Strategic Management Krispy Kreme Doughnuts Case Study

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Strategic Management Krispy Kreme Doughnuts Case Study

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Krispy Kreme Doughnuts (KKD) is one of the largest fast food-producing companies operating the services not only at the national but also in the international markets. The motif of the study is to identify the major issues and provide the best possible solutions. The company aims to provide the best quality doughnuts to the customers and maintain their satisfaction to create revenue collection and generate brand equity. Krispy Kreme Doughnuts (KKD) has some core issues and problems regarding organizational management, changes in the taste and preference of customers, and tough competition at the international and national level regarding the products.

Issues and problems from the case study

Lack of administrative officers

 KKD is built within two segments: International and USA. The main issue found in the organizational structure is that there are no chief administrative officers; chief operating officers are the chief strategy officers for functioning the entire organization and operations of the International and domestic market. The company has stores of its own convenience stores, gas stations, grocery stores, as well as some stores in various supermarkets at the international level. Some proper management officers and administrative officers are required for tackling various organizational functions (Cohen et al., 2017).

Customers shift to eat healthily

KKD offers hot fresh doughnuts having a one-of-a-kind taste which is a kind of fast food. The primary issue found here is that people are becoming more health-conscious and prefer healthy food rather than fast food. Low-carb diets are generally avoided by people now. People are also changing their mindset and directing towards avoiding low-carb eating lifestyles. One of the most crucial issues for the company to operate its fast-food business in the global and national market. The government has also posted some strict laws in various cities restricting some major portion sizes of sugary snacks and soft drinks (Hartmann et al., 2018).

Competitor's mindset

In terms of this, the major competitors of KKD like Starbucks and Dunkin's brand have also already transformed their fast food options and have made significant changes by including some healthy and tasty snacks into their menu. The company is facing tough competition in terms of providing healthy food to customers by avoiding fast food products and sugary snacks. This is also another significant and crucial critical challenge for the company that can be used as major maintenance for the company's sales and profit.

The issue regarding marketing strategies

KKD is planning to transition its business to its small factory shop and retail shops. Transiting a business into a small factory shop and retail shops includes various marketing strategies that need to be implemented in the entire organizational operation. As per Chaffeyet al., (2017), marketing plays a very critical role in helping an organization develop its new stores and shops in new areas by understanding the needs, requirements of the customers, market trends, and market competition. The company follows local relationship marketing strategies. Operating International and global business the marketing strategies needed to be upgraded and changed as per the marketing trends of international markets. It is also another issue for KKD (Shcherbakova, 2020).

Issues regarding suppliers

KKD has only one supplier which is also another set of drawbacks. Having only one supplier of a company can be a great problem for supplying and delivering other products to different stores at the National and international level.

SWOT analysis

SWOT analysis highlights the strengths, weakness, opportunities, and threats of the organizations and also provide definite strategies to develop the weak areas with the help of the opportunities and strengths (GURL, 2017).

 

Opportunities

Threats

Strengths

Strength Opportunities (SO) strategies

KKD can use these strategies to increase the market position

Strengths Threats (ST) strategies

The two approaches of ST used by KKD are analyzing the trends or creating current strengths and building processes to the expanded market presentation approach.

Weakness

Weakness Opportunities (WO) strategies

strategies depending on the marketing approaches and products development as per the preference of the customers

Weakness Threats (WT) strategies

KKD can use the weakness and threats or weaknesses and opportunities to build new strategies.

 

Strengths

Quality based products to develop brand value

The company focuses on providing the best quality and fresh doughnuts to all customers. The main mission of the company is to never settle for the second-best thing that they deliver. They also believe in keeping no substitute for the quality of their service to the customers (Chawla and Chakraborty, 2021). KKD is opening new stores at retail shops in different International markets. It thus helps in the brand value and brand image of KKD helping in develop market share (Gupta et al., 2020).

Domestic and international market

 Different segments providing doughnuts of KKD include domestic franchise, International franchise, company stores, and supply chain. The company has more than 200 stores operating domestically in more than 35 states and districts of Columbia. More than 500 shops are opened offering the KKD in 23 countries across the globe (Chawla and Chakraborty, 2021).

Good revenue collection

Moreover, the company also targets to plan different retail stores in the international market. It highlights that the company has a good revenue collection from different stores in different geographic regions. Also, the company-owned franchise provides a good revenue collection. Wholesale sales of KKD accounted for more than 50% of the total annual revenue collections received by the process and around 30 percent of total sales come from mass merchants from various retail stores including Walmart. It suggests that the company has a huge strength in its domestic and international services.

Brand awareness and brand equity

As the brand of KKD is very popular and is it has also brand awareness among the customers because of its unique and hot fresh good quality based doughnuts offered in the domestic as well as international retail stores. It has helped increase brand equity and brand recognition among the customers by playing a significant and predominant role to attract the customers (Chia-Jen, 2018).

Intellectual property rights

The company has also developed intellectual property rights trademarks and copyrights for securing the brand of the company that has their bi help interest competitive advantages (Saunders and Flugge, 2021).

Weakness

There are also some weak areas of the company.

Local marketing strategies

KKD follows local marketing strategies and also local relationship marketing strategies for the fundraisers. International market place the local relationship marketing strategies may not fit which can be a great weak area of the company and it needs to be improved for gaining a better market position and a great brand value (Rizka, 2019).

Customers eat healthy mindset

The company is the fast-food best product and service delivering company. There is a risk of customer shifts and changes. More health-conscious and they are also focusing on healthy and organic food-based diets which avoidtaking much sugar. A doughnut is made on the basis of frying it before heading towards the glazing waterfall to be covered in a sugary signature glaze. Hence, the entire doughnuts are based on high amounts of sugar and calories. This is the most crucial weakness of the company that can decrease the sales and revenue collection of the company.

Preferences of the customers decrease sales

The sales can also decline due to the changes in taste and preference of the customers. Due to the shift of the changes of the customers to healthy and organic food, the company can be greatly affected (Messer et al., 2017).

Dependency on one supplier

Dependent on only one supplier can also be a great issue for the company in delivering the products. Changes in the demands of the supplier can affect the company's entire supply chain. As there is a limited supplier, the supplier's bargaining power is high and the company has to maintain it for operating a smooth and uninterrupted supply chain (Wang, 2018).

 

Opportunities

Krispy Kreme doughnuts are planning to shift from a wholesale to a retail market. The company has always focused on delivering hot fresh quality-based doughnuts to the customers directly from the factory shops and stores.

New factory stores

The company has gained opportunities to build small size factory stores for providing services directly to the retail customers. There are also opportunities for the company to expand the stores at the international level.

Brand recognition

The company has become a global and international brand competing with its rival competitors in the national and international marketplace. There is a huge future prospect for the company. As the company focuses on quality development it has brand recognition opportunities (Kotsanopoulos and Arvanitoyannis, 2017).

Adjacent market

Opportunities in adjacent markets can also explain different adjacent industry-based business models strategies for attaining future market growth.

Digital marketing to enter the foreign market

Due to introduction of the technological advancements the company can use digital marketing and social media marketing for entering the international marketplace. It thus helps decrease different challenges and risks to enter the foreign market.

Threats

  • The competitors of KKD including Dunkin's brands, Starbucks and Tim Hortons offer different snacks and coffee to the customers. They shifted their menu to providing healthy foods which is a great threat to KKD's market share. Apart from that, nearly 54% of the total doughnut shop at the market is acquired by Dunkin's Brands (Sugianto, 2019). Tim Hortons is also one of the largest doughnut and coffee retailers in Canada and has a good market share. Starbucks is also another competitor that requires a good position in the market providing coffee to more than 18000 stores in different 60 countries.
  • Another threat is maintaining the satisfaction of the customers regarding their preferences and requirements as per the market trends. The bargaining power of the customers is changing day by day. The market and demands of the customers are also changing gradually day by day, KKD can face a severe decline in customer satisfaction because of shifting to a healthy lifestyle and healthy eating. It is a great threat to the company (Messer et al., 2017).
  • Government regulations are changing. Protests from the labor groups are also major threats. KKD needs to focus on the change in government rules and regulations for maintaining environmental sustainability and labor safety.

VRIO analysis

VRIO analysis of the Krispy Kreme Doughnuts (KKD)highlights the major six components of the company including resources value limitation organization and competitive advantage. With these components,KKD can increase opportunities to create a developed organizational portfolio and build a better and sustainable competitive advantage at the national and international marketplace (Indartono and Wibowo, 2017).

Resources

Value

Rare

Imitation

Organization

Competitive Advantage

company satisfaction and loyalty

More than percent of the total sales revenue of the company is generated from the consumption of doughnuts by above 20% of the consumers.

Yes, the products are rare. the company focuses to create a good prospect of customer loyalty and satisfaction by building rare quality doughnuts

The products are not imitable. The doughnuts of KKD are tried to be imitated by the competitors. But no competitor can imitate. 

The company leverages customer satisfaction and trust for gaining a good effect in the organizational development

There is a moderate chance of gaining competitive advantage

synchronize in the product lines and product portfolio

Yes, it has a good value in the firm. The customer's taste, preferences are valued. Also, customer segmentations are valued in the firm.

The competitors try to enter the different attractive markets.

The competitors can imitate this

It is used to bring good prospects in the firm

Innovation and transformation are required for the increasing competitive advantage

marketing strategies with the marketing experts

Yes, local marketing strategies along with international marketing strategies are used for attracting the customers.

No, almost in all the areas the competitor uses the same strategies for marketing segments. It can be imitated

The pricing method can be similar or different organizations.

Yes, the firm provides expertise in organizational operations.

Yes, the competitive advantage is short-lived

Opportunities in new resources and nearby industries for entering those industries

It can provide some value to the organizations and it can generate new revenue collections for the company

no

It can be imitated by various competitors

The abilities and capabilities of the firm are yet to be explored and utilized.

It has the capability to compete with rival companies in the domestic and international markets.

Brand positioning in contrast to the customers

Yes, the firm has a good brand positioning to target the customers of the local and international markets.

No, it is not rare

Yes, it can be copied or imitated by rival companies. Brand positioning is expensive and needs a huge capital

Yes the organization focuses on creating a good brand positioning as per the behavior and preferences of the customers

Competitive advantage is short-lived

Digital strategy and its implementation

Yes, digital strategy is required as it is the basis for dealing with a huge competitor in the marketplace.

No, it is not rare. Digital strategy is used by many companies nowadays

Yes, It is imitable 

It is the leading factor present in the industry

It is very common and almost all companies used digital strategies so it has no competitive advantage.

Raw material

Yes, the company has raw materials.

Yes, the product is the company is rare.

It is imitable.

yes

Provides sustainable advantage.

Leadership to manage the teams

Yes, efficient and skilled laborers are there in the company.

Yes, has a rarity.

It cannot be imitated.

Yes, it is almost the same in the companies.

It has a strong competitive advantage.

Domestic and global presence

Yes, it changes the revenue and profit collections and also changes the balance sheet of the financial records of the company.

Yes, it is also rare

Yes, It can be imitated by the other rival companies

Yes, it is a diversified organization of this industry

It has a strong competitive advantage.

Talent management for managing legal obligations and regulations

Yes. There is a talent management

No, it common

Yes, It can be imitated by the other rival companies

Yes

No, no such competitive advantage is there.

 

 

Recommendation

Therefore it can be recommended that the most important thing that the company needs to do is to implement some effective digital marketing strategies for operating services in the international marketplace.

  • KKD also should maintain the quality of the doughnuts and also implement innovations by some organic healthy raw materials for maintaining the satisfaction and loyalty of the customers (León?Bravo et al., 2019). It helps in developing brand value and brand recognition by eliminating the decreasing sales and revenue collection.
  • Except depending on one supplier the company can focus on creating a supply chain with two or more suppliers by technological support, Internet of Things to strengthen the supply chain (Ben-Daya et al., 2019)
  • Focusing on the needs, requirements, and customer feedback is important. The company can upgrade the website on a regular basis and conduct a survey to understand the feedback and opinion of the customers and thereby can implement effective strategies to improve the operations (Porter and Bozkaya, 2020).

 

Conclusion

It can be concluded that the company has a good prospect in developing an International doughnut company. Strategies, effective implementation of the strategies, and leadership styles are the most effective components for entering the international market and functioning the domestic and international wholesalers as well as retail stores with outstanding success. It can also deal with the changing preferences of the customers, rising competition, management, and administrative operations effectively. The company has the potential to acquire market share and increase the competitive advantage of the marketplace. By understanding the strengths, weaknesses, opportunities, and threats of the company, its resources and value-based products and services, and its competitive advantage- all these factors are helpful in building effective strategies to solve the issues and generate the master plan for gaining tremendous success.

 

Referencing

Ben-Daya, M., Hassini, E., & Bahroun, Z. (2019). Internet of things and supply chain management: a literature review. International Journal of Production Research57(15-16), 4719-4742.https://www.tandfonline.com/doi/abs/10.1080/00207543.2017.1402140

Chaffey, D., & Smith, P. R. (2017). Digital marketing excellence: planning, optimizing and integrating online marketing. Routledge.https://www.taylorfrancis.com/books/mono/10.4324/9781315640341/digital-marketing-excellence-dave-chaffey-pr-smith

Chawla, M., & Chakraborty, A. (2021). A SUCCESS STORY. Delhi Business Review22(1), 103-109.https://www.researchgate.net/profile/Mamta-Chawla-3/publication/349189761_MOD_A_Success_Story/links/60e4017e92851ca944ae46da/MOD-A-Success-Story.pdf

Chia-Jen, H. U. N. G. (2018). A study on the correlation among brand image, perceived risk, and purchase intention in the food and beverage industry. Revista de Cercetare ?i Interven?ie Social?, (61), 122-133.https://www.ceeol.com/search/article-detail?id=672679

Cohen, B. D., Bennett, J., & Bubb, J. (2017). Krispy Kreme: The Franchisor That Went Stale. Kellogg School of Management Cases.https://www.emerald.com/insight/content/doi/10.1108/case.kellogg.2016.000178/full/html

Gupta, S., Gallear, D., Rudd, J., & Foroudi, P. (2020). The impact of brand value on brand competitiveness. Journal of Business Research112, 210-222.https://www.sciencedirect.com/science/article/pii/S0148296320301399

GURL, E. (2017). SWOT analysis: A theoretical review. https://demo.dspacedirect.org/handle/10673/792

Hartmann, C., Ruby, M. B., Schmidt, P., & Siegrist, M. (2018). Brave, health-conscious, and environmentally friendly: Positive impressions of insect food product consumers. Food Quality and Preference68, 64-71.https://www.sciencedirect.com/science/article/pii/S0950329318301071

Indartono, S., & Wibowo, F. W. (2017). VRIO and THES based development of university competitive advantage model in formulating university strategic plan. International Information Institute (Tokyo). Information20(10A), 7275-7283.https://search.proquest.com/openview/d31a06ff57ce106594a4e5412f27ef13/1?pq-origsite=gscholar&cbl=936334

Kotsanopoulos, K. V., & Arvanitoyannis, I. S. (2017). The role of auditing, food safety, and food quality standards in the food industry: A review. Comprehensive Reviews in Food Science and Food Safety16(5), 760-775.https://onlinelibrary.wiley.com/doi/abs/10.1111/1541-4337.12293

León?Bravo, V., Moretto, A., Cagliano, R., & Caniato, F. (2019). Innovation for sustainable development in the food industry: Retro and forward?looking innovation approaches to improve quality and healthiness. Corporate Social Responsibility and Environmental Management26(5), 1049-1062.https://onlinelibrary.wiley.com/doi/abs/10.1002/csr.1785

Messer, K. D., Costanigro, M., & Kaiser, H. M. (2017). Labeling food processes: the good, the bad and the ugly. Applied Economic Perspectives and Policy39(3), 407-427.https://academic.oup.com/aepp/article-abstract/39/3/407/4085217

Porter, B., & Bozkaya, B. (2020). Assessing the Effectiveness of Using Live Interactions and Feedback to Increase Engagement in Online Learning. arXiv preprint arXiv:2008.08241https://arxiv.org/abs/2008.08241

Rizka, R. (2019). Pengaruh Teknik Sales Promotion Krispy Kreme Doughnuts Supermal Karawaci terhadap Keputusan Pembelian (Doctoral dissertation, Universitas Multimedia Nusantara).https://kc.umn.ac.id/11651/

Saunders, K. M., & Flugge, V. (2021). Food for Thought: Intellectual Property Protection for Recipes and Food Designs. Duke Law & Technology Review19(1).https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3930655

Shcherbakova, E. (2020). Importance of Diversified Marketing Strategies for Fast Food Restaurant Chains. Available at SSRN 3738461.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3738461

Sugianto, C. (2019). The impact of Dunkin'Donuts franchise cafe service quality and store atmosphere on customer satisfaction and loyalty (Doctoral dissertation, Universitas Pelita Harapan).http://repository.uph.edu/id/eprint/11794

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