Introduction: The Delicious Krispy Kreme Doughnuts stsrted on July 13, 1937 when
Vernon Rudolph bought a secret yeast raised doughnut recipe from a French chef in New
Orleans. He rented out a building to make the doughnut s and sold them to local grocery stores
(Krispy Kreme .com).The first drive thru at Krispy Kreme Kreme started with the cent of the
doughnut drifting in the air as people walked by. They would ask if they could buy a
doughnut so he cut a whole in the wall outside the building and started selling doughnuts to
customers .A lot of things have changed with this franchise throughout the years, starting with
the logo, to the hot light, to the different kinds of doughnuts they make .From the start
,Krispy Kreme has become one of the best doughnut shops in the world.
Organizational profile:
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Name of the Company: Krispy Kreme Doughnuts(KKD).
Founder: Vernon Randolph.
Date of Incorporation: 1937.
Commenced Operation: 1976.
President and CEO: Michael J. Tatterfield.
Telephone: +1800-457-4779.
Industry: Foods
Type: Public Limited Company.
First capital:
Present Asset: 75,806.
Number of Eployees: 4,300.
Number of Stores: 523 stores.
Total customers:
Slogan: ”Hot Doughnut Experience”.
E-Mail: KKGuest@krispykreme.com .
 Logo:
 Website: https://www.krispykreme.com/
1.Pumkin Spice Original Glazed Doughnuts: Get ready for a one-day-only pumpkin
takeover! Krispy Kreme Doughnuts today announced it will celebrate National Pumpkin Day on
Oct. 26 by making Pumpkin Spice Original Glazed doughnuts. This delicious twist on a classic
will be available at participating Krispy Kreme shops in the U.S. and Canada for one day only.
“Our Original Glazed doughnut is a treat beloved by guests young and old.
2. Pirate Doughnuts: -Inspired by the savory and spicy flavors of fall, Krispy Kreme
Doughnuts today announced a doughnut and beverage line featuring classic tastes such as
pumpkin spice and salted caramel. The Pumpkin Spice Cake Doughnut, Salted Caramel Latte
Doughnut and Pumpkin Spice Latte are now available in participating shops in the U.S. and
Canada through Nov. 24. The Pumpkin Spice Cake Doughnut is an old-fashioned doughnut.
3.F illed Football: Kick-off the football season with the ultimate game-day treat! Krispy
Kreme Doughnuts today announced it will once again offer Football Doughnuts in participating
U.S. shops starting Aug. 11. The Football Doughnut is Kreme™ filled and dipped in chocolate
icing before being finished with white icing football laces. These doughnuts will be available on
weekends throughout the entire football season.
4.Krispy Kreme Doughnuts Announces Valentine’s Day Sweet Treats: It’s the
perfect sweet treat for your special someone! Participating Krispy Kreme shops in the United
States are now offering four limited-time doughnuts, including the Luv Bug, Bee Mine, Sprinkle
Heart and Chocolate Iced with Sprinkles doughnuts. All four doughnuts are available now until
Feb. 14. Pair any of these special doughnuts with a Caramel Mocha beverage, a smooth espresso
blended with both caramel and chocolate.
5. Triple Chocolate is Back: Three decadent chocolates, one delicious doughnut! Krispy
Kreme Doughnuts, Inc., (NYSE:KKD), has combined scrumptious layers of chocolate to create
the perfect sweet treat. The Triple Chocolate Doughnut and Caramel Mocha Latte are available
now through Jan. 24, 2016 at participating Krispy Kreme shops in the United States and Canada.
The Triple Chocolate Doughnut goes great with any Krispy Kreme coffee, but the Caramel
Mocha.
Goals of the kripsy kreme:
Krispy Kreme Doughnuts, Inc. is an American global doughnut company and coffeehouse
chain based in Winston-Salem, North Carolina. Krispy Kreme is to become a privately held
company owned by JAB Beech, itself a private German investment firm. Krispy Kreme
founder Vernon Rudolph bought a yeast-raised recipe from a New Orleans chef and, in 1937,
rented a building in what is now historic Old Salem in Winston-Salem, and began selling to local
grocery stores.[3]
In the United States, Krispy Kreme's products are sold via their own outlets as well as through
grocery, convenience stores, supermarkets, and Temples. They are also available in other
countries through various channels.
The company's growth was steady prior to its initial public offering but profits have decreased in
recent quarters.
On February 24, 2015, Krispy Kreme opened its 1,000th shop in Kansas City, Kansas.
Mission: Our mission is to touch and enhance lives through the joy that is Krispy kreme .
Vision: Krispy Kremes vision statement says, our vision is to be the worldwide leader in
sharing delicious tastes and creating joyful memories.”The vision is clear on what Krispy Kreme
wishes to accomplish through future endeavors. And lastly, striving for a joyful experience
composes its vision of customer service.
Core Values
•
Each week, Krispy Kreme makes enough donuts to reach from New York to Los
Angeles.
•
Each store makes around 3000 doughnuts per hour.
•
In North America, there is an average of 5-7.5 million Krispy Kreme doughnuts bought
per day.
•
2 Billion Doughnuts are made per year in North America
•
Each year Krispy Kreme uses enough chocolate to fill 2 Olympic size swimming pools.
• The hole in the center of doughnuts is credited in 1847 to a boy named Hanson Gregory
who suggested to his mom to cut a hole in her “fried cakes” to make sure they were fully
cooked in the middle.
Corporate Governance:
Board of Directors:
Mr. Thompson President and Chief Executive Officer since June 2014. He joined Krispy Kreme
from Papa John’s International, Inc. where he most recently served as President and Chief
Operating Officer. Mr. Thompson is a highly respected professional with more than 25 years of
food service, grocery products and beverage experience.
James H. Morgan
Tony Thompson
Robert S. McCoy
JR
Mr. Bentsen
Charles A. Blixt
Carl E. Lee
Andrew J. Schindler
Lizanne Thomas
Chairman
President and Chief Executive Officer
Lead Independent Director
Lead Independent Director
Director
Director
Director
Director
Director
External environment:
External Forces
External forces can be divided into five broad categories:
1. Economic forces.
2. Social, cultural, demographic, and natural environment forces.
3. Political, governmental, and legal forces.
4. Technological forces; and
5. Competitive forces.
1. Economic Force: Economic forces are the factors that help to determine
the competitiveness of the environment in which the firm operates.
These factors include:
1.
2.
3.
4.
Unemployment level
Inflation rate
Fiscal policies
Government changes
These factors determine an enterprise’s volume of demand for its product and affect its
marketing strategies and activities. The economic system is made up of three main steps. The
first one being production and then there is distribution of the produced goods and then the last
step is consumption of the same. Now all this is possible because of two factors- Human
resource and Natural resource.
Natural resources include the raw material which is generally used in the production process, and
human resources help to convert the raw materials to finished products which are then ready for
distribution.
2. Social cultural demographic and natural environment forces: Social, cultural,
demographic, and environmental changes have a major impact on virtually all products, services,
markets, and customers. Small, large, for-profit, and non-profit organizations in all industries are
being staggered and challenged by the opportunities and threats arising from changes in social,
cultural, demographic, and environmental variables. In every way, the United States is much
different today than it was yesterday, and tomorrow promises even greater changes. The United
States is getting older and less white. The oldest members of America’s 76 million baby boomers
plan to retire in 2011, and this has lawmakers and younger taxpayers deeply concerned about
who will pay their Social Security, Medicare, and Medicaid. Individuals age 65 and older in the
United States as a percentage of the population will rise to 18.5 percent by 2025. The five
“oldest” states and five “youngest” states in 2007 are given in Table 3-4. By 2075, the United
States will have no racial or ethnic majority. This forecast is aggravating tensions over issues
such as immigration and affirmative action. Hawaii, California, and New Mexico already have
no majority race or ethnic group. The population of the world surpassed 7.0 billion in 2010; the
United States has just over 310 million people. That leaves billions of people outside the United
States who may be interested in the products and services produced through domestic firms.
Remaining solely domestic is an increasingly risky strategy, especially as the world population
continues to grow to an estimated 8 billion in 2028 and 9 billion in 2054. Social, cultural,
demographic, and environmental trends are shaping the way Americans live, work, produce, and
consume. New trends are creating a different type of consumer and, consequently, a need for
different products, different services, and different strategies. There are now more American
households with people living alone or with unrelated people than there are households
consisting of married couples with children. American households are making more and more
purchases online. Beer consumption in the United States is growing at only 0.5 percent per year,
whereas wine consumption is growing 3.5 percent and distilled spirits consumption is growing at
2.0 percent.2 Beer is still the most popular alcoholic beverage in the United States, but its market
share has dropped from 59.5 percent in its peak year of 1995 to 56.7 percent today. For a wine
company such as Gallo, this trend is an opportunity, whereas for a firm such as Adolph Coors
Brewing, this trend is an external threat. The trend toward an older America is good news for
restaurants, hotels, airlines, cruise lines, tours, resorts, theme parks, luxury products and services,
recreational vehicles, home builders, furniture producers, computer manufacturers, travel
services, pharmaceutical firms, automakers, and funeral homes. Older Americans are especially
interested in health care, financial services, travel, crime prevention, and leisure. The world’s
longest-living people are the Japanese, with Japanese women living to 86.3 years and men living
to 80.1 years on average. By 2050, the Census Bureau projects that the number of Americans age
100 and older will increase to over 834,000 from just under 100,000 centenarians in the.
3. Political, governmental, and legal forces: Federal, state, local, and foreign
governments are major regulators, deregulators, subsidizers, employers, and customers of
organizations. Political, governmental, and legal factors, therefore, can represent key
opportunities or threats for both small and large organizations. For industries and firms that
depend heavily on government contracts or subsidies, political forecasts can be the most
important part of an external audit. Changes in patent laws, antitrust legislation, tax rates, and
lobbying activities can affect firms significantly. The increasing global interdependence among
economies, markets, governments, and organizations makes it imperative that firms consider the
possible impact of political variables on the formulation and implementation of competitive
strategies. In the face of a deepening global recession, countries worldwide are resorting to
protectionism to safeguard their own industries. European Union (EU) nations, for example,
have tightened their own trade rules and resumed subsidies for various of their own industries
while barring imports from certain other countries. The EU recently restricted imports of U.S.
chicken and beef. India is increasing tariffs on foreign steel. Russia perhaps has instituted the
most protectionist measures in recent months by raising tariffs on most imports and subsidizing
its own exports. Russia even imposed a new toll on trucks from the EU, Switzerland, and
Turkmenistan. Despite these measures taken by other countries, the United States has largely
refrained from “Buy American” policies and protectionist measures, although there are increased
tariffs on French cheese and Italian water. Many economists say the current rash of trade
constraints will make it harder for global economic growth to recover from the global recession.
Global trade is expected to decrease 2.1 percent in 2009 compared to an increase of 6.2 percent
in 2008.3 Russia has said that “protective tariffs are necessary to allow Russian companies to
survive the recession.” This view unfortunately is also the view at an increasing number of
countries. Governments are taking control of more and more companies as the global economic
recession cripples firms considered vital to the nation’s financial stability. For example, France
in 2009 took a 2.35 percent equity stake in troubled car-parts maker Valeo SA. President Nicolas
Sarkozy of France has created a $20 billion strategic fund to lend cash to banks and carmakers as
many governments become more protectionist. The United States of course also is taking equity
stakes in financial institutions and carmakers and is “bailing out” companies too. The UK
government in 2009 took a 95 percent stake in the banking giant Royal Bank of Scotland Group
PLC in a dramatic move toward nationalization. The government gave the bank $37 billion and
insured another $300 billion of the bank’s assets. The UK government also recently increased its
stake in Lloyds Banking Group PLC to 75 percent. Similarly, the U.S. government has taken
over Fannie Mae and Freddie Mac and has raised its stake even in Citigroup to 40 percent. As
more and more companies around the world accept government bailouts, those companies are
being forced to march to priorities set by political leaders. Even in the United States, the federal
government is battling the recession with its deepest intervention in the economy since the Great
Depression. The U.S. government now is a strategic manager in industries from banking to
insurance to autos. Governments worldwide are under pressure to protect jobs at home and
maintain the nation’s industrial base. For example, in France, Renault SA’s factory in
Sandouville is one of the most unproductive auto factories in the world. However, Renault has
taken $3.9 billion in low-interest loans from the French government, so the company cannot
close any French factories for the duration of the loan or resort to mass layoffs in France for a
year. Political relations between Japan and China have thawed considerably in recent years,
which is good for the world economy because China’s low-cost manufactured goods have
become essential for the functioning of most industrialized nations. Chinese premier Wen Jiabao
addressed the Japanese parliament in 2007, something no Chinese leader has done for more than
20 years, and Japanese Prime Minister Shinzo Abe has visited Beijing. Japan’s largest trading
partner is China, and China’s third-largest trading partner is Japan—after the European Union,
number one, and the United States, numbers two.
4. Technological forces: Revolutionary technological changes and discoveries are having a
dramatic impact on organizations. CEO Chris DeWolfe of MySpace is using technology to
expand the firm’s 1,600-person workforce in 2009 even as the economic recession deepens.
MySpace expects a 17 percent increase in revenue in 2009. Nearly half of the site’s 130 million
members worldwide are 35 and older, and 76 million of the members are from the United States.
This compares to rival Facebook that has 150 million members worldwide but only 55 million in
the United States. Myspace is continually redesigning the site and revamping the way its
members can manage their profiles and categorize their friends, and enabling consumers to listen
to free streaming audio and songs. Doug Morris, CEO of Universal Music Group, says, “There is
a lot of conflict between technology and content, and Chris has successfully brought both
together.”4 The Internet has changed the very nature of opportunities and threats by altering the
life cycles of products, increasing the speed of distribution, creating new products and services,
erasing limitations of traditional geographic markets, and changing the historical trade-off
between production standardization and flexibility. The Internet is altering economies of scale,
changing entry barriers, and redefining the relationship between industries and various suppliers,
creditors, customers, and competitors. To effectively capitalize on e-commerce, a number of
organizations are establishing two new positions in their firms: chief information officer (CIO)
and chief technology officer (CTO). This trend reflects the growing importance of information
technology (IT) in strategic management. A CIO and CTO work together to ensure that
information needed to formulate, implement, and evaluate strategies is available where and when
it is needed. These individuals are responsible for developing, maintaining, and updating a
company’s
TABLE 3-7 Examples of the Impact of Wireless Technology Airlines—Many airlines now offer
wireless technology in flight. Automotive—Vehicles are becoming wireless. Banking—Visa
sends text message alerts after unusual transactions. Education—Many secondary (and even
college) students may use smart phones for math because research shows this to be greatly
helpful. Energy—Smart meters now provide power on demand in your home or business. Health
Care—Patients use mobile devices to monitor their own health, such as calories consumed.
Hotels—Days Inn sends daily specials and coupons to hotel guests via text messages. Market
Research—Cell phone respondents provide more honest answers, perhaps because they are away
from eavesdropping ears. Politics—President Obama won the election partly by mobilizing
Facebook and MySpace users, revolutionizing political campaigns. Obama announced his vice
presidential selection of Joe Biden by a text message. Publishing—eBooks are increasingly
available. Source: Based on Joe Mullich, “10 Industries That Wireless Will Change,” Wall Street
Journal (April 1, 2009): A12. Information database. The CIO is more a manager, managing the
firm’s relationship with stakeholders; the CTO is more a technician, focusing on technical issues
such as data acquisition, data processing, decision-support systems, and software and hardware
acquisition. Technological forces represent major opportunities and threats that must be
considered in formulating strategies. Technological advancements can dramatically affect
organizations’ products, services, markets, suppliers, distributors, competitors, customers,
manufacturing processes, marketing practices, and competitive position. Technological
advancements can create new markets, result in a proliferation of new and improved products,
change the relative competitive cost positions in an industry, and render existing products and
services obsolete. Technological changes can reduce or eliminate cost barriers between
businesses, create shorter production runs, create shortages in technical skills, and result in
changing values and expectations of employees, managers, and customers. Technological
advancements can create new competitive advantages that are more powerful than existing
advantages. No company or industry today is insulated against emerging technological
developments. In high-tech industries, identification and evaluation of key technological
opportunities and threats can be the most important part of the external strategic-management
audit. Organizations that traditionally have limited technology expenditures to what they can
fund after meeting marketing and financial requirements urgently need a reversal in thinking.
The pace of technological change is increasing and literally wiping out businesses every day. An
emerging consensus holds that technology management is one of the key responsibilities of
strategists. Firms should pursue strategies that take advantage of technological opportunities to
achieve sustainable, competitive advantages in the marketplace. In practice, critical decisions
about technology too often are delegated to lower organizational levels or are made without an
understanding of their strategic implications. Many strategists spend countless hours determining
market share, positioning products in terms of features and price, forecasting sales and market
size, and monitoring distributors; yet too often, technology does not receive the same respect.
Not all sectors of the economy are affected equally by technological developments. The
communications, electronics, aeronautics, and pharmaceutical industries are much more volatile
than the textile, forestry, and metals industries. A recent article in the Wall Street Journal
detailed how wireless technology will change 10 particular industries.
5. Competitive forces: The top U.S. competitors in four different industries are identified in
Table 3-8. An important part of an external audit is identifying rival firms and determining their
strengths, weaknesses, capabilities, opportunities, threats, objectives, and strategies. Collecting
and evaluating information on competitors is essential for successful strategy formulation.
Identifying major competitors is not always easy because many firms have divisions that
compete in different industries. Many multidivisional firms do not provide sales and profit
information on a divisional basis for competitive reasons. Also, privately held firms do not
publish any financial or marketing information. Addressing questions about competitors such as
those presented in Table 3-9 is important in performing an external audit. Competition in
virtually all industries can be described as intense—and sometimes as cutthroat. For example,
Walgreens and CVS pharmacies are located generally across the street from each other and battle
each other every day on price and customer service. Most automobile dealerships also are
located close to each other. Dollar General, based in Goodlettsville, Tennessee, and Family
Dollar, based in Matthews, North Carolina, compete intensely on price to attract customers. Best
Buy dropped prices wherever possible to finally put Circuit City totally out of business. Seven
characteristics describe the most competitive companies: 1. Market share matters; the 90th share
point isn’t as important as the 91st, and nothing is more dangerous than falling to 89. 2.
Understand and remember precisely what business you are in.
General environment
Economic
After the recession affecting the country, people are now conscious about their own spending.
With the prices of Krispy Kreme Philippines set at a higher cost than other competitors, the
company faces tough challenges in the industry it’s competing with.
Socio cultural
People prefer to purchase at convenient locations, which threatens Krispy Kreme market share.
Since the company only has stores around Metro Manila, it cannot attract more consumers as
much as they would like to.
Technological
The Krispy Kreme technology, “My Krispy Kreme”, an internet based portal that connects
Krispy Kreme vendors, has yet to arrive in the Philippine market. The company’s local website
serves as advertisements for its customers.
General environment
Economic
After the recession affecting the country, people are now conscious about their own spending.
With the prices of Krispy Kreme Philippines set at a higher cost than other competitors, the
company faces tough challenges in the industry it’s competing with.
Socio cultural
People prefer to purchase at convenient locations, which threatens Krispy Kreme market share.
Since the company only has stores around Metro Manila, it cannot attract more consumers as
much as they would like to.
Technological
The Krispy Kreme technology, “My Krispy Kreme”, an internet based portal that connects
Krispy Kreme vendors, has yet to arrive in the Philippine market. The company’s local website
serves as advertisements for its customers.
Industry environment
Generic environment
Krispy Kreme is part of the fast-food/pastries/coffee industry. Although we find it difficult to
really categorize its generic environment in one of the four types of businesses provided by the
Boston Consulting Group (volume, stalemated, specialized and fragmented), we think it is the
most closely related to the one of volume businesses. Indeed this industry presents many
advantages, yet few approaches are possible (either company-owned stores, franchisee store or
selling in grocery stores and supermarkets).
Industry attractiveness
The doughnut industry is not highly attractive and not completely unattractive at the same time.
On the one hand, the American market is very large for this type of products. Indeed all
segments of the American population consume coffee and doughnuts, even though people under
45 years old tend to consume more doughnuts themselves. But older clients can still buy
doughnuts for their families or office colleagues. Therefore, this industry can more or less count
on a 300 million potential customers on their domestic territory. As companies have concentrated
on populated areas, development is still possible in smaller communities.
Industry structure
This industry has only a few big competitors (chains) present on the whole national territory and
abroad. But there are many smaller competitors, each present very locally, as they are
individually-owned businesses. The big competitors that I will explore in details further are
Dunkin’ Donuts, Starbucks and Krispy Kreme, while the small competitors are local bakeries,
cafes and grocery stores. A strategic mapping is quite difficult to elaborate, as the big
competitors have many similar characteristics. I have decided to put each of them separately on
the strategic map and not as real groups, while I regrouped supermarkets, grocery stores and
local bakeries as entities to show their total weight, although they are not necessarily chains.
Competitive environment
Due to the type of its offering, Krispy Kreme competes with several industries: the baked goods
industry, the food industry, the restaurant industry and the cake and pastries industry. We could
also include the coffee industry, since the company also sells various types of coffees. At the
retail level, it competes with other doughnut retailers and bakeries, specialty coffee retailers,
bagel shops, fast-food restaurants, delicatessens, take-out food service companies, supermarkets
and convenience stores. At the wholesale level, it competes with grocery store bakeries,
packaged snack foods and vending machine of those same snacks.
External Factor Analysis (EFE)
Industry Analysis: The External Factor Evaluation (EFE) Matrix an External Factor Evaluation
(EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural,
demographic, environmental, political, governmental, legal, technological, and competitive
information. Illustrated in Table 3-12, the EFE Matrix can be developed in five steps: 1. List key
external factors as identified in the external-audit process. Include a total of 15 to 20 factors,
including both opportunities and threats that affect the firm and its industry. List the
opportunities first and then the threats. Be as specific as possible, using percentages, ratios, and
comparative numbers whenever possible. Recall that Edward Deming said, “In God we trust.
Everyone else bring data.” 2. Assign to each factor a weight that ranges from 0.0 (not important)
to 1.0 (very important). The weight indicates the relative importance of that factor to being
successful in the firm’s industry. Opportunities often receive higher weights than threats, but
threats can receive high weights if they are especially severe or threatening. Appropriate weights
can be determined by comparing successful with unsuccessful competitors or by discussing the
factor and reaching a group consensus. The sum of all weights assigned to the factors must equal
1.0. 3. Assign a rating between 1 and 4 to each key external factor to indicate how effectively the
firm’s current strategies respond to the factor, where 4 = the response is superior, 3 = the
response is above average, 2 = the response is average, and 1 = the response is poor. Ratings are
based on effectiveness of the firm’s strategies. Ratings are thus company-based, whereas the
weights in Step 2 are industry-based. It is important to note that both threats and opportunities
can receive a 1, 2, 3, or 4. 4. Multiply each factor’s weight by its rating to determine a weighted
score. 5. Sum the weighted scores for each variable to determine the total weighted score for the
organization. Regardless of the number of key opportunities and threats included in an EFE
Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest
possible.
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate
economic, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information.
Assign a rating between 1 and 4 to each key external factor to indicate how effectively the firm’s
current strategies respond to the factor, where 4 = the response is superior, 3 = the response is
above average, 2 = the response is average, and 1 = the response is poor. Ratings are based on
effectiveness of the firm’s strategies. Ratings are thus company-based, whereas the weights in
Step 2 are industry-based. It is important to note that both threats and opportunities can receive a
1, 2, 3, or 4.
Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest
possible total weighted score for an organization is 4.0 and the lowest possible total weighted
score is 1.0. The average total weighted score is 2.5. A total weighted score of 4.0 indicates that
an organization is responding in an outstanding way to existing opportunities and threats in its
industry.
Organizational Chart:
EFE matrix of Krispy Kreme donuts:
Factors
weight
Rating
Weighted
score
Opportunities
Asians love sweets and are open to trying
0.09
foreign foods
0.36
4
Dunkin' Donuts does not have hot
doughnuts to sell
0.24
0.06
4
Many children love sweets treats
0.24
0.08
3
South America, Africa, and Southern
Asia are markets to targets
0.1
0.05
2
Families crave convenience because of
busy lifestyles
0.12
0.04
3
Threats
Starbucks has much greater in amount
,stores world wide then Krispy Kreme
0.36
0.09
4
donuts
People are much health conscious , and
much care about high sugar and high fat
0.24
0.08
3
European mostly prefer their local brands
0.21
0.07
3
Dunkin' Donuts presently dominates the
doughnut market, particularly in north-
0.1
0.05
2
eastern U.S
Shareholders can sell their share due to lack
of return or dividend compared to their
0.28
0.07
4
competitors
Porter’s Five-Forces Model
Potential development of substitute products
Bargaining power of suppliers
Rivalry among competing
firms
Bargaining power of consumers
Potential entry of new competitors
Rivalry among Competing Firms
KKD competitors are Dunkin’s Donuts, Tim Hortons. Dunkin’s Donuts have a largest number
of retailer shop of donuts. KKD is competing with company selling baked in goods in
supermarket, convenience store, mass merchants, and other retailer. But KKD product is unique.
This is the competitive advantage of a firm. Their product quality is very high rather than
competitors. This is the main reason of successful of a firm.
Potential Entry of New Competitors
When new firm enter a market easily, the intensity of competiveness among firms increases.
KKD have a good quality, customer loyalty, brand image. Potential entry of new competitor is
very low.
Potential Development of Substitute Products
In many industries, firms are in close competition with products of substitute products in other
industries. KKD have no close competition. There have low chance of development of substitute
product because their product is different and 20 types of donuts. There is no substitute for
quality for their customer.
Bargaining Power of Suppliers
Bargaining power of supplier is low because KKD purchase the raw materials from various
commodity markets. Bargaining power of supplier is high when large number of suppliers and
few number of substitute raw materials.
Bargaining Power of Consumer
Bargaining power of consumer is high when competition among the firm also high. Competitor
gives the same product but special services than consumer can bargain from this product. KKD
have a brand loyalty and good quality. So bargaining power of consumer is low.
Competitive Profile Matrix
The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and its particular
strengths and weaknesses in relation to a sample firm’s strategic position. The weights and total
weighted scores in both a CPM and an EFE have the same meaning. However, critical success
factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths
and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 =
major weakness. The critical success factors in a CPM are not grouped into opportunities and
threats as they are in an EFE. In a CPM, the ratings and total weighted scores for rival firms can
be compared to the sample firm. This comparative analysis provides important internal strategic
information.
Internal Environment
STRENGTHS
Krispy Kreme’s extends business all major areas. The flagship product is affordable and
competitive with other firms value menu prices. The Krispy Kreme name and brand are tied to
the one-of-a-kind taste that generations of customers have grown to love. Krispy Kreme is
similar to western fast food chain, which enjoys fierce customer loyalty.
As another strength, the company employs a vertically integrated, automated system to produce
doughnuts in an efficient manner: three domestic manufacturing plants, which produce
proprietary Krispy Kreme mixes and custom doughnut-making equipment for all retail outlets.
WEAKNESSES
Krispy Kreme stores were closed in many markets during the company’s stock decline, including
North Carolina ,Canada, New York, Chicago, and the Southwest. Multiple lawsuits have been
filed against the company, some even by the Securities & Exchange Commission, for
misreporting profits and channel stuffing. Krispy Kreme Supply Chain can have operating
margins of 20 percent or greater, which are exceptionally high for their field. Conversely,
competitor are Starbucks, McDonalds, Dunkin' Donuts. They doesn't sell its own equipment to
its franchisees. They instead have a strong royalty stream based solely on store sales, keeping
company and franchisee interests aligned. Krispy Kreme Supply Chain should consider
equipment and mixes to franchisees at a lower premium to support franchise operations.
As another, It’s Food contain a good amount of fat. So, People ignore to take their food. They
should change it.
Marketing strategy for Krispy Kreme
Krispy Kreme uses a bare-bones marketing strategy that relies on word-of-mouth marketing by
its satisfied customers. The company uses its friendly employees, who are trained to provide
excellent customer service and market the company, as its main marketing tool.
Corporate Resource:
Krispy Kreme have responsible to increase the organizations activities and performance. The
IFAS ( Internal Factors Analysis System)
Strength
Weight(out of 5)
Rating
Weighted
score
Krispy Kreme’s extends business all major
areas.
0.10
5
0.50
Krispy Kreme uses a bare-bones marketing
strategy.
0.08
4
0.32
Krispy Kreme’s shown high profit in
business.
0.6
4
0.24
Krispy Kreme’s Food contain a good
amount of fat.
0.8
5
0.40
Total
1.58
Weakness
1.46
Corporate Structure:
CEO& President
Exec VP and CFO
US Store Operations
Corporate research of Krispy Kreme
General Counsel and
Asst. sec
International Store
Operations
Supply Chain and
Off Premises Sales
HR and
Organizational
Development
Additionally, "ethics as a corporate asset" can be economically valuable, becauseit can help to
prevent decreases in either brand equity and reputation or othersources of competitive advantage
during periods of extreme investorskepticism."Clearly, "ethics" should be more than just a
buzzword after the tangible and devastating financial losses at Krispy Kreme.However, the fact
that each day new corporate scandals are headlined in the news illustrates that "ethics as a
corporate asset" has not yet been embraced by business professionals. A survey of members of
the Association ofCertified Fraud Examiners revealed that only 17% of members feel that
therewill be a permanent shift among business professionals toward fraud preventionand
corporate integrity in the foreseeable future, 39% feel that interest incorporate ethics will fade
within the next five years, 32% feel that this interesthas already begun to fade, and 12% feel that
there has been no change at all among business leaders. An even less fortunate statistic is that
67% feel thatinstitutional fraud is more commonplace today than it was five years ago.These
fraud examiners agreed that Sarbanes Oxley has helped corporations andinvestors identify
weaknesses within internal control systems.
Addition to this new role for the corporate auditor, the policies of corporate accounting should
also be more properly aligned with representing a true and fair view of the state of affairs of the
company,rather than simply following the technical rules created by GAAP. Sarbanes-Oxley is
largely focused on adding more rules to the already cumbersome GAAP handbook .However, the
legislation also calls for the SEC to investigate an alternative accounting system, called
principles-based accounting. The general idea here is that instead of a whole handbook of
technical rules, corporate accounting should be based on a few general principles requiring
accountants to produce a true and fair picture of the economic reality of a company's finances.
The chairman of the Financial Accounting Standards Board (FASB) endorsedprinciple-based
accounting, because under the current model,People see the trees and not the forest."However,
some accounting experts fear that principles-based accounting would merely lead to selective
implementation of financial regulations because of great confusion over the legality of various
practices.Principles-based accounting embodies the idea that GAAP and Sarbanes-Oxley, and
any other laundry list of regulations, will not completely prevent corporate fraud. Accounting
scandals do not arise solely from thwarting therules and regulations. Instead, they are
manifestations of major human flaws: a fascination with risk-taking and greed.' Because
Congress cannot legislate away "greed," perhaps the best approach to minimizing its effects on
investor through the creation of a corporate asset based on ethics.Forcing corporations to comply
with general ethical standards perhaps did not have to be implemented through a complex set of
accounting regulations.In fact, these corporate scandals may, in form, seem to be about all
accounting discrepancies, but, in substance, they are clearly all about greed. The fact thatthe
financial markets reward innovators and risk-takers creates corporate leaders who are willing to
gamble on new ideas and procedures.' Unfortunately, these are the same leaders who may refuse
to heed warning signs of the danger ahead and may take excessive or fraudulent risks with
corporate assets.Krispy Kreme's post-Sarbanes-Oxley troubles reveal that the greed of numerous
players--executives, employees, investment bankers, fund managers, and investors--outweigh
any penalty of law. Legislation may not prevent unethicalconduct, and may only provide a
procedure for dealing with bad behavior within the legal system.Therefore, the only way to curb
future corporatescandal is to address ethics, or the lack of business professions.
One remarkable effect of Sarbanes-Oxley is the birth of the "Corporate Ethics Industry.
Immediately after the legislation passed, corporations tried to demonstrate their commitment to
ethics by hiring ethics consultants, creating Chief Compliance Officer positions, establishing
committees to handle complaints of misconduct, and issuing corporate codes of ethics.
Corporations hoped these efforts to create the appearance ofan ethical business environment
would persuade federal investigators and prosecutors to be more lenient .
if and when any noncompliance issues arose. For example, Krispy Kreme's website has links to
its Code of Ethics for Chief Executive and SeniorFinancial Officers, its Code of Business
Conduct and Ethics for Members of theBoard of Directors, a charter for its internal audit
committee, a General Codeof Business Conduct and Ethics, and a Corporate Governance
Guideline .These documents cover a huge range of topics, including insider trading,competition
and fair dealing, conflicts of interest, working with a spouse, and employees' use of the Internet.
However, the existence of such documents at Krispy Kreme, as well as the large rule books filled
with accounting regulations,did not give rise to an ethical organizational culture or curb the
major incentivefor Krispy Kreme to satisfy Wall Street's hunger for earnings .Perhaps the
business professionals at Krispy Kreme and other Americanfirms have not yet incorporated
"ethics" into their daily decision-making ,they are still unclear as to its definition. Who should
set the standard for ethics in a corporate context ? The international governing bodies? The thirdparty ethics auditors? In the United States, corporate ethics is largely an area of internal
determination, rather than federal or state regulation.Corporations define their own ethical
standards in line with their corporate charters, relevant regulatory bodies, and interested
investing communities. Generally,corporations utilize two types of ethical programs code and
compliance and values .However, neither of these programs will prove effective unless the
corporation itself ensures their enforcement. If management acts as the onlymechanisms of
enforcement, then these ethics standards can be ignored as easily as accounting standards have
been in the past. Perhaps, the independent auditors should also be responsible for ensuring
compliance with internal ethicalstandards as well as accounting and disclosure regulations.
Alternately, perhapsan association for business professionals, similar to The American Bar
Association for attorneys, could regulate corporate ethics with an ethical code of conduct, a
professional licensing system, and a review board for violations.These rules could create
consistent behavior across the profession, regardless of personal beliefs, and could also act as a
guide for making difficult decisions,especially when conflicts of interest exist. Most
importantly, corporate officers could then be responsible for ensuring compliance throughout
themanagement hierarchy of the organization .
Ethics as a corporate asset" can become truly valuable-more than a corporations use their own
ethical standards as a way to differentiate themselves from other publicly-traded companies as
the "right" investment choice.By highlighting not only its capacity to produce a high return, but
also its commitment to the social contract between business and society, a corporation can ease
apprehensive investors' worries about another Enron-like scandal and the resulting financial
downfall . However, investors also demandcredibility as their skepticism of public relations and
advertising increases;therefore, "ethics as a corporate asset" cannot serve asjust a promotional
tool,as it was for Livengood at Krispy Kreme in Investors expect to see some proof of ethics in
action-starting with the major business leaders.
though the accounting regulations contained in Sarbanes-Oxley are notthe final solutions for the
lack of ethical behavior in business, the legislationdoes set up the framework for compliance and
the legal penalties fornoncompliance. However, Krispy Kreme and its fraudulent
corporatecolleagues have proven that compliance with a set of accounting rules, like GAAP and
Sarbanes-Oxley, may not reveal a fair state of affairs of a corporation.Additionally, executives
who are devoid of any moral compass will always lookfor loopholes in the legislation.SarbanesOxley may help investors identifyfraudulent accounting practices, but, alone, it is not enough to
combat corporategreed. Therefore, the best approach to actually preventing accounting and
othertypes of fraud is by incorporating ethics into Corporate America's bottom line.
Marketing












The process of defining anticipating creating customers need and products and services.
Market share maters
The number and significance of market that a firm competes in with rivals.
Identify areas where competitors are vulnerable and assess.
Marketing means customer analysis, then selling products and services, planning then
pricing distribution.
Stakeholders effect pricing decisions.
The most effective product and service .
The process of making doughnuts was transformed.
Develop an effective human resources function.
The idea of going public intrigued the Krispy Kreme management.
Vernon quickly realized that a direct market existed and began selling his hot glazed
doughnuts to customer coming to location.
As a stoke market soared in the late 1990s the idea on going publish.
Finance:
Finance is the heart of any company. Financing is the act of providing funds for business
activities, making purchases or investing. As of February 1, 2009, the end of the last




fiscal year, Krispy Kreme was operating 523stores in the United States, Australia,
Bahrain, Canada, Hong Kong, Indonesia, Japan, Kuwait, Lebanon, Mexico, the
Philippines, Puerto Rico, Qatar, Saudi Arabia, South Korea, the United Arab Emirates,
and the United Kingdom.
The total asset is $194,926 in 2009 and $202,351 was in 2008.
The total Liabilities is $137,171 in 2009 and $145,727 was in 2008.
Operating expense is $345,007 in 2009 and $380,014 was in 2008.
So, they got loss in 2009 and 2008. The total loss amount is $4,061 in 2009 and $67,051.
In 2008 they had more loss than 2009.

 departments are Marketing ,Finance, Human Resource and Information Technology.
Human Resources
Krispy Kreme is a fast-food restaurant. Employees of Krispy Kreme motivated their
employee by giving benefits. Employees here do not need a lot of education, knowledge,
or expertise of any kind. Krispy Kreme provides full-time employees with very good
benefits. In any Krispy Kreme store there are about 125 employees, of which 65 are
usually full-time employees.
Information Technology
Today world is changing day by day. KKD Company is using modern technology. They use all
update technology for keeping their all information. Today business is challenging,
competiveness. Firm needs to all information about competitors. Information technology is
helping for getting all information.
Value Chain Analysis
1.Supplying fresh doughnut mix to all stores:
# Begins with the secret recipe (formulation and consistency).
# Unique taste.
2.Manufacturing of proprietary doughnut-making equipment:
# Design and manufacture of the proprietary doughnut making equipment.
# This is then sold to stores for profit and ensures consistency of end product.
3. Retail distribution channels:
# Mixture and equipment is distributed to large factory stores from
central hubs.
# Mix of factory stores that supply smaller stalls and kiosks.
# outsourced retail channels in service stations and Wal-Mart.
4. Fresh doughnut theatre store experience and doughnut:
# Worldwide locations.
# Doughnuts are freshly baked and produced each day.
# Original glazed sign large capacity for production Simple product line.
5. Cult brand
# Targeted local campaigns (no above the line campaigns).
# Store demand is driven by word of mouth Very recognizable brand.
# A lot of brand loyalty.
# Drives demand for franchise opportunities.
Internal Factors Evaluation:
A summary step in conducting an internal strategic-management audit is to construct an Internal
Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the
major strengths and weaknesses in the functional areas of a business, and it also provides a basis
for identifying and evaluating relationships among those areas. Assign a 1-to-4 rating to each
factor
Key internal factors
Weight
Rating
Weighted
score
Strengths
1.high quality donuts with strong visual
0.09
4
0.36
0.06
3
0.18
appeals and one of a kind test
2. Neon hot donuts now sign encourages
people outside the store to make an impulse
purchase.
3.market research shows appeal extends to
0.08
4
0.32
0.07
3
0.21
0.07
3
0.21
0.10
1
0.10
0.07
1
0.07
0.06
2
0.12
0.07
1
0.07
0.04
2
0.08
all demographic groups including age and
income
4.hot shop stores save money while keeping
Krispy Kreme donuts customer experience
intact
5.vertical integration helps ensure high
quality product
weakness
1. Return on quality, assets, and investments
all negative in the trailing twelve months.
Skill of management is questionable
2.shareholders have not receive dividends
recently, and are not expected to in near
future .stock price is state of flux
3.closing stores when stores should be
opening globally at steady rate to keep up
with competitors growth.
4.Product line show to expand with nothing
outside: sweet treats” to draw in healthconscious customers.
5.product line slow to expand with nothing
outside ‘sweet treats’ to draw in health
conscious customers.
Total
Basic Financial Ratios:
1.00
2.36
Financial ratios are computed from an organization’s income statement and balance sheet.
Computing financial ratios is like taking a picture because the results reflect a situation at just
one point in time. Comparing ratios over time and to industry average is more likely to result in
meaningful statistics that can be used to identify and evaluate strengths and weakness. But
industry average is not very easy to found. It’s need 100 years or more historical data to make
industry Average. Also industry average is not available for all ratios in online. So here we
decided to compare between to years.(2007-2008).
( All amount is in million)
Current Ratio
Current Ratio = (current Assets/Current Liabilities)
2007
2008
123.65/51.47
99.14/49.72
2.40%
1.99%
Quick Ratio
Quick Ratio =( Current Assets –Inventories) /Current Liabilities
2007
2008
(123.65 - 18.32 )/51.47
(99.14 - 16.31 )/49.7
2.04%
1.66%
Debt-to-Total-Assets Ratio
Debt-to-Total-Assets Ratio = Total Debt/ Total assets
2007
11.58 /342.05
0.034
2008
11.54 /342.88
0.0336
Debt-to-Equity Ratio
Debt-to-Equity Ratio = Total Debt/ Total Stockholders’ equity
2007
11.58/63.55
0.18
2008
11.54/63.07
0.17
Total Assets Turnover
Total Assets Turnover = Sales / Total Assets
2007
2008
127.34 / 342.05
130.36/342.88
0.37
0.38
Operating Profit Margin
Operating Profit Margin = Earnings before interest and taxes (EBIT) / Sales
2007
2008
5.92/127.34
7.75/130.36
0.046
0.058
Net profit Margin
Net profit Margin = Net Income / Sales
2007
5.92/127.34
0.046
2008
7.57/130.36
0.058
Return on total Assets (ROA)
Return on total Assets (ROA) = Net Income/ Total Assets
2007
2008
5.92/342.05
7.57/342.88
0.017
0.022
Return on Equity (ROE)
Return on Stockholder’s Equity (ROE)= Net income/ Total Stockholders’ equity
2007
2008
5.92/253.82
7.57/256.14
0.023
0.029
Earning Per share (EPS)
Earning Per share (EPS) = Net income/ Number of shares of common stock outstanding
2007
2008
5.92/63.55
7.57/63.07
0.093
0.12
Comments:
After Calculating krispy kreme Doughnuts ratios in 2007 to 2008 for Business Valuation. Here we can
see that the ratios of krispy kreme Doughnuts is Significantly are lower than the median of its peer group
: around 12.00 . According to those Financial Ratios krispy kreme Doughnuts valuation is way below
the market valuation of its peer group. There Revenue/sales , Net Income is not up to the mark.
Competition
Below we are giving some Competition Statistics
Company Name
city
Market cap.
Beta
1 year
Krispy Kreme
doughnuts……..
USA
N/A
0.56
Denny’s Crop
Famous Brands
Limited
Panera Bread
company
Retail Food Group
Limited….
Kappa Create
Holdings c….
USA
ZAF
N/A
International pears
median
870
1141
Year-toDate
Price
Change
(in local
currency)
N/A
-3.2%
0.68
0.30
-4.1%
-3.2%
USA
5323
0.56
AUS
746
0.75
JPN
554
0.22
14.2%
-20.0%
0.2%
Conclusion
The Krispy Kreme Company has become a long way. Deterring way from the fraudulent
reporting practices condoned by past management ,newly hired management is installing ethical
practices for the survival and evolution of the company .The past events management has led by
been a realization as to what needs to be done to regain control and establish stricter internal
command within the company.
Reference:
1. Case Study
2. Books
3. https://www.krispykreme.com/