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March 27, 2018 | Author: Zahra_Ramzan_A_5948 | Category: Doughnut, Strategic Management, Fast Food Restaurants, Starbucks, Brand
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Term Report - Strategic Management Institute of Business ManagementStrategic Management at Krispy Kreme Doughnuts Inc. Submitted to: Mr. Abdul Qadir Molvi Submitted by: 1) Zahra Ramzan Ali – 7926 2) Zarish Safdar – 6939 3) Maaz Shahid – 7837 4) Safura – 7626 5) Sahar Najam – 8141 Date: 15th December, 2010 LETTER OF TRANSMITTAL Mr. AbdulQadir Molvi, Professor Strategic Management, Institute of Business Management, Karachi. Dear Sir, This is the term report on Krispy Kreme Case-study (Strategic Management Concepts & Cases) that was assigned to us. This report presents a complete overview of the company in terms of its strategic management. Besides the case study in the book, several online journals, magazines and company’s website have been used to conduct the research. All the information we gathered has been analyzed using different matrices taught in the class and presented in this report. Also the recommendations for improving the strategies have been offered throughout the report whenever some strategy has been highlighted as weak. We hope that our report is up to your expectations. We would be pleased to answer any queries you may have regarding the report. Thank you. Sincerely, Group Members Strategic Management at Krispy Kreme Doughnuts Inc. Page 2 LETTER OF ACKNOWLEDGEMENT First and foremost, we would like to thank Allah Almighty, who gave us knowledge and capability to carry out this research and compile the report to the best of our abilities. Next, we would like to thank our professor, Mr. Abdul Qadir Molvi, who very diligently taught us each and every concept related to strategic management and assigned us this report which enabled us to see how everything taught in class is being practiced by organizations in the corporate world. It was truly an amazing experience getting to know about strategic management processes and practices at Krispy Kreme Doughnuts Inc. and we are sure it will help us gain a better understanding of strategic management at organization we will work for in our future career. Strategic Management at Krispy Kreme Doughnuts Inc. Page 3 TABLE OF CONTENTS Term Report - Strategic Management..............................................................................................1 Institute of Business Management...................................................................................................1 LETTER OF TRANSMITTAL.......................................................................................................2 LETTER OF ACKNOWLEDGEMENT.........................................................................................3 TABLE OF CONTENTS.................................................................................................................4 COMPANY OVERVIEW...............................................................................................................5 MISSION, VISION AND VALUES...............................................................................................6 INDUSTRY DEFINITION..............................................................................................................7 INDUSTRY ANALYSIS................................................................................................................7 COMPETITORS..............................................................................................................................8 PRODUCT LINE.............................................................................................................................9 BUSINESS SEGMENTS..............................................................................................................10 CORE COMPETENCIES..............................................................................................................11 MICRO ENVIRONMENT ANALYSIS.......................................................................................12 Value Chain Analysis................................................................................................................13 MACRO ENVIRONMENT ANALYSIS......................................................................................17 Porter’s 5 Forces Model.............................................................................................................17 Room for growth in the coffeehouse and snack chain industries..............................................17 Health Fads and Consumer Shift Toward Health Conscious Diets Affect Sales Environment of Krispy Kreme.............................................................................................................................19 STRATEGIC OVERVIEW...........................................................................................................20 SWOT ANALYSIS.......................................................................................................................23 EXTERNAL FACTOR EVALUATION MATRIX (EFE)...........................................................25 INTERNAL FACTOR EVALUATION (IFE) MATRIX.............................................................27 WEIGHTED COMPETITIVE STRENGTH ASSESMENT........................................................28 I/E MATRIX..................................................................................................................................31 TOWS MATRIX...........................................................................................................................32 SPACE MATRIX..........................................................................................................................35 GLOBAL REVENUE ...................................................................................................................37 BUSINESS AND FINANCIAL METRICS..................................................................................37 First quarter of fiscal year 2011.....................................................................................................37 COMPARITIVE INCOME STATEMENT...................................................................................37 .......................................................................................................................................................39 KRISPY KREME’S FINANCIAL RATIOS ANALYSIS............................................................39 Key Ratios..................................................................................................................................40 5 Years Summary.......................................................................................................................41 Net Worth Analysis....................................................................................................................41 REFERENCES..............................................................................................................................42 Strategic Management at Krispy Kreme Doughnuts Inc. Page 4 Dominican Republic. NC.COMPANY OVERVIEW Krispy Kreme is an international retailer of premium-quality sweet treats. quality and simplicity. Puerto Rico. Their doughnuts. indulgent sweet treat. The approximate number of employees is Approx. Today. including age and income. In addition to their taste. 3. Strategic Management at Krispy Kreme Doughnuts Inc. automated system is designed to create high quality. including its signature hot Original Glazed® doughnut. Qatar. clubs and family. have a oneof-a kind taste that generations of loyal customers have grown to love. Many of its customers are accustomed to purchasing our doughnuts by the dozen for their office. when illuminated. is a signal to the customers that the signature product. Malaysia. Turkey. Their vertically integrated. the company has offered the highest-quality doughnuts and great-tasting coffee since it was founded in 1937 by Vernon Rudolph. the Kingdom of Saudi Arabia. Indonesia. Lebanon. Headquartered in Winston-Salem. Currently. which are made from a secret recipe that has been in the company since 1937. Bahrain. Quality control starts with their manufacturing plant. The Hot Doughnuts Now sign is a strong impulse purchase generator and an integral contributor to the brand’s mystique. The Hot Doughnuts Now sign. Australia. is being made. Krispy Kreme and its one-of-a-kind Hot Light can be found in approximately 649 locations around the world. and the United Kingdom.900. Their store operators support their local communities through the popular fundraising programs and the sponsorship of local events. Thailand. the Republic of Korea. Krispy Kreme is also committed to strong local community relationships. Krispy Kreme doughnuts are an affordable. China. Krispy Kreme can be found in 20 countries. which produces proprietary Krispy Kreme mixes—their state-of-the-art laboratory runs quality tests on all key ingredients and each batch of mix. Canada. Kuwait. including the United States. the Philippines. The Krispy Kreme brand has several unique elements that have helped us create a special bond with our customers. Mexico. the United Arab Emirates. Market research indicates that Krispy Kreme’s breadth of appeal extends across all major demographic groups. hot Original Glazed® doughnuts. Page 5 . consistent doughnuts in an efficient manner. Japan. Vision To be the worldwide leader in sharing delicious tastes and creating joyful memories.. • • • • • • • Consumers are our lifeblood. VISION AND VALUES Mission To touch and enhance lives through the joy that is Krispy Kreme..MISSION. Page 6 . 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. Values They believe." we deliver on our commitments We must coach our team to ever-better results Strategic Management at Krispy Kreme Doughnuts Inc. in-store bakeries within grocery stores. it can be categorized into tertiary industry and by size it is a global industry since the trend of fast-food has been accepted and implied all around the world. By sector. which tracks consumer usage of the foodservice industry. doughnut sales rose approximately 5% year-over-year in grocery stores and rose approximately 3% in convenience stores in 2009. INDUSTRY ANALYSIS In the United States. this is an international industry and it is fragmented. including grocery store packaged products. the QSR segment is the largest segment of the restaurant industry and has demonstrated steady growth over a long period of time. Customer service. QSR sales have grown at an annual rate of 3% over the past 10 years. In addition to retail doughnut outlets. during calendar 2009. According to The NPD Group. convenience stores. The industry is basically product based but the concept of service has been widely integrated into it. data indicate that. The National Restaurant Association projected QSR sales to rise 3% in calendar 2010 from the $160 billion posted in calendar 2009. the domestic doughnut market is comprised of several other sales channels. Inc.Information Resources.INDUSTRY DEFINITION Krispy kreme as a whole is the part of restaurant industry but it can be further categorized into Quick Service restaurant or fast food industry. Strategic Management at Krispy Kreme Doughnuts Inc. Page 7 . and vending. foodservice and institutional accounts. Based on target market. Tim Horton's also has a food menu to complement its beverage selection. Strategic Management at Krispy Kreme Doughnuts Inc. Tim Hortons (THI) is the largest fast food restaurant chain in Canada (and the fourth-largest in all of North America) based on sales and number of restaurants. is an important factor in successfully competing for convenience store and grocery/mass merchant business. Currently they operate 40 franchised and company owned gourmet doughnut stores in seven states. breakfast sandwiches and other baked goods. Entenmann’s and Hostess. and products are either sourced from a central commissary or brought in by local bakeries. as well as regional brands.600 in 2008. and the goal is to open 1200 stores nationwide by 2010. offering doughnuts. including those made by well-known producers. Starbucks (SBUX) is an international coffeehouse that has built one of the world's most powerful and recognizable brands upon high-quality coffee and the unique "Starbucks Experience. In the packaged doughnut market. sandwiches. COMPETITORS Following are the direct and indirect competitors of Krispy Kreme: Dunkin' Donuts is the world's largest coffee and baked goods chain. such as Dolly Madison. and other food items." Starbucks has sought to capitalize on its growing popularity through expansion. serving more than 3 million customers per day. bistro-style doughnut stores with gourmet espresso bars in high traffic areas. Page 8 . There is an industry trend moving towards expanded fresh product offerings at convenience stores during morning and evening drive times. Krispy Kreme competes for sales with many sweet treats. LaMar’s Doughnuts’ strategy is to go to its customers by operating neighborhood. Dunkin' Donuts sells 52 varieties of donuts and more than a dozen coffee beverages as well as an array of bagels. the addition of over 1500 stores in just over a year brought its total store count to over 16.including frequency of deliveries and maintenance of fully stocked shelves. McDonald's operates its own restaurants and franchises its brand to local businesspeople (about 70% of the world's McDonald's restaurants are franchised). PRODUCT LINE Krispy Kreme’s product line consists of the following: 1) Doughnuts 2) Coffee 3) Iced drinks and Kool Kremes Strategic Management at Krispy Kreme Doughnuts Inc.000 locations in over 110 countries. Page 9 . with over 6300 Wendy's franchises in North America and over 300 franchises abroad.McDonald's (MCD) is the world's largest fast food restaurant chain with over 32. Wendy's International (WEN) is one of the world's largest restaurant operating and franchising companies. Domestic Franchise Stores The Domestic Franchise segment consists of the Company’s domestic store franchise operations. are smaller than most factory stores. These stores sell doughnuts and complementary products through the on-premises and off-premises sales channels and come in two formats: factory stores and satellite stores. there were 83 Company stores in 18 states and the District of Columbia. As of January 31. Factory stores have a doughnutmaking production line. Page 10 . Satellite stores. and include the hot shop and fresh shop formats. which serve only on-premises customers. and many of them sell products through both onpremises and off-premises sales channels to more fully utilize production capacity. 2010.BUSINESS SEGMENTS Company Stores The Company Stores segment is comprised of the doughnut shops operated by the Company. Domestic franchise stores sell doughnuts and complementary products through the on-premise and off-premise sales Strategic Management at Krispy Kreme Doughnuts Inc. including 69 factory and 14 satellite stores. Montana Mills Bread Co. Krispy Kreme Coffee Company. Page 11 . 2010. HDN Development Corporation.. there were 358 international franchise stores in 18 countries. Hot Doughnuts Now International Ltd. Panhandle Doughnuts. Krispy Kreme International Ltd. Krispy Kreme Mobile Store Company.channels in the same way and using the same store formats as in the Company Stores segment. Tim Hortons and LaMar`s Donut but the point that differentiate Krispy Kreme from other players is the “HOT DOUGHNUT EXPERIENCE” and the company owned stores that give a classic touch to the donut experience which it termed as “Doughnut Theatre” Strategic Management at Krispy Kreme Doughnuts Inc. Its subsidiaries are Principal Subsidiaries: Krispy Kreme Doughnut Corporation. Inc. (Switzerland). (Switzerland). There are other big players in the industry such as Dunkin Donuts. Inc. there were 141 domestic franchise stores in 29 states.K. As of January 31. LLC. CORE COMPETENCIES Eventhough Krispy Kreme has vertically integrated but their core competency is still in the doughnut making business. and also using a kiosk format. A portion of sales by the franchisees in the United Kingdom and in Australia are made to offpremises customers. Krispy Kreme Europe Limited (U. As of January 31. International Franchise stores The International Franchise segment consists of the Company’s international store franchise operations. Winchell`s Donut House. LLC. Krispy Kreme has strategic advantage over others because of forward and backward integration. Oliver Acquisition Corp. 2010. International franchise stores sell doughnuts and complementary products almost exclusively through the on-premises sales channel in the same way and using the same store formats as in the Company Stores segment. including 104 factory and 37 satellite stores. HD Capital Corporation... including 95 factory and 263 satellite stores. Krispy Kreme Distributing Company..). All these companies had some portion of market since the size of market was so huge that every company was doing good in its area of expertise. Quick and consistence service was the Dunkin donut focus. The biggest surprise with respect to other companies was that “a day old donut were never sold at the shops but were donated at day`s end to the needy”. It initiated several promotional schemes to combat Krispy Kreme. In contrast to Krispy Kreme it emphasize more on coffee and convenience. Winchell`s Donut house was also proposing itself as a fresh glazed donut maker. Eventhough half of its sales include coffee without donut. IVS supports ADC systems in term of distribution.S Market for Doughnut was $10 billion. Page 12 . Tim Hortons was another name in the market and it specialized in coffee and baked doughnut. Moreover. muffins and bagels. Another point of difference was the 24 hour drive through at Tim Hortons. Effective management of these systems have enabled Krispy Kreme to secure a strategic position and to focus on its core competencies. Dunkin Donut had threat from Starbuck which the countered by adding a wider variety of hot-and coldcoffee beverages. It brought some innovation by adding low-fat doughnuts. It initiated program like WARM N FRESH and replacing donut after every 15-20 minutes between certain times.Since the company has integrated vertically well and has also installed the IVS (Integrated Virtual System). Integrated Visual System’s sole focus is to deliver world class solutions to meet client’s warehouse management and automated data collection (ADC) requirements. Similarly LAMAR`s Donut was famous for its customized product and its doughnut were of “artisan quality”. Dunkin Donut was the world`s largest coffee and baked-good chain. MICRO ENVIRONMENT ANALYSIS The U. The Major portion of 45% market share was held by Dunkin donuts. some small vendors were also happy since giants like Krispy Kreme and others used to invest heavily on marketing and promotion which was simply increasing awareness and size of the market Strategic Management at Krispy Kreme Doughnuts Inc. and beating Starbuck in time management. Each operation of company created a value for the customer. The company revamped the stores to better attract the customer. Page 13 . The idea was to leverage the interest generated in Krispy kreme products to secure supermarkets and convenience stores accounts. was carried out by “KK manufacturing and Distribution”.Value Chain Analysis Krispy kreme had developed a vertically integrated supply chain whereby it manufacture mixes for its doughnuts at company plant in North Carolina and Illinois and it also manufactured doughnut making equipment for use in both company-owned and franchise stores. the most important one being given the “Hot Doughnut experience” depicting the freshness of the doughnut. aligning it more closely with the hot doughnut experience in its stores. The sales of mixes and equipment. Beverage sales of Krispy Kreme accounted for 10 % of company`s sales out of which coffee had half of the contribution. Krispy kreme soon became popular with Krispy Kreme coffee. Krispy Kreme acquired Digital java Inc. Company-owned stores had a major role in catalyzing the products of Krispy kreme.. Strategic Management at Krispy Kreme Doughnuts Inc. One other important perceived value for the customers was the experience of watching doughnut being through a 40 feet glass window. The company did not sell the doughnut rather it gave its customers the experience of Doughnut. To Improve the efficiency. a coffee company the sourced and roasted premium quality coffee and that marketed a broad line of coffee based and non-coffee beverages. caliber and appeal on its on-premise coffee and beverage offerings. The company had drive through window and dining area that had enough capacity of 50 people or more. Page 14 .Strategic Management at Krispy Kreme Doughnuts Inc. Page 15 .Strategic Management at Krispy Kreme Doughnuts Inc. Krispy Kreme stores actively promoted sales to school. Route drivers had the capability to take customer orders and deliver product directly to retail accounts.The company had developed highly effective system for delivering fresh doughnuts. to area retail stores. Page 16 . churches. Strategic Management at Krispy Kreme Doughnuts Inc. and civic group for fund-raising drives. both packaged and unpackaged. most consumers visit a coffee shop around once a week. According to a recent survey. there is still considerable room for growth in the coffee house and snack chain industries. Many reported that they use time at a coffee or snack restaurant to reflect.MACRO ENVIRONMENT ANALYSIS Porter’s 5 Forces Model Room for growth in the coffeehouse and snack chain industries According to a study by Market Force Information. Page 17 . coupled with Strategic Management at Krispy Kreme Doughnuts Inc. That. with 70% reporting that they go to coffeehouses or snack restaurants less than five times a month. or as an escape. Strategic Management at Krispy Kreme Doughnuts Inc.the fact that just 4% of consumers reported trying a new coffeehouse or snack restaurant in the last 30 days. Dunkin’ Donuts by 28%. However. Page 18 . When asked which coffeehouse or snack restaurants were their favorites. indicates big room for growth for chains. and Krispy Kreme by 16%. Starbucks was cited by 36%. Krispy Kreme wins wins 35% of the vote. when the number of locations is factored into the results. obesity in the United States remains high. and a shift towards health conscious diets is not an immediate threat to Krispy Kreme's bottom line.Krispy Kreme also outscored competing coffee shops and snack chains on eight of 10 attributes (attributes included Quality of Food. Friendly Service. Krispy Kreme saw strong sales in that country. An increased level of health conscious people may hurt sales of Krispy Kreme doughnuts. since opening stores in Japan in 2007. Food writer Mei Hojo says health-conscious eating remains a big trend in Japan. Healthy Choices. Cleanliness. However. raspberry filled doughnut contains 300 calories and 16 grams fat. Speed of Service. Green/Sustainability). Krispy Kreme's international locations are benefitting from a drop in health conscious behaviors among consumers. Atmosphere. Overall Value. especially for Americanstyle food. A glazed. Page 19 . Taste of Food/Coffee. All other competitors clustered together with very little differentiation. but it has also produced backlash. Accommodating. In fact. Health Fads and Consumer Shift Toward Health Conscious Diets Affect Sales Environment of Krispy Kreme One original Krispy Kreme glazed doughnut contains 200 calories and 12 grams fat. For example. Strategic Management at Krispy Kreme Doughnuts Inc. One apple fritter contains 380 calories and 20 grams fat. sharing. consistent doughnuts. Targeting consumer tastes is one area in which they Strategic Management at Krispy Kreme Doughnuts Inc. designed to create high quality. Krispy Kreme chooses not to segment its market. serves as their biggest signal to the freshest doughnuts offered. However. establishing the brand with the “Hot Doughnuts Now” experience. Concentrating on a large market seems to be the norm among competitors as well. cooperative. Krispy Kreme’s most import asset is their brand name and taste. They are committed to building an organization based on common values of integrity. protecting. and promoting their brand. Companies in this industry choose to compete based on their unique tastes or variety of flavors as potential competitive advantages. Page 20 . including age and income. authenticity. Perhaps. if looked at too simply. doughnut companies have also succeeded their cost position through vertical integration. by having an automated system. understanding. rather than cost. Currently Krispy Kreme implements a differentiation strategy. learning. Their “Hot Doughnut’s Now” sign. Developing a successful strategy in standard cycle market proves to be relatively simple for Krispy Kreme. Their commitment to value serves as a stage for all policies and programs that affect internal and external relationships. a company will choose a strategy that is too narrow or too broad based on the other factors of choosing a strategy. Krispy Kreme has developed strategies such as linking everything they do by. They place having both brand value and internal cultural values as a key priority. believing that their breadth of appeal extends across all major demographic groups. penetrating complementary. and positive expectations. Determining which customer needs to satisfy is an area where choosing the incorrect strategy can result in a decreased competitive advantage. or international strategy. passion. attempting to distinguish their doughnuts based on taste. and simplicity.STRATEGIC OVERVIEW Krispy Kreme’s ability to align strategy and execution with the brand’s highest potential defines their capacity for vision and creativity. However. Krispy Kreme chooses to emphasize its secret yeast raised doughnut recipe. Where they seem to fall behind the curve is in choosing an appropriate corporate. Using their brand as a platform.This seems to be the norm for the doughnut industry. quality. Krispy Kreme manufactures their own custom doughnut making equipment for all of their restaurants. off-premises channels of sales. but what they may have slightly overlooked in the past is that frequenters of doughnut/coffee shops enjoy the atmosphere as much as the sweetness of doughnuts. they sell snack foods. Another strategic decision of updating their extranet to a more standardized. They have recently begun updating the look of their stores to capture the essence of their unique brand. so means to attract more customers during the day or evening. By using this particular approach they continue to emphasize their small town. and protect important information from competitors. They understand that consumers value freshness when it comes to doughnuts. ranging from light and smooth to deeper. Through a related diversification strategy. cinnamon buns. more intense blends. browser-accessible interface has proven to be a competitive advantage for the company as well. Page 21 . and mini-doughnuts3. and wholesale charges to charities. Perhaps one of their biggest attractions is the doughnut making theater. creates a myth for consumers. real fruit pies.succeed. It also now offers espresso beverages. forming an unpaid loyalty base. and the sign. In addition to doughnuts. With this acquisition came the offering of different drip coffees. other than freshness. Krispy Kreme should choose to offer a variety of other products that doughnut eaters tend to enjoy. Before Krispy Kreme enters a market they will flood that market with memorabilia including T-shirts and hats. The system let’s administrators assign only those resources users require for their framework. However. and brand value. commitment to the community. sweetness. Offering more morning sweets or health conscious breakfast items such as low fat bagels should be avenues they explore. They currently offer beverages and places to sit. Their Doughnut Theatre Experience combined with clever marketing. Krispy Kreme acquired Digital Java. or deli type sandwiches throughout the day. their strongest marketing focus is their charitable efforts through giveaways. and other frozen beverages prepared with a variety of proprietary flavors5. This is one of the problems of their Strategic Management at Krispy Kreme Doughnuts Inc. Krispy Kreme executives understand that relying on word of mouth is more credible than paid advertising. should also be investigated. They could choose to diversify into fresh baked breads for the evenings. Inc to broaden their beverage offering to customers. Doughnuts are generally a morning consumption item. allowing customers to see the actual process of cooking and glazing the doughnuts. frozen coffee beverages. In 2001. southern hospitality. space saving design. Although Krispy Kreme has done a successful job in securing their position and maintaining a competitive strategy. anywhere4. This alone will remove the excessive costs of printing and distribution. and cinnamon roll. managers can log onto “MyKrispyKreme” to monitor inventory levels. they can avoid many of the high hidden costs of technology ownership. other companies in the doughnut industry have begun to respond to some of the successful actions by Krispy Kreme. LaMar’s Doughnuts. and purchase collectibles. Management at Krispy Kreme hope this problem will be solved by their new internet site. One company has even begun to compete head to head with what Krispy Kreme prides itself on most. and consumers and investors can log on to obtain information about the company. LaMar’s Strategic Management at Krispy Kreme Doughnuts Inc. held in Springfield. Page 22 . glazed sour cream. The doughnuts were judged according to taste and appearance. which integrates keyboard and operating screen into an intelligent compact terminal. Krispy Kreme has a thorough understanding of the actions and focus needed to maintain a competitive advantage as they are in their early stages of growth. Even their cash register is an efficient low profile. chocolate iced and Bavarian Crème filled. In one such contest. newsletters. However as they continue to grow and enter new markets they may want to consider alternatives in altering or expanding upon their current strategy. Already. A potential problem looming over Krispy Kreme executives is their low inventory turnover ratio compared to that of the inustry. Through their website. Their website also features a “Friends of Krispy Kreme club” where customers can sign up to be emailed regular newsletters about store openings and new flavors. taste and quality. “Police and sheriff department officers judged LaMar’s Doughnuts to be superior to Krispy Kreme’s products in four of five categories: original glazed. if not this flaw in Krispy Kreme’s supply line will continue to cost the company money and reduce future profits. Missouri.former extranet. perhaps the biggest prospective threat to Krispy Kreme has held taste tests directly competing with a variety of Krispy Kreme’s products. By connecting reliable smart terminals to industry standard open system components. With the upgrade they can now quickly and securely deliver applications and data to employees anytime. new and upcoming openings. it is critical that they continually take strategic actions to stay ahead of the competition. This allows Krispy Kreme to operate more efficiently and stay one step ahead of the competition. their success is in large part due to the fact that they are the new kids on the block. which is based on thorough review of the business (corporation. Strong Brand Recognition and Recall 2.strategy is to go to its customers by operating neighborhood. Untouched domestic locations Strategic Management at Krispy Kreme Doughnuts Inc. Krispy Kreme has achieved this with their doughnut theatre by offering customers something they don’t see often. STRENGHTS: 1.” Cinnabon offers an experience. much like the Krispy Kreme experience. product category competition. identities and evaluates the internal strengths and weakness of the companies well as its external threats and opportunities. Page 23 . Everyone in the bakery/sweets industry attempts to differentiate their product based on quality and taste. Krispy Kreme makes it possible for different organizations throughout the community to use OPPORTUNITIES: 1. such as a diamonds from Tiffany’s or a doughnut from Krispy Kreme. and linger a while to enjoy the entertaining baking process and warm. Of particular importance to Cinnabon’s strategy is their Express Packs ™ they have designed packaging made to seal in the warmth and freshness of their products until you get them home and are ready to eat. sample their unique product and delicious treats. They may want to slow their growth in location to maintain the authenticity and exclusiveness associated with high quality desired products of any kind. Growth in two-income households will increase snack-food consumption 2. They similarly represent themselves as a “modern version of the traditional neighborhood bakery where people are always welcome to stroll in. friendly atmosphere. and the goal is to open 1200 stores nationwide by 2010. SWOT ANALYSIS SWOT Analysis. a first hand view of the frying and glazing process. The marketing mix is driven by the results of the SWOT analysis. customers and products). Cinnabon has realized the advantage of this unique featured and copied the idea. competitive advantage building idea or capability. Currently they operate 40 franchised and company owned gourmet doughnut stores in seven states. It is only those with an entrepreneurial mindset and vision who can provide an innovative. bistro-style doughnut stores with gourmet espresso bars in high traffic areas. As critics of Krispy Kreme’s strategy have thought. 8. It has a high capacity to make 4. Penetration into foreign/intl. Acquisition of Atlanta Bread 9. 10.e. Competitors like Dunkin Donuts. All equipment and Uniforms are supplied 6. 13. KKD has great service and innovation. 16.their product as a fundraiser. Krispy Kreme offers a product that is second to none. 9. It also has a new fall product line of donut called Spice.. Entertaining opportunities moving from home to work environment 11.Wide appeal of signature hot original glazed doughnuts 7.. Krispy Kreme has Doughnut machine Technology. Manufactures all equipment internally in its Manufacturing and Distribution Department 3. hand held computers for delivery drivers) 13. Markets and popularity of American foods and fashion in overseas markets 7. . 15. freshness and the finest ingredients. KKD can offer to have customers watch product being made at the donut theater. Internet pre-ordering) 12. 14. Mass) 10. Employees are better trained. 11.Starbucks and other National Chains/Specialty Eateries. Expansion of new locations (Maine. WEAKNESSES: 1. 3. It has a unique brand and variety of freshly made donuts. On-Premise sales royalties (3%).The higher the sales. It has a great desire for growth and success of people and company. It offers additional products through businesses acquisitions.000 to 10.e. Increasing popularity of coffee shops and bakery cafes 4. Krispy Kreme has Strong Channel of Distribution. paperless ordering. It is expanding into Dunkin Donuts territory. 12. Americans continue to experience time-starvation 8. with regards to taste. Channel expansion possibilities (i. Non-interactive website 3. 4. Customer receiving "Hot-Donut" now instead of waiting 5. the more money received THREATS: 1.Krispy Kreme is most popular in grocery and convenience stores which gives customers easy access to the product. Lack of more International locations in the United Kingdom. Fundraising program has helped non-profit organizations raise millions of dollars in needed funds. Tim Horton’s. predictive modeling software. It also has e-commerce which gives owners access to real-time information. KKD has a drive through window for sales. Low-carb trend in eating preferences Page 24 Strategic Management at Krispy Kreme Doughnuts Inc. Japan and Spain 2. 2. 5.000 donuts daily. Expanded assortment of offerings at KKD stores including beverages 6. Technological advancements (i. Krispy Kreme Doughnuts prides themselves on high customer satisfaction with fresh quality donuts. KKD snacks are not healthy (need to consider low-calorie donut) 7. All-natural. Uncertainty of International markets 6. Pricing in some locations 11. No other Standout Products (Weak Menu) 3.27 0.18 0. Montana Mills acquisition) 10.09 0. Increase in eating at full-service restaurants combined with a decrease in the use of fast-food restaurants 9.28 0.15 Page 25 Opportunities Growth in two-income households will increase 0. Increasing cost of Ingredients 4.07 0. Overextended (i. Internet pre-ordering) Penetration into foreign/intl. Krispy Kreme stores went up too fast 7. Perishability of product 8..08 0.24 0. Store locations too scattered EXTERNAL FACTOR EVALUATION MATRIX (EFE) EXTERNAL FACTOR EVALUATION (EFE) MATRIX OF Krispy Kreme Doughnuts Key External Factors Weight Rating 4 3 3 4 3 3 Weighted Score 0. Increasing utility and fuel costs 5.4. packaging. Cultural differences in breakfast and snack foods 8.56 0..e.06 0. organic. No online ordering capability 5. Markets Technological advancements 0.e. .05 Strategic Management at Krispy Kreme Doughnuts Inc. healthy eating trends 6. Limited product line (heavy reliance on doughnut sales) 9.14 1 2 3 4 5 6 snack-food consumption Untouched domestic locations Increasing popularity of coffee shops and bakery cafes Channel expansion possibilities (i. ingredients etc) 12. Bad Relations with Franchisees (cost of equipment. 08 0.64 whichindicates that the business has above average ability to respond to external factors.07 0. healthy eating trends 0. organic.08 0.06 2.04 Threats Competitors like Dunkin Donuts. 0.04 0.08 0.08 0.08 0.64 2 3 4 5 6 Starbucks and other National Chains/Specialty Eateries. Strategic Management at Krispy Kreme Doughnuts Inc.14 0.24 0.2 0.10 1 2 2 2 1 2 3 2 1 0. Tim Horton’s.Acquisition of Atlanta Bread 7 0. Page 26 .00 TOTAL Total weighted score for the Krispy Kreme external Factors is 2. Increasing cost of Ingredients Store locations too scattered Increase in eating at full-service restaurants combined with a decrease in the use of fastfood restaurants Cultural differences in breakfast and snack foods All-natural.08 0.04 On-Premise sales royalties 8 0.06 1. 08 0. Page 27 . ingredients etc) Pricing in some locations 0.04 4 4 3 3 4 3 3 3 0.6 Total weighted score for the Krispy Kreme internal factor is 2.15 0.12 0.08 0.27 0.05 0.10 0.05 0.00 2.09 0. Strategic Management at Krispy Kreme Doughnuts Inc.09 0.56 0. Doughnut machine Technology Gained Reputation through various fundraising programs New fall product line of donut called Spice 0.12 0.06 0.So it is internally strong and aggressive approach.1 0.18 0.06 0.14 0.05 1 1 2 1 2 1 0. Japan and Spain Limited product line (heavy reliance on doughnut sales) KKD snacks are not healthy (need to consider lowcalorie donut) No online ordering capability Bad Relations with Franchisees (cost of equipment.INTERNAL FACTOR EVALUATION (IFE) MATRIX of Krispy Kreme INTERNAL FACTOR EVALUATIONDoughnuts (IFE) Key Internal Factors Strengths 1 2 3 4 5 6 7 8 Strong Brand Recognition and Recall Wide appeal of signature Hot Original Glazed Doughnuts Strong Channel of Distribution Customers watch product being made at the Donut Theater High customer satisfaction with Fresh Quality Donuts.09 0.32 0.05 TOTAL 1.32 0. packaging.05 0.6 which is above average.06 0.12 Weight Rating Weighted Score Weaknesses 1 2 3 4 5 6 Lack of more International locations in the United Kingdom.15 0.05 0. 25 Analysis of Weighted Competitive Strength Assessment: The Firm with the largest overall competitive strength rating enjoying the strongest competitive position is Starbucks followed by Dunkin Donuts and then Krispy Kreme.00 6.9 8/1.8 8/0.2 5/0.3 7/2.5 6/0.25 4/0.75 6.1 Starbuck s 9/1.35 5/0.25 6/0.55 5.WEIGHTED COMPETITIVE STRENGTH ASSESMENT Key Success Factor/Strength Measure Quality/Product Performance Reputation/image Manufacturing capability Technological skills Dealer network/distribution capability New product innovation capability Financial Resources Relative cost position Customer Service Capability Weight Krisp y Krem e 0.1 Dunki Tim n Horton’ Donuts s 7/1.05 0.35 8/0.20 0.4 5/0.05 0.25 7/2.The Strategic Management at Krispy Kreme Doughnuts Inc.15 0.75 4/0.2 4/0. Page 28 .4 5/0.2 8/0.1 McDonald s 6/0.3 4/0.3 5/0.2 8/2.8 9/1.05 0.4 7/0.35 8/0.5 6/1.05 0.35 7.25 7/2.6 6/0.8 7/1.30 8/1.25 5/0.15 5/0.4 7/0.4 Sum of Weights Weighted Overall Strength rating 1.3 6/0.9 5/0.4 5/1 4/0.25 5/0.85 7. Krispy Kreme attempts to win their market share through superior doughnut quality and vertically integrating back into their company to generate sales in coffee and other beverages.25 8/2.2 6/0.35 4/0.2 7/0.05 9/0.2 5/0.3 5/0.05 0. So Krispy Kreme is at net competitive disadvantage against Starbucks and Dunkin Donuts. Here Krispy Kreme score exceeds Tim Horton’s and McDonalds.10 0.25 3/0. there was a public outcry and sales declined. especially Krispy Kreme doughnuts. They create business through sales at company-owned stores. and selling franchised stores pre-made doughnut mixes and doughnut making equipment. They have also created Krispy Kreme Manufacturing and Distribution that has produced sales to their franchisees by providing equipment to their stores. Every Krispy Kreme store is designed as a doughnut theater which allowed customers to see the entire doughnut process take place. Krispy Kreme creates 66% of their 665. Now Krispy Kreme can control the sourcing and roasting of their own coffee which ensures that the company has strict quality standards and consistency. Since customers come to Krispy Kreme for the warm doughnuts. This could create negative customer opinion about the product and led to lost customers.these stores do not create the same taste that is associated with Krispy Kreme. When former owners Beatrice Foods bought Krispy Kreme in 1976 and changed the recipe. fresh doughnut. One of the problems with Krispy Kreme is that the U.000 annual income from company store operations. Page 29 . After doughnuts were produced. Although they have provided low-calorie alternatives. and people come here because this is the only place that you can receive a fresh hot doughnut. hot. Strength of Krispy Kreme is how many different ways they have created income.592. Krispy Kreme strategic plan changed store operations to showcase their superior product and allow flexibility of new store sizes. 4% from franchising operations.Doughnuts will have sat out all day and dried up creating a different taste from what Krispy Kreme is about. The supermarket sales may also affect brand image. The major strength of Krispy Kreme is their product. Strategic Management at Krispy Kreme Doughnuts Inc. they have created a 40-foot glass window that allows customers to view the entire doughnut making process. Krispy Kreme has also started to alter store sizes because some markets do not require the standard 7. Krispy Kreme uses their strategic plan of superior. fresh doughnuts to their advantage by allowing all customers to view the creation process. stores turned on neon signs saying HOT DOUGHNUTS NOW.000 square-foot store.S.strategic plan of Krispy Kreme Doughnuts is to produce hot. Another major advantage to Krispy Kreme is the vertical integration that took place with Digital Java Inc. fresh doughnuts that a customer can receive right off of the assembly line. is becoming more health conscious. Although 50% of company revenue is due to supermarket and convenience stores. and 30% from KK manufacturing and distribution in 2004. people eat doughnuts for the taste. They created sales volume from both on-premise sales at Krispy Kreme stores and off-premise sales at supermarkets and convenience stores. royalties from franchised stores along with franchise fees. It is believed that the low-calorie market will not be lucrative for Krispy Kreme because people associate us with a certain taste of a hot. Strength of Krispy Kreme is store operations. This will allow Krispy Kreme to see the strengths of each market. there could be a drop in revenues due to the recent craze. fresh donut that is created right before their eyes. in order to decide if expansion and contraction is the possible solution to Krispy Kreme problems. and create new ways to provide fresh doughnuts to the public.A weakness of Krispy Kreme is that it continues to try and grow when all financial data indicates that franchisees are competing with each other rather than rivals. The majority of Krispy Kreme sales come from cult-like followers that will do anything for a Krispy Kreme doughnut. distribution capabilities. obsessed consumers camp outside for days to be the first to have a fresh doughnut. After quantitatively analyzing the current market with a weighted competitive strength assessment. many Strategic Management at Krispy Kreme Doughnuts Inc. Digital Java Inc. Consumers come to Krispy Kreme to receive a warm. and coffee taste. Krispy Kreme has focused the majority of their stores in the south east of the U. it can be concluded that Dunkin Donuts has a few distinct advantages over Krispy Kreme that will allow more lasting power for Dunkin Donuts. When stores are located near each other. but all other aspect are lacking. Threats that Krispy Kreme faces are competitive pressure from Dunkin Donuts and increase interest in low-calorie and low-carbohydrate diets. Winchell Donut House is able to compete with Krispy Kreme in taste and freshness.S.. They have greater manufacturing capabilities. Only so many consumers are interested in this type of donut and Krispy Kreme stores rivaling each other.S. Although Krispy Kreme outperforms DunkinDonuts in taste and freshness. this frenzy fades and the craze dies out. This following could be extended into other foreign markets besides Canada and England. markets. Dunkin Donuts has expanded their market to all areas of the U. they affect the sales volume of the other store. Krispy Kreme seizes expansion into current U. As more and more stores are introduced into an area. Americas recent health interest has had a major impact on companies such as Krispy Kreme. There are opportunities to expand their coffee company. When the first Krispy Kreme is put up in a new market. When Scott Levingood and his management team were controlling Krispy Kreme. Analysis of Krispy Kreme shows that although there is a strong loyalty towards the product. Although Krispy Kreme provides superior taste. Stores are competing against each other for the same market share which is having an adverse effect on the overall company. Page 30 . which has led them past Krispy Kreme in customer recognition. Krispy Kreme must also restore shareholder loyalty in order for stock prices to turn around.S. customer awareness. lasting power. It can be recommended that Krispy Kreme Donuts backs out of some of their current markets. Dunkin Donuts sweeps all of the other categories. Krispy Kreme could explore is further expansion into the global market. this taste can only be provided at in-store locations. Krispy Kreme should either withdraw their product from supermarkets or change the process in order to provide freshness with every donut. The final issue that should be addressed is the possible withdraw from supermarkets. Although this accounts for 50% of revenue for Krispy Kreme Donuts. When these donuts have been sitting out for 15 hours. Page 31 . the customer and shareholder loyalty is restored. they are destroying product identification. Consumers expect to taste a certain donut every time they bite into a Krispy Kreme glazed donut. I/E MATRIX Strategic Management at Krispy Kreme Doughnuts Inc. fresh taste the people relate to. For Krispy Kreme to turn around.accounting errors took place that led to customer dissatisfaction and disloyalty of the shareholders. this is not the same warm. Krispy Kreme is suggested to adapt the hold and maintain strategy that concerns mainly with market penetration and product STRENGTHS 1. Vertical integration 4. Wide appeal of signature glazed doughnuts 3. Montana Mills acquisition) Lack of locations in some areas Pricing in some locations TOWS MATRIX Strategic Management at Krispy Kreme Doughnuts Inc. WEAKNESSES Perishability of product Limited product line (heavy reliance on doughnut sales) Overextended (i. Strong brand recognition and recall 2.e. Development in international markets 5.So as the V quadrant suggests a defending approach. Page 32 .. Strong channel of distribution development. Develop low-carb doughnuts 4. Increase locations to be convenient for busy traffic areas in several markets 4. opportunity and threats we were able to figure out that Krispy Kreme's major strength is its strong brand recognition. healthy eating trends SO STRATEGIES 1. Low-carb trend in eating preferences 4.. It needs to come up with innovative products as its competitors can always have a fair chance of stealing away Krispy Kreme's customers. Provide special offerings geared towards encouraging people to bring doughnuts to work 5. or organic offerings 3. Increase in eating at full-service restaurants combined with a decrease in the use of fast-food restaurants 3. Development of store locations in overseas markets 3. coffee. Page 33 . Americans continue to experience time-starvation 5. but value pricing compared to Starbucks WT STRATEGIES 1. sandwiches) 2. weaknesses. Growth in two-income households 4. It also has a strong channel of distribution which makes it easily available to its customers. Offer standardized. Offer nutritional information with an emphasis on new low-carb.OPPORTUNITIES 1. Offer value-based and consistent pricing Tows Matrix Analysis After doing the analysis of Krispy Kreme in terms of its strengths. it is really important that Krispy Kreme Strategic Management at Krispy Kreme Doughnuts Inc. the problem area for Krispy Kreme is basically its limited product line. Continue to be innovative in technological applications that can improve efficiency ST STRATEGIES 1. Competitors like Dunkin Donuts and Starbucks 2.e. However. it relies too much on the sales of its doughnuts. Increasing popularity of coffee shops and bakery cafés 2. Increase locations 4. Development of bakery cafés 2. In order to retain its customer base. Develop new product offerings 2. Develop doughnut made with organic ingredients WO STRATEGIES 1. Focus on signature glazed doughnuts as a differentiating advantage over competitors 2. Increase products offered in locations (i. Customers are wellaware of signature glazed doughnuts which makes it a trademark for Krispy Kreme. Develop Montana Mills in a way that fits the mission of KKD 3. Popularity of American foods and fashion in overseas markets 3. organic. Entertaining opportunities moving from home to work environment THREATS 1. All-natural. low-calorie. Doing all this can significantly help it develop a competitive edge over its rivals.e. it should also Increase locations to be convenient for busy traffic areas in several markets and it should provide special offerings geared towards encouraging people to bring doughnuts to work Krispy Kreme in order to overcome its weakness and avail the opportunities needs to increase products offered in locations (i. it also needs to take care of the pricing of the products and it should see the products should not be over-priced in some areas where the customer cannot afford to spend much on the food items. opportunity and threats would be that it must development of bakery cafés. Krispy Kreme can see its major opportunities lying in the fact that there is an increase in the popularity of coffee shops and bakery cafes and its has become a hotspot for youngsters as well aged-population where people can come to relax and have an informal meeting with their colleagues. Kripy Kreme needs to focus on signature glazed doughnuts as a differentiating advantage over competitors. but value pricing compared to Starbucks. Page 34 . SPACE MATRIX Internal Strategic Position External Strategic Position Strategic Management at Krispy Kreme Doughnuts Inc. sandwiches) and offer standardized. low-calorie. while the pricing of its products in the other areas. Another major problem lies with the absence of its stores in some areas. coffee.should try to diverse its product lines. The management needs to analyze the products demand and the potential in various areas. it must development of store locations in overseas markets. it must Offer nutritional information with an emphasis on new low-carb. and based on the analysis it must open the branches wherever suitable. weaknesses. or organic offerings besides it must also develop low-carb doughnuts. So it should make use of this opportunity and should come with better ideas to cater the market.. Some of the recommendations we can come up with after analyzing Krispy Kreme's strengths. liquidation.7_ average Competitive (CA) -1 best. concentric diversification CA Integration. Strategic Management at Krispy Kreme Doughnuts Inc.e.57___ average __1.57___ average Industry (IS) +6 best.43____ average +3. divestiture.14__ x-coordinate (CA + IS) Vector magnitude: square root of (y2 + x2) = _1. Intensive Competitive ES Defensive The framework of space matrix recommends that Krispy Kreme pursue an integration as well as an intensive strategy albeit we have more confidence in the intensive strategies. i. the build – a – burger aisle or a healthy fare menu.44____ versus maximum 7. The strategy that seems to make the most sense is the product development as it will create the most economic value added. +1 worst +_1_ Return on investment +_1_ Leverage +_3_ Liquidity +__1 Working capital +_1_ Cash flow +_1_ Ease of exit from market +__4 Risk level of business Environmental (ES) -1 best. -6 worst -3__ Market share -2__ Price/quality ratio -3__ Product life cycle -2__ Customer loyalty -2__ Competition's capacity utilization -2__ Technological know-how -3__ Bargaining power -2.44 0 +2 +1 0 -1 -2 -3 -4 -5 -6 Conservative Intensive. Page 35 . +1 worst +3__ Stage of industry/alliance evolution +3__ Growth potential +4__ Profit potential +4__ Financial stability +4__ Technological know-how +4__ Resource utilization +3__ Capital intensity __-0.Financial (FS) +6 best. medium. concentric diversification +6 +5 +4 +3 -1 --2 -3 -4 -5 -6 IS Retrenchment. -6 worst -3_ Stage of technological life cycle -3_ Rate of inflation -2__ Demand variability -2__ Price range of competing offerings -1__ Barriers to entry into market -4__ Competitive pressure -3__ Price elasticity of demand + __1.87__ y-coordinate (FS + ES) -2. weak) SPACE Matrix Analysis FS Aggressive Intensive Integration Diversification +6 +5 +4 +3 +2 +1 v = 1.07 = ___weak______(strong. 8% to $6. Net income was $4. a net increase of 34 locations since January 31. revenues rose 0. Operating income increased 4.8 million. the sixth consecutive quarterly increase.06 per share diluted.1 million from $5. or $0. compared to $1. 2010. Excluding the effects of refranchising Company stores.5 million. Company same store sales rose 3.9 million.03 per share diluted in the first quarter last year.4 million during the first quarter of 2010. or $0.4%. The Company ended the first quarter of fiscal 2011 with a total of 616 Krispy Kreme stores systemwide.GLOBAL REVENUE BUSINESS AND FINANCIAL METRICS First quarter of fiscal year 2011 Krispy Kreme reported revenues decreased 1. Page 36 . COMPARITIVE INCOME STATEMENT Strategic Management at Krispy Kreme Doughnuts Inc.4%.1 million from $93.4% to $92. 2009 2008 2007 2006 2005 Strategic Management at Krispy Kreme Doughnuts Inc. Page 37 . 0 0.0 0.0 0.0 -135.76 0.77 67.24 0.49 55.05 0.01 38.Total Income After Tax Minority Interest Equity In Affiliates U.98 345.38 9.78 -135.77 598.34 0.59 68.32 -67.0 31. Total Gross Profit Selling/General/Administrative Expenses.0 0. Items Total Extraordinary Items Accounting Change Discontinued Operations Net Income Total Adjustments to Net Income Preferred Dividends General Partners' Distributions 383.0 0.03 0.0 21.0 0.0 -141.0 0.5 4.71 0.77 707.93 0.98 23.2 389.73 0.0 0.05 461.05 0.0 8.0 28.0 18.0 57. Net Operating Unusual Expense (Income) Other Operating Expenses.0 -67.28 109.67 -157.32 380.55 1.86 0.06 0.0 0.0 -135.78 0.0 -42.06 0.0 163.92 0.98 383.24 543.0 0.82 -3.76 0.36 474.43 0.0 0.24 0.92 -28.21 -42.45 -41.9 -1.0 -0.0 0.0 -2.05 0.3 0. Page 38 .36 543.31 26.0 -0.0 -136.Revenue Total Revenue Cost of Revenue.54 -0.01 49.0 0.S. Net Income Before Tax Income Tax .46 0.0 0.14 0.0 90. Net Non-Operating Gain (Loss) on Sale of Assets Other.0 0.0 0.3 0.0 0. Total Research & Development Depreciation/Amortization Interest Expense (Income).05 -41.0 -4.05 0.39 0.82 48.0 -42.03 1.76 707.29 -198. Total Operating Income Interest Income (Expense).0 -67. GAAP Adjustment Net Income Before Extra.49 1.0 -157.73 2.0 0.74 -117.32 429.5 0.0 0.4 -147.97 -64.01 -52.0 2.0 -4.34 0.0 28.5 -4.0 Strategic Management at Krispy Kreme Doughnuts Inc.2 461.06 429.76 0.56 0.38 71.0 0.0 0. 68 61.06 0.38 0.1 14.38 -0.05 -1.53 -23.8 22.87 -0.72 -23.63 -2.22 0.7 -3.2 -2.Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items Diluted Weighted Average Shares Diluted EPS Excluding Extrordinary Items Diluted EPS Including Extraordinary Items Dividends per Share Common Stock Primary Issue Gross Dividends . Supplemental Depreciation.47 0.05 63.85 -0.05 0.56 -7.14 -45.03 KRISPY KREME’S FINANCIAL RATIOS ANALYSIS Strategic Management at Krispy Kreme Doughnuts Inc.55 -3.06 -0.31 -3.88 30.99 4.Common Stock Interest Expense.47 -0.33 20.61 63.01 -3.81 -1.0 20.24 -1.68 -76.87 -0.05 -1. Page 39 .81 -2.06 -0.75 61.04 -0.3 21.2 0.21 27.0 9.01 -12.06 65.85 -50.68 -0.68 -0.78 -0.0 10.83 -0.72 -0.7 -0.0 20.22 61.63 -2.91 54.06 0.68 0.78 -26.81 -2.02 5.9 2.8 17.2 -2.0 0.68 8.55 -3.02 61.83 1.0 0.2 61.24 1.18 22.81 -1.0 6.68 -1.0 0. Supplemental Normalized EBITDA Normalized EBIT Normalized Income Before Tax Normalized Income After Taxes Normalized Income Available to Common Basic Normalized EPS Diluted Normalized EPS Amortization of Intangibles 65.25 16.94 -0.06 -0.94 -0.39 -29.64 -76.0 0.0 0.78 -29.63 61.01 -50. 1 10.3 6.00 34.6 -0.9 27.40 NA 59.7 -55.60 35.3 5.4 -15.1 0. Page 40 .94 54.7 -29.70 30.40 -9.3 -0.5 1.8 2.26 35.8 12.2 0.60 13.35 6.0 25.9 2.16 1.3 13.0 1.6 36.37 24.3 15.5 -0.5 14.Key Ratios Growth Rate % Sales (qtr vs year ago qtr) Net Income (YTD vs YTD) Net Income (qtr vs year ago qtr) Sales (5 years annual average) Net Income (5 years annual average) Dividens (5 years annual average) Price ratio Current P/E Ratio P/E Ratio 5 Years High P/E Ratio 5 years Low Price/Sales Ratio Price/ Book Value Price/Cash Flow Ratio Profit Margin % Gross Margin Pre-tax Margin Net Profit Margin 5 Years Gross Margin (Average) 5 Years Pre-Tax Margin (Average) 5 Years Net Profit Margin (Average) Financial Condition Debt/Equity Ratio Current Ratio Quick Ratio Interest Coverage Leverage Ratio Book Value/Share Investment Return % Return on Equity Return on Assets Return on Capital Return on Equity (5 Years Average) Return on Assets (5 Years Average) Return on Capital (5 Years Average) Management Efficiency Krispy Kreme -11.7 3.8 9.6 -16.7 Industry 5.2 11.05 17.2 12.2 Strategic Management at Krispy Kreme Doughnuts Inc.5 -21.74 4.6 4.29 11.1 13.6 2.9 0.20 14.90 -1.81 1.20 6.8 0.97 NA NA NA NA NA 0. 255 49.22 Net Profit Margin (%) -1. Share Price = EPS x Net Income 81.9 -65.5 -124.2 ROA (%) -2.87 $1.06 0.Income/Employee Revenue /Employee Receivable Turnover Inventory Turnover Assets Turnover -254 91.30 -6.6 -9.13 0.1 5 Years Summary Date 02/09 02/08 01/07 01/06 01/05 Average P/E -51.5 -53.067 17.4 -5.8 -20.62 -4.00 -7.20 -13.30 1.75 Price/Book 1.0 -32.444 98.5 97.35 1.86 $0.5 Net Worth Analysis 1.5 1.9 10.4 -5.1 18. Stockholder’s Equity + Goodwill 2.36 1.76 $3.1 -33.24 0.03 2.62 3.1 -33.61 ROE (%) -7.7 Interest Coverage 0.10 -3.7 1.60 Price/Sales 0.24 Strategic Management at Krispy Kreme Doughnuts Inc.4 -1. Net Income 3.34 10.61 0. Page 41 .2 -25.73 0.22 3.0 -118.90 Debt/Equity 1.26 $1.2 Date 02/09 02/08 01/07 01/06 01/05 Book Value/Share $0.1 -12.43 1.1 -15.0 -22. Number of Shares Outstanding x Share Price Method Average 16. Page 42 .allbusiness.asp?date=051304&ID=s1519337 http://www.businesspundit.com/inquirer/business/20101114_Krispy_Kreme_back_in_Philly_with_new_b usiness_recipe.go.20 94 REFERENCES http://krispykreme.com/franchise-risks Strategic Management at Krispy Kreme Doughnuts Inc.4.philly.com/krispy-kreme-part-ii-a-bad-strategy/ http://www.com/Business/story?id=87804&page=2 http://www.com/allstories-news-story.com/marketing-advertising/branding-brand-development/4675339-1.html http://www.morebusiness.com http://www.businesspundit.com/krispy-kreme-and-wal-mart/ http://www.spokesmanreview.html http://abcnews. com/news/business/1107290/by_2011_the_global_fast_food_market_is_for ecast_to/ Strategic Management at Krispy Kreme Doughnuts Inc.php? id=krispy_kreme_going_global&time=1289774917 http://www.htm http://www.wikiswot.html http://www. Page 43 .http://www.abc.au/unleashed/40808.com/indie/dannydiab/fin821kkd.net.angelfire.redorbit.com/SWOT/backup.
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