Krispy Kreme Case Study: What is your final assessment of Krispy Kreme

Krispy Kreme Doughnuts, Inc., 2015

Headquartered in Winston-Salem, North Carolina, Krispy Kreme Doughnuts (KKD) serves doughnuts and coffee as well as other snack items. The company has locations in 23 different countries. Many Krispy Kreme shops are factory shops where customers can watch doughnuts being made and purchase fresh hot doughnuts as well. The factory stores are responsible for servicing local grocery stores and convenience stores. The KK Supply Chain provides raw materials for both franchise and company-owned stores in the doughnut-making process. Krispy Kreme storeowners must purchase all materials from KK Supply Chain. Krispy Kreme reported total revenues in fiscal year end February 2015 of $490 million (up from $460 million the prior year) with about 90 percent of revenues derived from the United States.  For the fiscal first quarter (Q1) of 2015, Krispy Kreme’s revenue rose 9 percent year-over-year to $132.5 million, driven almost entirely by a 17.3 percent increase in Krispy Kreme’s store count. For that quarter, the company’s domestic same-store sales rose 5.2 percent, but its international franchise same-store sales declined 1.7 percent. Overall for Q1 of 2015, the company’s adjusted net income was $16.6 million, or $0.24 per share. The company’s EPS number was up at least by the KKD buying back 391,300 shares of its stock for $7.4 million.

History

Krispy Kreme traces its roots back to 1933 when Vernon Rudolph bought a doughnut shop in Paducah, Kentucky. After selling doughnuts in Kentucky, Tennessee, and West Virginia, the store known today as Krispy Kreme was moved to Winston-Salem. Krispy Kreme doughnuts were sold to grocery stores at first, but became so popular with customers that they requested the option to buy the doughnuts fresh and hot from the store, thus launching the doughnut factory retail store and selling directly to the public.

Krispy Kreme grew quickly over the next four decades before being sold to Beatrice Foods Company in 1976. Shortly after the purchase by Beatrice, in 1982, several Krispy Kreme franchisees purchased the company back from Beatrice Foods and quickly established the current Doughnut Theater style of factory stores where by customers can watch doughnuts being made. It was not until 1996 that KKD finally expanded outside the Southeast by opening a store in New York City, followed in 2001 by opening its first store outside the United States, in Canada. The company went public with its IPO launch in April 2000

Question 1: What are the benefits of having a clear mission and vision statement? What components are important for a mission statement written for Krispy Kreme and why? Propose a Vision statement and a New Mission statement for Krispy Kreme Doughnuts. (minimum requirements: 4+ paragraphs)

Question 2: Identify Krispy Kreme’s external opportunities and threats AND internal strengths and weaknesses. Prepare a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix (see pp. 171-174). What is your final assessment of Krispy Kreme’s situation? (minimum requirements: 4+ paragraphs and/or comprehensive bullet lists & Matrix).

Question 3: Conduct a Five Forces analysis for Krispy Kreme. What does Rivalry look like for KK? Who are KK’s strongest competitors? What are possible substitutes in this industry? What is the bargaining power of buyers? What is the bargaining power of suppliers? How strong are the barriers to entry into this industry? Make sure to analyze each of the Five forces in depth. (minimum requirements: 5+ paragraphs)

Question 4: Recommend at least 4 specific strategies and long-term objectives. Show how much your recommendations will cost. *Do not make broad generalizations, be specific by stating, what, why, when, how, where and who (as applicable). Avoid recommending a course of action beyond an organization’s means, be realistic. Give ample justifications for your recommendations. (minimum requirements: 4+ paragraphs)

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