot doughnuts to sell
eating a Krispy Kreme doughnut (S7,
Krispy Kreme Donut hot
5. Many children love sweet
O5)
doughnuts (W6, O4)
treats
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