Q.1. what is Krispy Kreme Doughnuts corporate Strategy?

Briefly
identify the business strategies that Krispy Kreme Doughnuts is using in each of its
consumer business segments.

Company strategies:
Krispy Kreme Doughnuts, Inc. is a global retailer, distributor, marketer and wholesaler of
doughnuts, including operating and franchising a chain of doughnut stores; manufacturing and
selling doughnut mixes, supplies, and machinery to franchisees; and selling and distributing its
own line of branded coffees.
Currently Krispy Kreme implements a differentiation strategy, attempting to distinguish their
doughnuts based on taste, quality, and simplicity
There are three Business segments from which Krispy Kreme Generating its Revenue
1. Company Stores
KKD shifted in focus from a wholesale bakery to a specialty retail bakery to promote and
increase sales at the companys own retail outlets. The company emphasized the HOT
DOUGHNUTS NOW feature as a response to customer feedback as well as a form of local
advertising. The company was able to boost its store sales-volume by combining on-premise
sales at its stores to capture customer base and then to secure off-premise sales at supermarket
and convenience stores for packaged sales.
2.

Franchises

For rapid Expansion KKD Start Giving Franchise License Domestically to capture the larger part
of Market in united State .Grant franchises only to candidates who have experience in operating
multi-unit food establishments and who have the capital to adequately finance the opening of
new Krispy Kreme stores in their territory. Relying upon franchised stores as opposed to
company-owned stores conserves the companys capital for other expansion efforts.
KKD also Want to enter in Global Market where People are somehow aware of doughnuts and
welcome Western Food KKD used the International Franchising Strategy to Become a global
krispy kreme that can be enjoyed by everyone all over the world
3. KKD Supply Chain
Build a vertically-integrated value chain by supplying doughnut mixes to all stores, by making
the doughnut equipment used at all Krispy Kreme stores, and by supplying coffee products used
in making hot and cold coffee beverages. Selling ready-mixed ingredients and doughnut-making
equipment to franchisees.

Q.2. Develop Strategic Position & Action Evaluation Matrix (SPACE)

X
A
X
I
S

Y
A
X
I
S

Internal Strategic Position

Competitive Advantage (CA)
( -1 Best, -6 Worst)
Market Share
-2
Brand image
-1
Product Quality
-2
Customer Loyalty
-3

Average
Total X Axis Score
Financial Strength (FS)
Revenue increase
Cash flows
Efficiency Ratios
Working Capital Ratio
Average

Total Y Axis Score

-2

External Strategic Position

Industry Stability (IS) ( +1 Worst, +6 Best)
Growth Potential
2
Resource Utilization
1
Financing Access
1
Industry Profits
2

1.5
-0.5

(+1 Worst. +6 Best)

2
1
2
3
2

Environmental Stability ( -1 Best, -6 Worst)

Inflation Rates
-4
Technological Changes
-3
Competitive Pressure
-3
Competing Products Price
-2
Average
-3

-1

KKD's directional vector is positioned in the Defensive vector (Lower-Left quadrant) of the matrix, it
shows that a firm financially is so weak not utilizing its Internal Strengths (IS) which its Competitive
advantage is. Firm can also work on improving its internal factors, by developing newer products that are
health conscious and improving choice which will envariablly result in increased sales.

Question 2: What is your assessment of the long-term attractiveness of the industries

represented in Krispy Kreme business portfolio?
Industry Attractiveness
Measure

weight

Company
Store

Franchises

Market size and projected

growth rate
Intensity of Competition

0.35

1.4

1.05

1.0

0.20

.60

.40

.60

Resource Requirements

0.20

.80

.20

.80

Industry Profitability

0.25

.75

.50

.75

TOTALS

3.15

KK

Supply
Chain

2.15

2.85

What is your assessment of the competitive strength of Krispy Kremes different business
units?
Competitive Strength
Measure

Weight

Relative Market share

0.20

.60

.20.

0.80

Costs relative to
competitors' costs
Brand image and
reputation
Profitability relative to
competitors
Total

0.20

.60

.40

0.60

0.40

1.60

.80

1.20

0.20

.60

.60

0.60

Company Stores

3.4

Franchises

KK Supply Chain

3.2

Company Stores and KK Supply Chain are for growth and built base on their big size and high
level of industry attractive. Besides, Franchisees segment for maintain, harvesting base on their
average industry attractive and relative market size comparing to other industry

G.E Matrix
Buiness Units

Revenue

Revenue%

Profit

Company Store

265890

69.2%

-26610

Franchises

25537

6.7%

KK
Chain

92557

24.1%

Supply

Profit %

IAS

CS

3.15

3.4

16515

41.2%

2.15

23565

58.8%

2.85

3.2

Q.5. what are the cash flow characteristics of each Krispy Kreme Doughnuts segments?
Which businesses are the strongest contributors Krispy Kreme Doughnuts free cash
flows? By developing a BCG matrix of its relative market share and growth rate?

Buiness Units

Revenue

Revenue%

Profit

Company Store

265890

69.2%

-26610

Franchises

25537

6.7%

KK
Chain

92557

383984

Total

Supply

Profit %

RMS

Growth
Rate

.80

-13

16515

41.2%

.20

10

24.1%

23565

58.8%

.60

-7

100

40080

100

Franchises is located in the Question Marks position on the BCG Matrix. It has a low Relative
Market Share Position but a high industry Growth Rate. So KKD , need to focus on market
penetration, market development and product development . Company stores and KK supply
chain fall in cash cow portion .Company store Business segment presence in cash cow portion of
BCG is due to its negative growth. Its attractiveness is high in industry so if company start
focusing on product development for those who are health conscious then company store can
come in Star.

Q.6. Develop strategic group map for the industry. Justify your reasons

Starbucks is World known Coffee Company having a huge variety of products, like soft drinks,
beverages, ice cream, coffee, hot snacks .and the market share of Starbucks ins restaurant
industry is more than other two Company. Dunkin donut comes 2nd in restaurant industry having
operating globally and its market share much more than kkd company .KKD has less product
range than these 2 and still its not penetrated in whole market domically and internationally.

Q.7. Identify the Key Success Factors and develop a Competitive Profile
Matrix (CPM)?
The Competitive Profile Matrix (CPM)

Critical Success
Factors
Brand Reputation
Market Share
Financial Position
Product Quality
Product Lines
Consumer Loyalty
Total

Weight

0.2
0.1
0.2
0.2
0.2
0.1

1.0

Krispy Kreme
Rating
(1-4)
Weighted
Score
4
0.80
1
0.10
2
0.40
2
0.40
3
0.60
2
0.20
2.5

Dunkin Donuts
Rating
Weighted
Score
4
2
3
3
3
3

0.80
0.20
0.60
0.60
0.60
0.30
3.1

Starbucks
Rating
Weighted
Score
4
4
4
3
4
3

0.80
0.40
0.80
0.60
0.80
0.30
3.7

As The Total Weighted score of Starbucks is 3.7 which is more than 3.15 that mean Starbucks Is
the Market Leader in this Industry. Dunkin Donuts come 2nd with 3.1 score. Krispy Kreme
position is 3rd in this Industry with score of 2.5

Q.8. what is your assessment of Krispy Kreme Doughnuts financial

performance during fiscal years 2007-2009? Analyze the following ratios?
a. Profitability Ratios:

Profitability

2007

2008

2009

Gross profit Margin

15.6%

11.5%

10.2%

Net Profit Margin

-42236/461195*100=
-9.2%

-67051/429319*100=
-15.6%

-4061/383984*100
-1.1

Interpretation:

The Gross profit margin showing a decreasing trend .Company decreasing sales effected
Gross profit margin. Net profit margin of KKD is negative for the three years. Its mean
company not producing any profit. Company not utilizing its resources properly .operating
expense increasing continuously.

b.

Liquidity Ratios:

Liquiadity

2007

2008

2009

Current Ratio

131818/13487 =
00.98

760680/43218=
1.76

75806/39616=
1.91

Working Capital

131818-134870=
-3052

760680-43218=
707462

75806-39616=
36190

Interpretation:

Current ratios and working capital ratios showing that company can pay its current liability
easily. But due to continue loss in 3 years company will not be able to pay its long term debt.
That is an alarming situation for the KKD, so no one will invest in KKD