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Krispy Kreme Doughnuts - A Strategic Analysis Essay Example

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Krispy Kreme Doughnuts - A Strategic Analysis

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Krispy Kreme Doughnuts - A Strategic Analysis. Dunkin Donuts is planning to expand overseas for the next several years as well, which increases the pressure on Krispy Kreme (Foodmarket Watch, 2010).The third area of examination is with internal strengths. One of the primary strengths for Krispy Kreme is their brand name. The company was founded in 1937 during the Great Depression era, yet survived and proved to be an American success story. Their long history built up good brand equity and reputation over the years (Calegari, 2010). Another research article pointed to the new leadership now in place at Krispy Kreme, after they weathered various accounting and management scandals. James Morgan is the new company chairman; president; and CEO (Foodservice Equipment and Supplies, 2008).

Another key strength, which is well known, is that Krispy Kreme has a good quality product. Their products are available in many gas stations, supermarkets, Wal-Mart’s, and Target Stores, among other visible locations.The fourth area of examination is with internal weaknesses. One study of the company showed where there is a limited amount of healthy food choices at Krispy Kreme (Fish et al. A second resource pointed how low-carb diets became in fashion just about the time that the company was rapidly expanding (Intini, 2007). Hoyt (2008) pointed out how the company seems to be closing too many stores. Their franchisees are struggling, and even though 28 new franchisees opened in the first quarter of 2008; there were 7 closures. The company stated that they “will close additional stores in the future and the number of such closures may be significant (Hoyt, 2008). Hoyt (2008) further elaborates that Krispy Kreme stated their earnings are vulnerable to sharp rises in raw material costs (Hoyt, 2008).More problems exist as Krispy Kreme faces slowing customer traffic; a lack of product diversification; and high fixed costs. In addition, US stores are contracting some of the base stores (Kell and Burris, 2009). Yet another problem is with the company stock rising to a high of $49 per share in 2008 before ultimately losing 90% of its value due to overexpansion; heavy debt; management scandals; SEC investigations; and bankrupt franchisees (Kopp, 2009).Next, we will summarize and match in a general form the information gathered above. The company’s internal strengths include: (1) brand name; (2) new top. Krispy Kreme Doughnuts - A Strategic Analysis.

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References

Calegari, Michael (2010). Financial Analysis of Krispy Kreme’s Earnings Forecasts,

Joint Ventures; Investments, and Franchise Repurchases. Issues in Accounting Education.

(25)1, 85-118.

Fish, Tim, et. al (2009) Krispy Kreme Doughnuts Case Analysis. Strategic Management,

279-301.

Food Marketwatch (2010). News, Datamonitor Plc, 20 June 2010, 18-28.

FoodService equipment and supplies (2008). Krispy Kreme Elects New Chief Executive

Officer. February 2008, 12.

Hoyt, Jennifer (2008). Earnings Digest: Krispy Kreme Posts Profit, But Sales Keep Weakening;

More Stores Will Close as Franchisees Struggle; Shares Trade 14% Higher. Wall Street

Journal 10 June 2008 B-7.

Intini, John (2007) Warm, gooey and Getting Really Kremed. MacLean’s, 120(23), 2

Kell, John and Mike Burris (2009).. Corporate News: Krispy Kreme’s Loss Narrows. Wall

Street Journal. 4 September 2009, B-5.

Kopp, Carol (2009). The Tragedy of Krispy Kreme.

<http://finance.yahoo.com/news/The-Tragedy-of-Krispy-minyanville-220090191.html?x=0

> 13 October 2009.

Lloyd, Mary Ellen. (2007) Krispy Kreme’s Loss Widens; Challenges Remain for Rebound

Effort; Challenges Remain for Rebound Effort; Taste for Ice Cream? Wall Street Journal. 5

June 2007, C-7.

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