SWOT And Porter’s Five Forces Analysis Of Krispy Kreme Doughnuts

Conducting SWOT Analysis of Krispy Kreme Doughnuts

The organization Krispy Kreme Doughnuts (KKD) formed in 1937 by Vernon Rudolph is one of the major doughnuts producing organizations of the United States of America (Krispykreme.com, 2018). More importantly, the concerned organization has been able to attain a significant amount of success through the hot doughnuts which it offers to the domestic customers and also the customers from 23 different nations in which it is operational (Krispykreme.com, 2018). Beske, Land and Seuring (2014) are of the viewpoint that an analysis of business environment is important since it not only offers an insight into the key competencies of an organization but also an idea about the opportunities and the threats offered by the business market. A SWOT analysis of the organization is likely to reveal insightful details about the threats and the opportunities that galore the organization-

Strength	· The primary strength of the organization can be said to the strategy of the organization to not only manufacture the doughnuts before the customers but also to offer them hot ones. · The focus of the organization on the interests of the customers is another strength point of the concerned organization. · The use of corporate social responsibility (CSR) activities by the organization like helping the local communities of USA during fund-raisers and others is yet another strength point of the organization which has helped it to attain success in the recent times. Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper · The use of innovative strategies like lighting up the boards of the stores during the peak hours of business and others has also helped the cause of the organization in a substantial manner.
Weakness	· The lack of effective mission and vision statements is a major weakness of the organization. · The absence of some important officials like Chief Operating Officer, Chief Administrative Officer or Chief Strategy Officer is yet another weakness of the company. · The sole focus of the organization on the doughnuts business in a highly competitive doughnuts business market of USA wherein other organizations are resorting to the use of the coffee and beverage business for the enhancement of their profit is another weakness of the organization.
Opportunity	· The organization in order to enhance the prospects of their business can offer a wide range kind of products to the customers like coffee beverages and others. · The current focus of the organization is on the wholesale business rather than on the retail business. Thus, it is likely that the organization would be able to gain in a substantial manner by resorting to the use of the model of retail business. · Acquisition of rival companies like Jollibee Foods Corps is another option or opportunity that the organization can utilize for the growth of its business. · Making the menu or the food products offered by the organization more healthy and nutritious is another option which the concerned organization can utilize.
Threats	· The major threat which the concerned organization is facing currently is from the competitors like Dunkin’s Brand, Tim Hortons, Starbucks and others which have already monopolized the business market of USA. · The increasing awareness of the customers regarding their health and the kind of food products that they consume is another factor which is adversely affecting the prospects of the organization.

McCormack and Johnson (2016) are of the viewpoint that the business enterprises need to have an idea about the kind of market competition that they are facing in the business market of a particular nation which is likely to offer them an insight about the strategies they need to use. In this regard, Porter’s Five Forces model is an important one since it offers insightful information regarding the competition faced by an organization (Dodgson, 2018). An analysis of the organization KKD on the basis of this model would reveal the following facts-

Threat from new entrants	The organization KKD had been in business for more than 80 years and the quality of the doughnuts offered by the organization is being much appreciated by the customers (Krispykreme.com, 2018). As a matter of fact, despite the high competition that the organization is facing in the business market of USA, the annual revenue growth of the organization for the year 2013 was more than 6%. In addition to this, the organization has been able to gain a substantial amount of success in its coffee and other ventures which it has recently started to enhance it customer base. On the score of these factors, it can be said that the organization faces a very limited amount of threat from the new entrants into the business market of the nation.
Threat from substitutes	The hot doughnuts which are prepared before the customers had attracted many customers to this food item offered by the organization. In comparison to this, it is seen that the other organizations offer doughnuts to the customers, which had already been prepared long before. More importantly, the taste and the high quality of the doughnuts offered by the organization are the two important factors which has not only enabled the organization to earn the satisfaction of the customers but also their loyalty as well. Thus, it can be said that the organization faces a very low level of threat from the substitutes.
Bargaining power of the suppliers	The organization over the years had developed their own supplier system (KK Supply Chain) which is imbued with the responsibility of not only procuring the raw materials which are needed by the organization but also for delivering the doughnuts to the franchise stores and the stores owned by the organization. As opined by Smink, Hekkert and Negro (2015), the business of an organization can get adversely affected if the bargaining power of the suppliers associated with organization is high. In this regard, it can be said that the organization developing and also controlling its own supply chain had been able to mitigate this factor in a substantial manner.
Bargaining power of the buyers	There are various options available to the customers for the purchase of doughnuts like the ones offered by the organizations Dunkin’s Brand, Tim Hortons and others. However, taste is something which distinguishes the ones offered by the organization from the ones. In addition to this, the other organizations offer cold doughnuts to the customers whereas KKD offers hot ones to the customers. Thus, it can be said the bargaining power of the customers is low despite having a lot of options and also having to pay the same amount of prices for the doughnuts.
Industry rivalry	The doughnut business of the USA is worth more than $13 billion however at the same time it is seen that the business market has already been monopolized by the organizations like Dunkin’s Brand, Tim Hortons and others. For example, it is seen that the organization Dunkin’s Brand holds more than 54% of the doughnut market share. More importantly, it is seen that the organization in the recent times has entered into the coffee business however this business market is also being dominated by Starbucks which holds more than 34% of the market share in USA. Thus, it can be said that the organization faces a high level of industry in the USA business market.

The five strategies that the organization KKD can use for effectively utilizing the business opportunities presented by the business market of USA and also the mitigation of the threats are listed below-

• The strategy of acquisition is a strategy which will help the organization to not only reduce the high competition which it faces in the business market of USA but would also help it to use the customer base of the rival organization it has purchased (Prajogo, 2016). More importantly, it will enable the organization to increase its man-power and the other resources of the rival organizations as well (Dyllick & Muff, 2016). Thus, it is likely that through the use of this strategy KKD would be able to reduce the threat of competition.
• The modern customers are becoming very conscious about their health and thus it is seen that in the nation of USA the doughnut industry is facing a decline (Grayson & Hodges, 2017). However, to overcome this decline just like the organizations Dunkin’s Brand, Tim Hortons and others, the organization can offer healthy food products to the customers. This will ensure that the organization has a steady flow of customers and thereby revenue.
• The organization in order to mitigate the adverse effects of the decline that the doughnuts industry is facing currently can offer coffee, beverages and other similar products to the customers just like Dunkin’s Brand, Tim Hortons and others (Heasman & Lang, 2015). It is likely that the use of this strategy would help the concerned organization to make up the deficit revenue because of the decline in the industry.
• Shift from wholesale business to the retail business is another strategic option which the organization has at its disposal that it can utilize for the process of their business operations (Saguy & Sirotinskaya, 2014). It is pertinent to note that the organizations like Dunkin’s Brand, Tim Hortons and others have been able to gain a substantial amount of success through the use of this policy. However, KKD since its foundation has focused on wholesale business and in a way it can be said that this has limited the prospects of the concerned organization in a substantial manner. Thus, it can be said that the use of this strategy will not only help the organization to expand their business but also to earn a higher profit as well.
• The use of digital marketing strategy is another option that the organization can use to mitigate the adverse effects of the business competition. Through the use of the digital marketing strategy, the organization will be not only able to promote their food products in a much effective manner but would also be able to reach out to a much larger customer base (Grant, 2016). This will also help the organization to increase the sale of the food items offered by them since it is seen that the contemporary customers are more influenced by the digital marketing campaigns rather than the traditional ones like newspapers and others (Schaltegger, Lüdeke-Freund & Hansen, 2016).

The five strategies that the organization KKD can use to effectively utilize the strengths of their organization and also to overcome the weaknesses of their organization are listed below-

• The organization in order to effectively capture the business market of USA can utilize the strategy of cost leadership. It is pertinent to note that one of the key strength points of the organization is the fact that it offers high as well as tasty doughnuts to the customers. However, the price of the doughnuts charged by the organization is a major concern for the customers. The use of this strategy will enable the organization to reach out to a larger customer base and thereby increase their profitability.
• Use of the strategy of product differentiation is another option that the organization can use for the process of their business. It is pertinent to note that there are many organizations in USA which offer the same kind of doughnuts to the customers. The organization can use this strategy to modify the taste as well as the quality of the doughnuts offered by them to the customers (Barata & da Cunha, 2018). This will enable them to have a larger customer base and thus facilitate the process of their growth.
• Formulation of effective mission as well as vision statement which will not only clearly state the objectives of the organization but also take into effective consideration the perspective of the customers is another strategy that the organization can adopt. The use of this strategy is likely to help the organization to position itself in a much effective manner with the customers and thereby will increase their profitability (Lee et al., 2015).
• Use of effective organizational structure is another strategy that the organization can use for the process of the enhancement of their business prospects. (Cortimiglia, Ghezzi & Frank, 2016) For example, it is seen that the organization does not have Chief Operating Officer, Chief Administrative Officer or Chief Strategy Officer. Thus, the appointment of these officers and the guidance that they would offer to the organization are likely to help the organization in a substantial manner.
• The effective utilization of the strategy of CSR is another strategic option which the organization has at its disposal. For example, it is seen that the CSR activities of the organization are currently limited only to the fund-raisers for the local communities. However, the organization by helping the nation to address important issues and also contributing towards the social as well as economic growth of the nation would be able to earn a positive brand image which will in turn help it in the process of its business (Crane & Matten, 2016).  

Jackson and Singh (2015) are of the viewpoint that the prospects of an organization depends to a large extent on the kind of business strategies that the concerned organization is using for the process of their business. The organization under discussion here in order to further enhance the prospects of their business and earn a higher profitability can use the two below given strategies-

• The use of “omni-channel business strategy” is one option that the organization under discussion here which it can use for the process of its business to attain a higher level of growth. As opined by Silva, Sereno and Sobral (2018), the behavior of the customers in the recent times has changed in a substantial manner and thus it is seen that than taking the help of the “brick and the mortar” services offered by the organizations they are increasingly turning towards the use of the e-commerce services. Thus, it can be said that through the effective use of this business strategy, the organization under discussion here would be able to offer “brick and mortar” services to the customers and also the e-commerce ones as well. However, the effective use of this business strategy would require the organization to only develop its online apps but also to develop various departments like customer-care department, delivery system and others through services to the customers who are taking the help of the online services offered by it would be taken care of (Belasco, 2014). Recent researches have shown that the organization which use this business strategy for the process of their business have a far better chance of gaining success rather than the ones that follow only the “brick and the mortar” system of business (Silva, Sereno & Sobral, 2018).
• The “resource-based strategy” is another important strategy which the organization under discussion here can use for the process of their business operations. Rothaermel (2015) is of the viewpoint that the contemporary business enterprises through the effective utilization of the resource based strategy can not only effectively utilize the resources and also the capabilities of their organization but also improve the quality of the products or the services offered by them to the customers as well. Furthermore, using this strategy the organization can also develop its capabilities and modify their business as per the demands of the business environment. More importantly, the use of this strategy will enable the organization to offer other kinds of products to the customers like coffee, beverages and others. As opined by Bigliardi and Galati (2016), in the major of the cases, it is seen that the effective utilization of this strategy can help the organizations to attain sustainability as well. Thus, it can be said that the organization can gain in a substantial manner through the effective use of this business strategy.     

The best possible strategic option that the organization can use to improve the prospects of its business in the USA is the “omni-channel business strategy”. According to an estimate, more than 93% of the people of the nation of USA use various kinds of online technologies not only for the purpose of social networking but also for diverse kinds of online transactions as well (Dodgson, 2018). Lee et al. (2015) are of the viewpoint that the lives of the individuals, especially in nations like USA has become so busy that unlike the earlier times they do not get enough to visit the brick and mortar stores for the purchase of products. It is precisely here that the “omni-channel business strategy” becomes important since it offers the opportunity to the customers wherein they can get the things or the products that they require at their doorsteps without having to visit the stores. However, at the same time, it is also seen despite the technological advancements there are various individuals who still like to visit the stores for the purpose of shopping. More importantly, one of the major reasons for the success attained by KKD is the fact that they prepare the doughnuts before the customers and also the customers can taste hot doughnuts. At the same time, it needs to be said that the market leaders like currently can offer coffee, beverages and other similar products to the customers just like Dunkin’s Brand, Tim Hortons and others in the doughnuts business industry of USA are actively taking the help of this business strategy. Thus, it is likely that the organization KKD would also be able to derive substantial amount of business benefits through the effective utilization of this business strategy.

Strengths of Krispy Kreme Doughnuts

As opined by Grayson and Hodges (2017), the effectiveness of a business strategy depends to a large extent on the objectives with which they are being used and also the control measure that is being used for the implementation and also regulation of the concerned strategy. In the particular context of the organization KKD, the following are the strategic objectives with which the organization can use the “omni-channel business strategy”-

Strategic Objective	Control Measure	Justification for the use of the control measure
KKD holds only 5% of the doughnuts market share in the business market of USA in comparison to the 54% market share held by Dunkin’s Brand. Thus, the first objective of the organization for the use of the omni-channel business strategy would be increase the market share held by it from 5% to atleast 20% in the coming 5 years.	The control measure for the assessment of the achievement of this objective would be the comparison of the annual revenue earned by KKD and its competitors in the business market of USA.	The use of this control measure will be an effective one since it will not only offer an insight to the organization regarding the process that they have made in the past 5 years but will also indicate the market share that it holds in comparison to its competitors. Furthermore, the organization by focusing on e-commerce will be able to reach out to a larger customer base and thereby earn higher revenue and thus increase their market share.
The revenue growth of the organization for the year 2013 was 6%. However, the effective use of this strategy the organization should try to increase it by atleast 15% in the next 5 years.	The control measure for this objective will be the assessment of the annual sale of the products offered by the comparison and net revenue generated by them.	This will be an effective control measure for the organization since it will provide detailed information to the organization regarding their annual sales, the revenue generated by it, the measures that it needs to take in case of loss or for the enhancement of sale of products and others. The use of this strategy will offer the opportunity to the customers to order doughnuts from home and thus it is likely that they would use this services offered by the company. This would help the organization to achieve this objective in an effective manner.
The major focus of the organization currently on the wholesale business in comparison to the focus of its competitors on the retail business. However, the growth options associated with wholesale business is very limited and thus the organization through the use of this strategy should try to increase its retail business by atleast 30% in the next 5 years.	The control measure for this will be the number of sale of the dozen boxes that the organization makes in the retail sector.	This is an effective measure since it will offer the organization to measure their growth rate in the retail sector in a much effective manner. More importantly, it will also offer the organization to create various KPIs and achieve them in steps to achieve the overall objective that they have outlined for the use of this strategy. The use of this strategy will help the organization to grab the attention of the retail organizations and thereby offer them the opportunity to achieve this objective.

The mission of the organization should be, on the basis of the case study, to offer the best quality and tasty doughnuts to the customers. It is pertinent to note that the organization has built its business on the basis of the factor of quality rather than quantity. Thus, it can be said that the use of this mission statement would be an adequate one for the concerned organization.

The vision of the organization on the basis of the case study should be to become the largest organization in the nation of USA in the doughnut business market by offering the best quality doughnuts to the customers. The organization already holds the monopoly in the doughnut business market of USA in terms of quality if not quantity. Thus, it would be more beneficial for the organization to capture the doughnut business market of the nation on the basis of quantity as well.

McCormack and Johnson (2016) are of the viewpoint that the stakeholders play an important role in the business operations of an organization and to a large extent the success or the failure of the strategic vision and also the strategies used by an organization depends on them. The three stakeholders who would be critical to the success of implementing the strategic vision formulated for the organization KKD are-

Stakeholders	Roles played by them
Customers	The role of the customers in this regard is important since it is they who would help the organization in the effective implementation of the strategic by opting for the food products offered by them. The effective implementation of the vision would require the customers to buy the doughnuts both online and offline in more quantities than before.
Employees	The employees would also play an important role since they would have to cater to the increasing demands of the business and also the customers as well. This would require them to perform as per their maximum potential and also devise new means to enhance their productivity as well.
Shareholders, financers and others	They would have to provide the necessary funding or the finance which the organization would require to build its online presence in an effective manner. In addition to this, they would also need to offer the required funding so that the organization is able to manage different departments like customer delivery, support services and others.

As opined by Dyllick and Muff (2016), the communication strategies utilized by an organization are important since they help an organization to convey the important about their products or services to the customers. In addition to this, the communication strategies also help the organizations to maintain effective relationships with the internal and also the external stakeholders (Heasman & Lang, 2015). The two communication strategies that KKD can use for the process of their business are listed below-

• The use of social media as a communication tool to maintain effective relationships with the internal as well as the stakeholders is a strategic option which the organization can use. The use of this strategy will not only enable the organization to communicate in an effective manner with the stakeholders but would also help them to promote the food products offered by them in a meaningful manner (Grant, 2016).
• The use of seminars and other events is another option which the organization KKD can use for the process of communicating with the stakeholders (Lee et al., 2015). This would not only enable the organization to convey the messages to the stakeholders but would also offer the opportunity to the stakeholders to place their feedbacks and suggestions before the representatives of the organization.

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Belasco, W. J. (2014). Appetite for change: How the counterculture took on the food industry. Cornell University Press.

Weaknesses of Krispy Kreme Doughnuts

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