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Krispy Kreme External Anaylsis Essay

1146 words - 5 pages

External Environment

The US economy is still recovering from a recession. Despite the poor economic conditions, Krispy Kreme managed to have a steady growth in revenues. Krispy Kreme however is in a low cost industry therefore the rise and fall in the market does not affect their revenues as significantly as higher priced luxury goods.

If and when Krispy Kreme decides to go global they will enter a whole new world of adaptation to different markets. They will no longer be able to offer their staple hot fresh plain glazed doughnuts and expect them to sell in every market. France for instance has built a world reputation on fresh baked goods; therefore their key branding technique would not be as effective in such a culture. However the hot fresh plain doughnuts strategy works very effectively across the United States with two exceptions. First is the growing number of obese Americans. With growing media attention turned towards sliming up American quick service restaurants, Krispy Kreme has come into the crosshairs of mainstream media. The other hindrance on Krispy Kreme's complete success is the all in one convenience attitude. Demonstrated by Wal-Marts success, giving
clients as much as possible with one stop is a sure draw for modern American consumers. Aside from breakfast there are not many who consider doughnuts as a full meal, it is generally considered a desert or at most a snack. Thus Krispy Kreme is faced with the problem of offering a greater variety of meals to suite lunch and dinner, or changing the way America perceives doughnuts to increase sales in existing markets.

Although doughnut-making technology has not progressed a great deal in the recent past, however how the mixes are prepared and ordered has progressed. Krispy Kreme has recently introduced “MyKrispyKreme.” This Internet based portal connects management franchisees and Krispy Kreme vendors to each other. Enabling everyone in the Krispy Kreme chain to monitor, forecast, and plans supply and cash flows through Krispy Kreme’s enterprise resource planning system. In addition to this Krispy Kreme has just completed a central manufacturing and distribution center for doughnut mixes to be shipped all across America. The new facility is located in Illinois and is distributed by railcars.

5 Forces of Competition

Bargaining Power of Suppliers
The ingredients in doughnuts are simple and plentiful. Anyone who wants to enter the doughnut industry can simply stop by a grocery store to purchase the necessary supplies. The amount of vendors in the supply side of this industry limits the power of suppliers greatly. In addition to this Krispy Kreme has centralized its dough production facility. This centralized mixing facility has added an extra advantage aside from quality assurances. The central mixing facility enables Krispy Kreme to purchase all of their supplies from closely maintained relationships keeping costs low the...

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