Your company has recently been asked to advise

KRISPY KREME MATRICES/REPORTS

Current Strategies and Objectives

Per pages 26 and 27 of its Form 10-K (annual report) filed April 17, 2009, Krispy Kreme Donuts has listed the following as its current objectives:

1. Reduce the investment required to produce a given level of sales and reduce operating costs by operating smaller satellite stores instead of larger, more expensive factory stores .

2. Achieve greater production efficiencies by centralizing doughnut production to minimize the burden of fixed costs.

3. Achieve greater consistency of product quality through a reduction in the number of doughnut-making locations.

4. Enable store employees to focus on achieving excellence in customer satisfaction and in-shop consumer experience.

5. Stimulate an increase in on-premises sales of doughnuts and complementary products by increasing the number of retail distribution points to provide customers more convenient access to the company’s products.

Regarding strategies, the Form 10-K filed April 17, 2009 notes a few:

1. Open up new (or convert traditional factory stores to) “hot shops” that provide a hot doughnut experience for customers throughout the day, instead of the traditional experience of having the hottest, freshest doughnuts available only at certain times of the day—these “hot shops” would be added to the traditional fresh shops and kiosks as the primary methods for market penetration while reducing operating costs.

2. Open up new company-owned satellite stores for additional market penetration.

3. The company also plans to extend its testing of soft serve dairy products into additional locations in fiscal 2010 as part of its product development.

4. Close stores that are not performing to company standards.

Vision

Krispy Kreme Donuts “Vision and Values” can be found on their web site (http://investor.krispykreme.com/includes/stupop.html).

“We Believe…

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Consumers are our lifeblood, the center of the doughnut

There is no substitute for quality in our service to consumers

Impeccable presentation is critical wherever Krispy Kreme is sold

We must produce a collaborative team effort that is unexcelled

We must cast the best possible image in all that we do

We must never settle for ‘second best’; we deliver on our commitments

We must coach our team to ever-better results”

Vision Statement

From Krispy Kreme Donut’s “Vision and Values” provides the following Vision Statement: “To be the global leader in doughnuts and complementary products, while creating magic moments worldwide.”

Competitive Profile Matrix (CPM)

Dunkin’ Donuts

Starbucks

Tim Hortons

Critical Success

Weight

Rating

Score

Rating

Score

Rating

Score

Factors

Advertising

0.11

4

0.44

3

0.33

2

0.22

Product Quality

0.15

3

0.45

3

0.45

2

0.30

Product

0.08

2

0.16

1

0.08

2

0.16

Diversity

Price

0.08

3

0.24

2

0.16

3

0.24

Competitiveness

Management

0.10

3

0.30

3

0.30

2

0.20

Financial

0.10

3

0.30

2

0.20

3

0.30

Position

Customer

0.10

4

0.40

3

0.30

3

0.30

Loyalty

Global

0.13

3

0.39

4

0.52

1

0.13

Expansion

Market Share

0.10

3

0.30

3

0.30

1

0.10

Sales

0.05

2

0.10

3

0.15

2

0.10

Distribution

Total

1.00

3.08

2.79

2.05

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1. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

External Factor Evaluation (EFE)

Key External Factors

Weight

Rating

Weighted Score

Opportunities

1.

Families crave convenience because of busy lifestyles

0.08

3

0.24

2.

Asians love sweets and are open to trying foreign foods

0.05

2

0.10

3.

Starbucks lacks a diversified and distinctive pastry line

0.10

3

0.30

4.

Dunkin’ Donuts does not have hot doughnuts to sell

0.07

4

0.28

5.

Many children love sweet treats

0.03

2

0.06

6.

Tim Hortons has yet to expand beyond the U.S. and Canada, and

0.04

2

0.08

its product line does not appear to be competitive

7.

South America, Africa, and Southern Asia are markets to conquer

0.09

1

0.09

Threats

8.

Dunkin’ Donuts presently dominates the doughnut market,

0.12

1

0.12

particularly in northeastern U.S.

9.

People are becoming more health-conscious, which does not bode

0.08

2

0.16

well for high-sugar, high-fat treats

10. Starbucks has approximately 25 times the amount of stores

0.08

1

0.08

worldwide that Krispy Kreme Donut has

11.

Restricted cash flow from banks and massive layoffs have stifled

0.06

2

0.12

the world economy, decreasing discretionary income

12.

Europeans prefer their local brands of doughnuts

0.05

2

0.10

13.

Britons tend not to have cars, which inhibits drive-thru customers,

0.06

2

0.12

and their eating habits and office etiquette differ from Americans

14.

Shareholders may sell Krispy Kreme Donut stock for lack of

0.09

1

0.09

returns and dividends compared to other similar firms in the industry

Total

1.00

1.94

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2. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

Internal Factor Evaluation (IFE)

Key Internal Factors

Weight

Rating

Weighted Score

Strengths

1.

Affordable, high-quality doughnuts with strong visual appeal and

0.09

4

0.36

“one-of-a-kind” taste

2.

Neon “Hot Doughnuts Now” sign encourages people outside the

0.06

3

0.18

store to make an impulse purchase

3.

Market research shows appeal extends to all major demographic

0.08

4

0.32

groups including age and income

4.

“Hot shop” stores save money while keeping Krispy Kreme Donuts

0.07

3

0.21

customer experience intact

5.

Vertical integration helps ensure high quality product

0.07

3

0.21

6.

Consistent expansion; now in 16 countries

0.08

3

0.24

7.

Product sold at thousands of supermarkets, convenience stores,

0.06

3

0.18

and retail outlets through U.S.

Weaknesses

1.

Return on equity, assets, and investments all negative in the

0.10

1

0.10

trailing twelve months; skill of management is questionable

2.

Shareholders have not received dividends recently, and are not

0.07

1

0.07

expected to in near future; stock price in state of flux

3.

Closing stores when stores should be opening globally at steady

0.06

2

0.12

rate to keep up with competitors’ growth

4.

Management states in recent 10-K that it is struggling with how to

0.07

1

0.07

make stores profitable

5.

Product line slow to expand with nothing outside “sweet treats” to

0.04

2

0.08

draw in health-conscious customers

6.

Advertising not aggressive enough to appeal to areas outside

0.03

2

0.06

southeast of U.S. where most stores are

7.

Revenues down, net losses in each of past three years

0.08

1

0.08

8.

Per 10-K, continued disputes with franchisees could hurt future

0.04

2

0.08

business

Total

1.00

2.36

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3. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

Strengths-Weaknesses-Opportunities-Threats Matrix (SWOT)

Strengths

Weaknesses

1. Affordable, high-quality

1. Return on equity, assets,

doughnuts with strong visual

and investments all

appeal and “one-of-a-kind” taste

negative in the trailing

twelve months; skill of

2. Neon “Hot Doughnuts Now” sign

mgmt is questionable

encourages people outside the

store to make an impulse purchase

2. Shareholders have not

received dividends recently,

3. Market research shows appeal

and are not expected to in

extends to all major demographic

near future; stock price in

groups including age and income

state of flux

4. “Hot shop” stores save money

3. Closing stores when

while keeping KKD customer

stores should be opening

experience intact

globally at steady rate to

keep up with competitors’

5. Vertical integration helps ensure

growth

high quality product

4. Management states in

6. Consistent expansion; now in 16

recent 10-K that it is

countries

struggling with how to make

stores profitable

7. Product sold at thousands of

supermarkets, convenience stores,

5. Product line slow to

and retail outlets through U.S.

expand with nothing outside

“sweet treats” to draw in

health-conscious customers

6. Advertising not

aggressive enough to

appeal to areas outside

southeast of U.S. where

most stores are

7. Revenues down, net

losses in each of past three

years

8. Per 10-K, continued

disputes with franchisees

could hurt future business

Opportunities

SO Strategies

WO Strategies

1. Families crave convenience

1. TV, radio, and print ads

1. Make doughnuts filled with

because of busy lifestyles

demonstrating 27 varieties of

fruit, put fruit cups on menu,

2. Asians love sweets and are

doughnuts against non-descript

and develop wide variety of

pastry offerings by Starbucks (S3,

fresh fruit smoothies; offer

open to trying foreign foods

O3)

ways to incorporate nuts and

3. Starbucks lacks a diversified

protein into foods (W5, O3)

2. All store signs in supermarkets

and distinctive pastry line

and conveniences where product is

2. Aggressive Internet ads

4. Dunkin’ Donuts does not have

sold have picture of young child

demonstrating the appeal of

hot doughnuts to sell

eating a Krispy Kreme doughnut (S7,

Krispy Kreme Donut hot

5. Many children love sweet

O5)

doughnuts (W6, O4)

treats

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