ATENEO DE DAVAO UNIVERSITY
SCHOOL OF BUSINESS AND GOVERNANCE
GRADUATE SCHOOL
STRATEGIC MANAGEMENT
DUNKIN BRANDS GROUP, INC., 2015
Submitted to:
PROF. STEPHEN ANTIG
Submitted by:
ALGER, CHRISTINE JOYCE P.
AROBO, ANA ROSE
JULY 20, 2019
I.
INTRODUCTION
With more than 20,000 points of distribution in more than 60 countries, Dunkin’
Brands is one of the world’s leading franchisors of quick service restaurants
(QSRs) serving hot and cold coffee and baked goods, as well as hard serve ice
cream. Dunkin’ Brands is the parent company of two of the world’s most
recognized and beloved brands: Dunkin’, America’s favorite all-day, everyday stop
for coffee and baked goods, and Baskin-Robbins, the world’s largest chain of ice
cream specialty shops.
Dunkin’, founded in Quincy, Massachusetts in 1950, is famous for its combination
of high-quality coffees, espresso beverages, baked goods and breakfast
sandwiches served all day with fast, friendly service. Baskin-Robbins, founded in
Glendale, California in 1945, is iconic for its variety of “31 flavors” of ice cream,
along with the brand’s creative ice cream cakes, milkshakes and ice cream
sundaes. Dunkin' Brands' 100 percent franchised business model currently
includes more than 12,500 Dunkin' restaurants and nearly 8,000 Baskin-Robbins
restaurants.
Source: https://www.dunkinbrands.com/company/about/about-dunkin-brands
II.
VISION AND MISSION STATEMENT
A. VISION STATEMENT
OLD VISION STATEMENT
We strive to be recognized as a company that responsibly serves our guests,
franchisees, employees, communities, business partners, and the interests of our
planet.
Source: https://www.dunkinbrands.com/community/corporate-socialresponsibility/overview
PROPOSED REVISED VISION STATEMENT
We strive to be the world’s biggest everyday source of high-quality all-day coffee,
baked goods and creative ice cream products whilst responsibly and sustainably
serving our stakeholders.
B. MISSION STATEMENT
OLD MISSION STATEMENT
Dunkin’ Brand’s website does not provide a written mission statement, however,
below are listed as the company’s “priorities” broken down into four parts:
Our Guests
At Dunkin’ Brands, we approach everything we do – from product development to
restaurant operations to communications – through a guest-centric lens.
(Customer; Philosophy)
We strive to offer all of our guests authentic, high-quality menu items. Our goal is
to continuously improve our menu while offering guests the choice and great taste
that they expect from Dunkin’ and Baskin-Robbins. (Product)
Food safety continues to be a key priority for Dunkin’ and Baskin-Robbins
restaurants and our supply chain. (Self-Concept)
Our Planet
When it comes to our impact on the environment, we recognize that what we do
today will matter tomorrow. Guided by our Serving Responsibly commitment, we
actively work to make business decisions that serve the interests of our guests,
franchisees, communities and the planet today and for years to come – by reducing
our packaging, improving the efficiency of our restaurants, and sourcing our
ingredients more sustainably. (Survival, growth and profitability; Philosophy;
Technology)
Our People
We are committed to improving the diversity of our employee, franchisee and
supplier base and to fostering an inclusive environment for all who come in contact
with our Brand. We strive to welcome diverse employees to our teams and to
weave inclusion into the fabric of our culture. Our leaders and employees foster an
environment where everyone is valued and respected; everyone matters here.
(Employees)
Our Neighborhoods
At Dunkin’ Brands, we feel fortunate that our restaurants are part of the fabric of
so many communities and neighborhoods around the globe, and our franchisees
value the role they can play in strengthening their communities. (Public
Image;Philosophy)
Source: https://www.dunkinbrands.com/community/corporate-socialresponsibility/overview
PROPOSED MISSSION STATEMENT
Dunkin’ Brand is a global (3) source of high-quality all-day coffee, baked goods
and creative ice cream products (2). With emphasis on food safety and our
commitment to serve all our stakeholders responsibly (1,5,6,7,8,9) we are in
continuous pursuit of developing sustainable products and overall operations while
taking advantage of technological advancements (4,5,7,8). We foster an inclusive
environment with a diverse team (9) who helps the company pursue its
commitments to all of its stakeholders especially in strengthening every community
where the brand is established worldwide. (1,3,6,7,8). (80 words)
(1) Customer, (2) Product or services, (3) Markets, (4) Technology, (5) Survival,
growth and profitability, (6) Philosophy, (7) Self-Concept, (8) Public image, (9)
Employees
III.
INTERNAL ASSESSMENT
A. FINANCIAL ANALYSIS
INCOME STATEMENT OVERVIEW
Dunkin’ Brand’s revenues have increased to USD$ 34.9M in 2014. Although
operating expenses have slightly decreased in 2014, its operating income has
greatly decreased indicating a poor financial health. But overall net income has
increased to USD 29.4M.
(in thousands of USD)
Income Statement
Revenues
Operating Expenses
Operating Income
EBIT
Interest
EBT
Tax
Other Items
Net Income
12/28/2013
713,840
436,631
27,527
304,736
86,648
218,088
71,784
599
146,903
12/17/2014
748,709
432,535
22,684
338,858
83,125
255,733
80,170
794
176,357
Percent Change
4.88%
-0.94%
-17.59%
11.20%
-4.07%
17.26%
11.68%
32.55%
20.05%
BALANCE SHEET OVERVIEW
Total assets of Dunkin’ Brands have decreased to USD 57.3M and their liabilities
have decreased by USD 9.9M. Total equity also decreased by USD 37.3M.
2014’s overall financial position is really not looking good.
(in thousands of USD)
Income Statement
12/28/2013
12/17/2014
Percent Change
Cash
Accounts Receivable
Inventories
Other Current Assets
Total Current Assets
PPE
Equity Investments
Goodwill & Intangibles
Other Assets
Total Assets
256,933
79,765
125,062
461,760
182,858
170,644
2,343,803
75,625
3,234,690
208,080
105,060
129,478
442,618
182,061
164,493
2,317,167
71,044
3,177,383
Short-term Debt
Accounts Payable
Other Current Liabilities
Total Current Liabilities
Long-term Debt
Deferred Income Taxes
Other Liabilities
Total Liabilities
5,000
12,445
326,853
344,298
1,818,609
561,714
97,781
2,822,402
3,852
13,814
337,853
355,519
1,807,081
540,339
99,494
2,802,433
-22.96%
11.00%
3.37%
3.26%
-0.63%
-3.81%
1.75%
-0.71%
Noncontrolling Interest
Common Stock
Retained earnings
Treasury Stock
Paid in Capital and other
Total Equity
Total Liabilities,
noncontrolling Interest, &
Equity
4,930
107
779,741 10,773
1,197,765
412,288
6,991
104
711,531
1,079,386
374,950
41.81%
-2.80%
-8.75%
-100.00%
-9.88%
-9.06%
3,234,690
3,177,383
-1.77%
-
-19.01%
31.71%
-
3.53%
-4.15%
-0.44%
-3.60%
-1.14%
-6.06%
-1.77%
HISTORICAL RATIOS
Historical Ratios Overview
Based on their financial ratios – in terms of liquidity, their ratios dropped in 2014
but nevertheless they are still capable of paying their short-term obligations
however this must be addressed accordingly to avoid liquidity problems in the
future. In terms of operating performance – their efficiency dropped in 2014, but in
terms of profitability their performance has increased. As to the financial health of
the company, the company has a weak equity position. Their operation primarily
capitalizes on debt thus financial risk is very high. In terms of overall growth, they
are in a good position because it is higher than the previous year.
2013
Internal Liquidity
Current Ratio
Quick Ratio
Operating Performance
Total Asset Turnover
Operating Profit Margin
Net Profit Margin
Risk Analysis
Debt-Equity Ratio
Long Term Debt/Capital
Growth Analysis
Return on Equity
Net Profit Margin
Return on Investments
2014
1.34
1.34
1.24
1.24
0.23
42.69
20.58
0.22
45.26
23.55
4.61
0.81
5.04
0.83
35.91
20.58
6.55
47.71
23.55
8.08
Du Pont Analysis Overview
There’s an increase in Operational Efficiency (ROS), Marketing Excellence and
overall Corporate Performance (ROE). However, financial risk is high because it is
more than the industry tolerance of 3.3.
RATIO
DU PONT ANALYSIS
DUNKIN' BRAND
2014
2013
NET INCOME
176,357
146,903
SALES
748,709
713,840
3,177,383
3,234,690
367,959
407,358
24%
0.24
8.64
48%
21%
0.22
7.94
36%
TOTAL ASSETS
EQUITY
RETURN ON SALES
ASSET TURNOVER
EQUITY MULTIPLIER
RETURN ON EQUITY
INTERNAL FACTOR EVALUATION MATRIX (IFE MATRIX, IFEM)
Strengths
1
2
3
4
5
Dunkin’ Brands is one of the largest franchisors of QSR and
has a global reach and accessibility considering the
presence of 11, 300 (Dunkin) and 7,000 (BR) restaurants
across the world and considered as a speed leader in QSR
Dunkin' Donuts has Centralized Manufacturing Locations
(CML) were products are delivered fresh daily
Dunkin' Franchisees in the United States pay 5% of gross
sales for advertising fees
No 1 in customer loyalty - Dunkin’ Donuts recognized as the
#1 in coffee category for 8 consecutive years by the Brand
Keys Customer Loyalty Engagement Index
Price of products are highly competitive
Weight
Weighted
Score
Rating
0.09
4
0.36
0.07
4
0.28
0.07
3
0.21
0.07
4
0.28
0.05
3
0.15
6
Has shown impressive growth in revenues (8.1%) and
overall corporate performance
0.05
3
0.15
7
Was named top US ice cream and frozen dessert franchise
0.04
3
0.12
8
Can negotiate better pricing on food, packaging and othe
supplies due to size compared to small scale entrepreneurs
0.04
3
0.12
9
Superb performance in new Markets - Dunkin Brands Group
Inc. has built expertise at entering new markets and making
a succes out of them
0.03
3
0.09
Already engaged in various CSR activities
0.02
3
0.06
10
Primary Implication from IFEM (Strengths)
Dunkin’ Brands greatest strength is that they are the market speed leader in QSR.
Dunkin’ has established. They have continuously received rewards for Customer
Loyalty which is a good indicator that they have strong position in the market.
They have established Central Manufacturing Locations making their operation
more efficient which reflects their overall corporate performance.
Weaknesses
1
Does not offer healthy options for health conscious
customers
Store cannibalization is becoming a problem
Weight
Weighted
Score
Rating
0.07
1
0.07
0.06
1
0.06
3
A few products have a high market share, while most of the
products have a low market share. This reliance on a few
products makes Dunkin Brands Group Inc vulnerable to
external threats if these few products suffer for any reason
0.06
1
0.06
4
There is a lack of proper financial planning at Dunkin Brands
Group Inc regarding cash flows, leading to certain
circumstances where there isn’t enough cash flow as
required leading to unnecessary unplanned borrowing
0.05
1
0.05
0.05
2
0.1
0.04
1
0.04
0.04
1
0.04
2
5
6
7
8
9
10
Total number of stores outside US territories have decreased
in number
The company’s financial risk is high due to high debt to
equity ratio
The company's ability to meet its short term financial
obligations is low
Dunkin Brands has no COO
0.04
2
0.08
Even though the product is a success in terms of sale but its
positioning and unique selling proposition is not clearly
defined which can lead to the attacks in this segment from
the competitors
0.03
2
0.06
Dunkin Brands has limited control over employees at
restaurants because they are employed and paid by
franchisee
0.03
2
0.06
Total IFE Score
1
Primary Implication from IFEM (Weaknesses)
Primary weakness is their lack of healthy options for health-conscious customers.
This is the current consumer trend and if left unsolved can lead to reduction of
revenues. They also have limited product offerings because they are primarily
known as a breakfast restaurant. The company also have a high financial risk at
the moment because of poor long-term debt management.
2.44
CURRENT ORGANIZATION CHART
PROPOSED ORGANIZATIONAL CHART
Reason:
We added the COO because we noticed that they don’t have any second-incommand. As we all know the function of CEO is more concentrated on
investments thus someone must be commissioned to oversee the business
operations.
MARKET MAP
Overview:
In terms of quality and price – Dunkin is in positioned lower than the competitors.
EXISTING STRATEGY TO INCREASE REVENUE
Drive-Thru Facility – to cater consumers in a hurry
Loyalty and rewards program – enable company to collect data
Dunkin’ K-Cup – helped Dunkin penetrate the market
Use of Arabica Coffee – cheaper than other types of coffee
Will open 65 Dunkin Donut Stores in Brasilia and additional stores 80
additional stores outside brazil
6) Rehauling stores to have “sip and sit” atmosphere
7) Offer dinner – friendly food
1)
2)
3)
4)
5)
IV.
EXTERNAL ASSESSMENT
EXTERNAL FACTOR EVALUATION MATRIX (EFE MATRIX, EFEM)
Opportunities
New trends in the consumer behavior can open up new market
for the Dunkin' Brands Group, Inc. It provides a great
1
opportunity for the organization to build new revenue streams
and diversify into new product categories
Weight
Weighted
Score
Rating
0.09
4
0.36
0.08
4
0.32
0.07
0.06
4
4
0.28
0.24
There is still room for international expansion considering UK
5 re-opening was a success; other Asian countries still has room
for expansion
0.06
3
0.18
6
The new technology provides an opportunity to Dunkin' Brands
Group, Inc.
0.05
4
0.2
7
The local players have local expertise while Dunkin Brands
can bring global processes and execution expertise on table.
0.05
3
0.15
8
The price of Arabica coffee bean is lower compared to other
variety of coffee bean (Robusta)
0.04
3
0.12
0.04
3
0.12
0.03
3
0.09
Technology is becoming more advanced in term of food
2 preparation, marketing, packaging innovations and so much
more
3 Intense price competitiveness among rival firms
4 Consumers are becoming more health conscious
Dunkin' Brands can develop an agreement to Colombia, the
2nd world's Arabica grower
10 Customer crave convenience because of busy lifestyle
9
Opportunities Implications:
Consumer behavior has changed and is now leaning towards consuming healthy options.
Technology is more accessible now to companies who wanted to develop their products,
packaging, and services.
Threats
As the company is operating in numerous countries it is
1 exposed to currency fluctuations especially given the volatile
political climate in number of markets across the world.
2 More competition in the breakfast category
Incidents involving food-borne illnesses, food tampering, or
3 food contamination could create negative publicity and
significantly harm in Dunkin’s operating results
Weight
Weighted
Score
Rating
0.06
2
0.12
0.05
2
0.1
0.05
2
0.1
New technologies developed by the competitor or market
4 disruptor could be a serious threat to the industry in medium to
long-term future.
0.05
2
0.1
Changing consumer buying behavior from online channel
5 could be a threat to the existing physical infrastructure driven
supply chain model.
0.05
2
0.1
Intense competition – Stable profitability has increased the
number of players in the industry over last two years which has
6
put downward pressure on not only profitability but also on
overall sales
0.04
1
0.04
There’s a looming supply crisis in the coffee industry as well as
the increase of prices to 50%
0.04
1
0.04
In 2014 KKD, Starbucks and Dunkin’ Brand Group increased to
6.5, 10.1 and 4.9 percent respectively. The quick service
8
restaurant segment is highly competitive, and competition
could lower revenues.
0.04
2
0.08
Trade Relation between US and China can affect Dunkin
Brands growth plans - This can lead to full scale trade war
9
which can hamper the potential of Dunkin Brands to expand
operations in China.
0.03
1
0.03
0.02
1
0.02
7
Many mom-and-pop stores can open anytime promising
10 cheaper product offerings because they don’t have to pay
franchise fees and royalties
Total EFE Score
1
2.79
Threats Implications:
Currently, competition in the breakfast industry is very tight. Due to intense
competition, competitors have upgraded their services with the help of technology
and are currently ahead in the game in terms of taste and quality.
THE COMPETITORS
a. “MOM-AND-POP” DOUGHNUT SHOPS
Not really a dominant rival, however there are thousands of “mom-andpop” doughnut and specialty shops worldwide eating a portion of the
market.
b. STARBUCKS CORPORATION (SBUX)
Starbucks is the world’s largest specialty coffee retailer with more than
18,000 coffee shops in 60 countries. It offers coffee drinks and pastries,
roasted beans, coffee accessories, and teas. The company owns about
9,400 of its own shops (mostly in the United States), while licensees and
franchisees operate roughly 8,650 units worldwide (primarily in shopping
centers and airports). In 2014, Starbucks began offering beer and wine, as
well as fancy snacks, chicken skewers, chocolate fondue, and other items.
By year-end 2014, only 40 Starbucks offered these new items. The
company also owns the Seattle’s Best Coffee and Torrefazione Italia coffee
brands. Starbucks markets its coffee through grocery stores and licenses
its brand for other food and beverage products. The company is determined
to get the afternoon and evening customer, whereas historically it has
mainly been a breakfast place. That is why the beer, wine, and more food
is being rolled out at more and more Starbucks outlets.
The company sees afternoon and dinner also as a way to differentiate itself
from Dunkin’ Donuts and Krispy Kreme Doughnuts that historically have
been more about quick service than sit down and stay, which is the venue
Starbucks plans to enter aggressively globally. Starbucks now offers 10
standard small dinner plates as part of its evening menu, such as truffle
macaroni and cheese. There are also five choices of red wine, three white
wines, a sparkling rose, and prosecco.
c. KRIPY KREME DOUGHNUTS (KKD)
Krispy Kreme Doughnuts is chain of doughnut outlets with about 695
locations throughout the United States and in about 20 other countries. The
shops are popular for their glazed doughnuts that are served fresh and hot
out of the fryer, as well as cake and filled doughnuts, crullers, and fritters.
Hot coffee and other beverages also are sold. KKD outlets are almost all
owned and operated by franchisees; the company owns and operates 90
locations. Aside from doughnuts and coffee, no other food items of
substance are offered. The company markets its doughnuts through
grocery stores and supermarkets.
Green Mountain Coffee Roasters Inc. (GMCR) and KKD have agreed to
widen the home- made single-serve coffee options for Keurig users,
whereby KKD’s upcoming coffees—Smooth and Decaf—will be available in
K-Cup packs for Keurig brewers. Krispy Kreme’s K-Cup packs will be
available at the online shopping sites of Keurig and KKD, along with the
participating KKD shops, grocery, and many other retail outlets. The
convenience of Keurig brewers will enhance the popularity of KKD coffee
among Keurig fans.
The fiscal fourth-quarter results for KKD on March 12, 2014, saw revenue
rise 3.3 percent to $112.7 million. Company-owned same-store sales rose
1.6 percent, and franchise same-store sales soared 6.7 percent. Adjusted
net income grew 37 percent to $8.3 million. It was the fifth full year and 21st
quarter in a row of same-store KKD sales gains.
d. TIM HORTONS, INC.
Tim Hortons is Canada’s leading quick-service restaurant brand, having
more than 4,250 cof- fee and donut shops across the country, and in several
U.S. states. Tim Hortons was acquired by Burger King Worldwide in late
2014 in an $11 billion deal, and BKW immediately created Restaurant
Brands International (RBI). RBI is now the second largest global quickservice restaurant in the world. Today, BKW is headquartered in Oakville,
outside of Toronto, Canada.
The Tim Horton menu features a variety of coffees and cappuccino, along
with donuts, Dutchies, bagels, and other baked goods. In addition, Tim
Hortons serves a lunch menu of soup, sandwiches, and chili. The chain
includes freestanding as well as kiosk and mall-based outlets; all but about
20 of the locations are operated by franchisees. The company owns the
Cold Stone Creamery ice cream shop chain. Tim Hortons’ revenues in a
recent quarter increased 10.7 percent, and adjusted earnings-per-share
grew 6 percent.
DUNKIN BRANDS VERSUS RIVAL FIRMS
No of Employees
1%
1%
Dunkin
Krispy Kreme
98%
Starbucks
2500
2000
1500
1000
500
0
Dunkin
Krispy Kreme
Starbucks
Net Income
Market Capital
7%
2%
Dunkin
Krispy Kreme
91%
Starbucks
COMPETITIVE PROFILE MATRIX (CPM)
DNKN
Critical Success
Factors
Price
competitiveness
Product quality
Advertising
Market share
Financial position
Customer loyalty
Global expansion
Top management
Customer service
Union relations
Technological
advantages
Location of facilities
Social responsibility
Totals
SBUX
KKD
Weight Rating Score Rating Score Rating
Score
0.15
0.13
0.12
0.11
0.1
0.08
0.07
0.06
0.05
0.04
4
2
4
3
2
4
4
2
3
2
0.6
0.26
0.48
0.33
0.2
0.32
0.28
0.12
0.15
0.08
2
4
2
4
4
2
3
3
4
3
0.3
0.52
0.24
0.44
0.4
0.16
0.21
0.18
0.2
0.12
3
3
3
2
3
3
2
4
2
4
0.45
0.39
0.36
0.22
0.3
0.24
0.14
0.24
0.1
0.16
0.04
0.03
0.02
1.00
3
3
4
40.00
0.12
0.09
0.08
3.11
4
4
2
41.00
0.16
0.12
0.04
3.09
2
2
3
36.00
0.08
0.06
0.06
2.80
Note: We only considered the two major competitors of Dunkin’ Brands for this analysis.
Primary implications from CPM
From viewing the competitive profile matrix, Dunkin Brands ranks the second out of its
two main competitors Starbucks and Krispy Kreme in its total critical success factors. The
company’s low-ranking stems are from their weaker financial profit, top management,
union relations, and lower product quality. However, Dunkin’ Brands still dominates its
two competitors over price competitiveness, advertising, customer loyalty, social
responsibility, and in global expansion.
V.
STRATEGY FORMULATION
a. SWOT MATRIX
This matrix shows possible strategies for the company. Condition was a
comprehensive analysis of internal and external factors and their influence
on the company.
INTERNAL
SWOT MATRIX
EXTERNAL
OPPORTUNITIES
1.
New trends in the consumer behavior can open up
new market for the Dunkin' Brands Group, Inc. It
provides a great opportunity for the organization to
build new revenue streams and diversify into new
product categories
2.
Technology is becoming more advanced in term of
food preparation, marketing, packaging innovations
and so much more
3.
Intense price competitiveness among rival firms
4.
Consumers are becoming more health conscious
5.
There is still room for international expansion
considering UK re-opening was a success; other
Asian countries still has room for expansion
6.
The new technology provides an opportunity to
Dunkin' Brands Group, Inc.
7.
The local players have local expertise while Dunkin
Brands can bring global processes and execution
expertise on table.
8.
The price of Arabica coffee bean is lower compared
to other variety of coffee bean (Robusta)
9.
Dunkin' Brands can develop an agreement to
Colombia, the 2nd world's Arabica grower
10.
Customer crave convenience because of busy
lifestyle
THREATS
1.
As the company is operating in numerous countries
it is exposed to currency fluctuations especially
given the volatile political climate in number of
markets across the world.
2.
More competition in the breakfast category
3.
Incidents involving food-borne illnesses, food
tampering, or food contamination could create
negative publicity and significantly harm in Dunkin’s
operating results
4.
New technologies developed by the competitor or
market disruptor could be a serious threat to the
industry in medium to long-term future.
5.
Changing consumer buying behavior from online
channel could be a threat to the existing physical
infrastructure driven supply chain model.
6.
Intense competition – Stable profitability has
increased the number of players in the industry over
last two years which has put downward pressure on
not only profitability but also on overall sales
7.
There’s a looming supply crisis in the coffee industry
as well as the increase of prices to 50%
8.
In 2014 KKD, Starbucks and Dunkin’ Brand Group
increased to 6.5, 10.1 and 4.9 percent respectively.
The quick service restaurant segment is highly
competitive, and competition could lower revenues.
9.
Trade Relation between US and China can affect
Dunkin Brands growth plans - This can lead to full
scale trade war which can hamper the potential of
Dunkin Brands to expand operations in China.
10.
Many mom-and-pop stores can open anytime
promising cheaper product offerings because they
don’t have to pay franchise fees and royalties
STRENGTHS
1.
Dunkin’ Brands is one of the largest franchisors of
QSR and has a global reach and accessibility
considering the presence of 11, 300 (Dunkin) and
7,000 (BR) restaurants across the world and
considered as a speed leader in QSR
2.
Dunkin' Donuts has Centralized Manufacturing
Locations (CML) were products are delivered
fresh daily
3.
Dunkin’ Franchisees in the United States pay 5%
of gross sales for advertising fees
4.
No 1 in customer loyalty - Dunkin’ Donuts
recognized as the #1 in coffee category for 8
consecutive years by the Brand Keys Customer
Loyalty Engagement Index
5.
Price of products are highly competitive
6.
Has shown impressive growth in revenues (8.1%)
and overall corporate performance
7.
Dunkin’ Franchisees in the United States pay 5%
of gross sales for advertising fees
8.
Can negotiate better pricing on food, packaging
and other supplies due to size compared to small
scale entrepreneurs
9.
Superb performance in new Markets - Dunkin
Brands Group Inc. has built expertise at entering
new markets and making a success out of them
10.
Already engaged in various CSR activities
WEAKNESSES
1.
Does not offer healthy options for health-conscious
customers
2.
Store cannibalization is becoming a problem
3.
A few products have a high market share, while most of the
products have a low market share. This reliance on a few
products makes Dunkin Brands Group Inc vulnerable to
external threats if these few products suffer for any reason
4.
There is a lack of proper financial planning at Dunkin
Brands Group Inc regarding cash flows, leading to certain
circumstances where there isn’t enough cash flow as
required leading to unnecessary unplanned borrowing
5.
Total number of stores outside US territories have
decreased in number
6.
The company’s financial risk is high due to high debt to
equity ratio
7.
The company's ability to meet its short-term financial
obligations is low
8.
Dunkin Brands has no COO
9.
Even though the product is a success in terms of sale, but
its positioning and unique selling proposition is not clearly
defined which can lead to the attacks in this segment from
the competitors
10.
Dunkin Brands has limited control over employees at
restaurants because they are employed and paid by
franchisee
SO
WO
1.
2.
3.
OPTIMIZE CMLS BY
DIVERSIFYING PRODUCT
PORTFOLIO BY ADDING
HEALTHY OPTIONS USING
ADVANCE TECHNOLOGY (S2,
O2, O4)
DEVELOP COLOMBIA AS A
SUPPLY PARTNER TO
INCREASE COFFEE
PRODUCTION AS PART OF
DUNKIN’S CSR ACTIVITES
(S10, O10)
DEVELOP PRODUCTS
HEALTHY PRODUCTS TO
INCREASE REVENUES AND
(S6, O4)
ST
1.
2.
1.
2.
USE TECHNOLOGICAL
ADVANCMENTS TO DEVELOP
HEALTHY PRODUCT OPTIONS AND
PACKAGING (W1, W2)
INTENSIFY PROMOTIONAL
ACTIVITIES USING MEDIA BUY AND
ONLINE PLATFORMS TO
PENETRATE MARKET (W9, O2,06)
WT
OPTIMIZE THE 5%
FRANCHISEE ADVERTISING
FEES TO INTENSIFY
PROMOTIONAL ACTIVITIES
(S5, T5)
PROMOTE DUNKIN FOOD
SAFETY POLICY USING
ADVERTISING FUND TO GAIN
CONSUMER TRUST (S3, T3)
1.
INSTALL A COO TO OVERSEE AND
STREAMLINE THE WHOLE GLOBAL
BUSINESS OPERATIONS
(WS1,T1,T3,T6,T3, T9)
b. IE MATRIX
Result of our IE matrix indicated that our tactical strategies should focus
on market penetration and product development.
c. QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
Product development Online channel Promotional event
Strengths
Weight
Dunkin' Brands is one the largest franchisors of QSR and has a
global reach and accessibility considering the presence of 11,300
(Dunkin) and 7,000 (BR) restaurants across the world and
1 considered as a speed leader in QSR
0.09
Dunkin' Donuts has Centralized Manufacturing Locations (CMLs)
2 were products are delivered fresh daily
0.07
Dunkin' Franchisees in the US pay 5% of gross sales for
3 advertising fees
0.07
No. 1 in customer loyalty - Dunkin' Donuts recognized as the # in
coffee category for 8 consecutive years by the Brand Keys
4 Customer Loyalty Engagement Index
0.07
5 Price of products are highly competitive
0.05
Has shown impressive growth in revenues (8.1%) and overall
6 corporate performance
0.05
7 Was named top US ice cream and frozen dessert franchise
0.04
Can negotiate better pricing on food, packaging and other
8 supplies due to size compared to small scale entrepreneurs
0.04
Superb performance innew markets - Dunkin' Brand Groups Inc.
has built expertise at entering new markets and making a success
9 out of them
10 Already engaged in various CSR activities
0.03
0.02
AS
TAS
AS
TAS
AS
TAS
4
0.36
3
0.27
1
0.09
4
0.28
2
0.14
1
0.07
2
0.14
3
0.21
4
0.28
2
3
0.14
0.15
1
2
0.07
0.1
0
0
0
0
4
3
0.2
0.12
3
4
0.15
0.16
1
1
0.05
0.04
4
0.16
2
0.08
3
0.12
4
2
0.12
0.04
3
1
0.09
0.02
2
3
0.06
0.06
Product development Online channel Promotional event
Weaknesses
Weight
1 Does not offer healthy options for health conscious customers
0.07
2 Store cannibalization is becoming a problem
0.06
A few products have a high market share, while most of the
products makes Dunkin' Brands Group Inc. vulnerable to external
3 threats if these few products suffer for any reason
0.06
4 There is a lack of proper financial planning at Dunkin' Brands
0.05
Group Inc. regarding cash flows, leading to certain circumstances
where there isn't enough cash flow as rrquired leading to
unnecessary unplanned borrowing
Total number of stores outside US territorieshave decreased in
5 number
0.05
The
company's
financial
risk
is
high
due
to
high
debt
to
equity
ratio
6
0.04
The company's ability to meet its short term financial obligations is
7 low
0.04
8 Dunkin' Brands Group Inc. has no COO
0.04
Even though the product is a success in terms of sales but its
positioning and unique selling proposition is not clearly defined
9 which can lead to the attacks in the segment from the competitors
0.03
Dunkin' Brands has limited control over employees at restaurants
10 because they are employed and paid by the franchisee
0.03
AS
4
4
TAS
0.28
0.24
4
2
AS
2
2
TAS
0.14
0.12
0.24
0.1
0
3
2
0.1
1
AS
3
3
TAS
0.21
0.18
0
0.15
1
0
0.06
0
4
0.2
0
0
0.04
3
0.12
0
0
2
0
0.08
0
4
2
0.16
0.08
0
0
0
0
2
0.06
3
0.09
4
0.12
0
0
3
0.09
0
0
Product development Online channel Promotional event
Opportunities
Weight
New trends in the consumer behavior can open up new market for
the Dunkin' Brands Group, Inc. It provides a great opportunity for
the organization to build new revenue streams and diversify into
1 new product categories
0.09
Technology is becoming more advanced in term of food
preparation, marketing, packaging innovations and so much more
2
0.05
3 Intense price competitiveness among rival firms
0.05
4 Consumers are becoming more health conscious
0.06
There is still room for international expansion considering UK reopening was a success; other Asian countries still has room for
5 expansion
0.08
The new technology provides an opportunity to Dunkin' Brands
6 Group, Inc.
The local players have local expertise while Dunkin Brands can
7 bring global processes and execution expertise on table.
The price of Arabica coffee bean is lower compared to other
8 variety of coffee bean (Robusta)
Dunkin' Brands can develop an agreement to Colombia, the 2nd
9 world's Arabica grower
10 Customer crave convenience because of busy lifestyle
AS
TAS
AS
TAS
AS
TAS
4
0.36
2
0.18
3
0.27
4
4
4
0.2
0.2
0.24
3
3
2
0.15
0.15
0.12
1
2
3
0.05
0.1
0.18
4
0.32
2
0.16
3
0.24
0.06
3
0.18
0
0
0
0
0.04
4
0.16
0
0
2
0.08
0.04
4
0.16
0
0
3
0.12
0.03
0.07
3
4
0.09
0.28
4
1
0.12
0.07
0
1
0
0.07
Product development Online channel Promotional event
1
2
3
4
5
6
7
8
9
10
Threats
Weight
As the company is operating in numerous countries it is exposed
to currency fluctuations especially given the volatile political
climate in number of markets across the world.
0.06
More competition in the breakfast category
0.05
Incidents involving food-borne illnesses, food tampering, or food
contamination could create negative publicity and significantly
harm in Dunkin’s operating results
0.04
New technologies developed by the competitor or market
disruptor could be a serious threat to the industry in medium to
long-term future.
0.05
Changing consumer buying behavior from online channel could be
a threat to the existing physical infrastructure driven supply chain
model.
0.03
Intense competition – Stable profitability has increased the
number of players in the industry over last two years which has put
downward pressure on not only profitability but also on overall
sales
0.04
There’s a looming supply crisis in the coffee industry as well as the
increase of prices to 50%
0.04
In 2014 KKD, Starbucks and Dunkin’ Brand Group increased to
6.5, 10.1 and 4.9 percent respectively. The quick service
restaurant segment is highly competitive, and competition could
lower revenues.
0.05
Trade Relation between US and China can affect Dunkin Brands
growth plans - This can lead to full scale trade war which can
hamper the potential of Dunkin Brands to expand operations in
China.
0.05
Many mom-and-pop stores can open anytime promising cheaper
product offerings because they don’t have to pay franchise fees
and royalties
0.02
STAS
AS
TAS
AS
TAS
AS
TAS
1
2
0.06
0.1
3
3
0.18
0.15
1
1
0.06
0.05
4
0.16
2
0.08
3
0.12
3
0.15
4
0.2
1
0.05
0
0
2
0.06
0
0
2
0.08
0
0
0
0
4
0.16
3
0.12
2
0.08
4
0.2
2
0.1
3
0.15
4
0.2
0
0
3
0.15
4
0.08
6.23
3
0.06
4.34
2
0.04
3.15
d. STRATEGY CONCLUSION
Based on the results of the models used, tactical strategies should focus on
product development and market penetration.
VI.
STRATEGY IMPLEMENTATION
Dunkin Brands should maintain current strategies and focus on product
development and market penetration– especially in creating healthy menu for
health-conscious people.
A healthy hearty selection must be added on the menu like, but not limited to the
ff:
1.
2.
3.
4.
5.
Dunkin Low-calorie beverages line
Dunkin exclusive Mixed juices line
Low-calorie bagels line
Vitamin enriched breads
Low-calorie ice cream and cakes
The new products will be advertised extensively using media buys and other online
platforms for better market penetration.
To better streamline the operations, a COO should be installed to oversee the
business and make sure that all strategies are implemented. Thus, the
organizational structure will be changed to:
ORGANIZATIONAL STRUCTURE
THE PROJECTED VALUES
Increase in revenue:
Assumptions:
We still expect a growth of 4.88% targeting a total of 8.8% by the end of the third
year.
With the new product line, we are targeting a gradual increase on the 40% of the
revenues from 5% on the first year, upto 10% on the 3rd year.
December 28, 2013
Revenues
713,840
Computation:
1st year
2nd year
Remarks
rd
3 year
36,537.00
39,050.74
42,518.45
14974.18
51,511.18
32,008.81
71,059.55
34,851.19
77,369.64
800,220.18
871,279.73
948,649.37
8.88%
Total increase
in revenues
for the next 3
year
4.88%
increase
across the
board
5% increase
in growth 1st
year
10% increase
2nd-3rd year
Total revenue
per year
December 27, 2014
748,709
VII.
STRATEGY EVALUATION
Prepare a balance scorecard to measure both qualitative and quantitative factors
affecting the success of the implemented strategy.