krispy doughnuts i

7/30/2019 krispy doughnuts i

1/8

Krispy Kreme Financial Analysis CaseStudy IntroductionKrispy Kreme Doughnuts, Inc. is one of the worlds leading retailers andwholesalers of doughnuts and packaged sweets. The company owns andfranchises Krispy Kreme doughnut stores which make and retail varieties of doughnuts and a wide range of coffees and other beverages. It operatesabout 530 stores both locally and in foreign countries like Australia, Canada,Indonesia, and Mexico among other countries. The company is headquartered in Winston-Salem in North Carolina, the US Krispy KremeDoughnuts, Inc.In this paper financial analysis is done between Krispy Kreme and averageindustry which is comprised of other companies in the restaurant industry for example the Starbucks and McDonalds.Financial Ratio AnalysisSome of the key ratios analyzed in this case study includes the following:Return on Equity (ROE), Return on Assets (ROA), Return on Investments(ROI),profitability, margins and returns, liquidity and leverage, financialposition and efficiency ratios.Quick ratio: This is the measuring of liquidity ratio which is done by comparingcurrent assets minus inventories divided by current liabilities. Krispy Kremesquick ratio is 1.73, while the industrys is 0. 69. This is a very positive ratio for the firm because it indicates that the firm has a competitive advantage over the industry when it comes to its ability to pay off its debt. i.e. its ability issuperior as compared to that of the industry.Inventory turnover ratio: this is cost of the goods sold divided by inventory.The firms turn over ratio is 20.03. This means that the company is able to selltheir inventory in 18 days on average as compared to the industrys turn over which is 31.78 hence can sell their inventory in 11 days. From the fact thatKrispy Kreme is a very liquid company, as far as speed of inventory isconcerned, there are a little behind them.Return on Assets (ROA): this is the key indicator in evaluating how the

management is generating profits from operations. ROA is net income dividedby total assets. The Krispy Kreme ROA is 12.28, while that of the industry is9.15 and this considerable difference in the ratios means that the firm has ahuge advantage in that for every dollar in total assets, Krispy produces $12.12in net income as the industry produces $9.15; therefore it means that KrispyKreme is good in using its assets to produce more income and thus high profitmargin.


2/8


3/8

A looming problem for Krispy Kreme firm is the low inventory turnover ratiowhich currently averages approximately eighteen days as compared to theindustry average of nine days. If not attended to quickly the firms supply linewill continue to cost more money and reduce future profits.The financial condition of Krispy Kreme is superior to that of its competitorsbut does have some areas that need improvement. Krispy Kremes youngmanagement is showing that they want to be cautious and have employed analmost zero tolerance policy regarding debt.OpportunitiesDiversification strategy should be considered. Given the fact that itscustomers enjoy their sweetness of their doughnuts suggest that they alsoenjoy the prevailing environment. Perhaps by allowing customers to see theactually process of cooking and glazing the doughnuts will go along way toattracting more customers while keeping them loyal.Since doughnuts are generally morning consumption, other freshness for therest of the day should be explored for instance diversifying into fresh bakedbreads for evenings or deli-type sandwiches throughout the day.Despite the fact that Krispy Kreme strategy of upgraded extranet servicesworks well for the company now, there is an opportunity to consider alternatives in altering or expanding the same to suit the continuous growth of the company as they enter new markets.ThreatsOther trends such as the recurrence of health food manias and other consumer preference issues are also threats to Krispy Kremes potential

especially in terms of customer numbers.Krispy Kreme needs to continuously reinvent their strategies to stay ahead interms of competiti on as other companys in the same industry are posingserious competition in regard to doughnut tastes e.g. LaMars Doughnuts isthe biggest prospective threat to Krispy Kreme since they go to its customersby operating neighborhood bars and in high traffic areas.One of the most troubling financial indicators for Krispy Kreme are their market value ratios (p/cf,p/b etc) which indicates that in the current marketthey are valued higher than their counterpartsConclusion

Considering the financial analysis of Krispy Kreme, the firm is performing wellin the industry and still has a great potential of even doing better. Analysisshows that the firm is still new in the market and has been able to differentiateitself and its products from its competitors. This therefore indicates that KrispyKreme has bright future.


4/8

Read more: http://www.ukessays.com/essays/economics/krispy-kreme-financial-analysis-case-study-economics-essay.php#ixzz2S2y28tYz

18Sep

Case study about Krispy Kreme Doughnut admin

Contents

Chapter Two: Krispy Kreme Doughnut

2.1 Identification of Vision, Mission, Objectives and Strategies

Vision

Mission Objectives

Strategiesddfdfdf

2.2 Developing Vision, Mission, Objectives and Strategies

Vision

Mission

Objectives

Strategies

2.3 External Factors and Evaluation Matrix 2.4 External Factor Evaluation Matrix

2.5 Competition Profile Matrix

2.6 SWOT Analysis

2.7 Internal Factor Evaluation matrix

2.8 Quantitative Strategic Planning Matrix

Chapter Three: Hershey


Vision

Mission

Objectives

Strategies


Vision
http://www.ukessays.com/essays/economics/krispy-kreme-financial-analysis-case-study-economics-essay.php#ixzz2S2y28tYzhttp://www.ukessays.com/essays/economics/krispy-kreme-financial-analysis-case-study-economics-essay.php#ixzz2S2y28tYzhttp://www.ukessays.com/essays/economics/krispy-kreme-financial-analysis-case-study-economics-essay.php#ixzz2S2y28tYzhttp://www.ukessays.com/essays/economics/krispy-kreme-financial-analysis-case-study-economics-essay.php#ixzz2S2y28tYzhttp://www.sparklessoft.com/?p=100http://www.sparklessoft.com/?p=100http://www.sparklessoft.com/?author=1http://www.sparklessoft.com/?author=1http://www.sparklessoft.com/?p=100http://www.ukessays.com/essays/economics/krispy-kreme-financial-analysis-case-study-economics-essay.php#ixzz2S2y28tYzhttp://www.ukessays.com/essays/economics/krispy-kreme-financial-analysis-case-study-economics-essay.php#ixzz2S2y28tYz


5/8

Mission

Objectives

Strategies

2.3 External Factors and Evaluation Matrix

2.4 External Factor Evaluation Matrix

2.5 Competition Profile Matrix

2.6 SWOT Analysis

3.7 Internal Factor Evaluation Matrix

Chapter One: Introduction

This paper is going to present strategic analyses on two well known international organizations in order to

study how well they are doing in the market and how well, their management of the business and its

operations actually is. The number of external and int ernational factors contributing to these will be focused

upon through the use of various strategic management tools and finally, recommendations and conclusion

will be presented for each organization if it seeks to improve its business or at least stabilize it in the longer

run.

In order to do this, the paper is going to do the following:

i) Identify the vision, mission, objectives and strategies of the organizations and develop them if any is

missing or lacking

ii) Identify external opportunities and threats for the organization and construct an external evaluative

matrix

iii) Develop a competitive Profile matrix in order to study the competitive positioning of the organization in

the market

iv) Study the internal situation of the organization by constructing a Internal Factor Evaluation matrix and a

SWOT matrix

v) Develop recommendation for the organization in case they are needed and they also elaborate upon their

ways for implementation by the management of the organization.

All these tools will be used for the two organizations i.e. Krispy Kreme Donuts and Hershey Company side by

side. The aim of doing so is to be able to provide the comparative conclusion and say how management of

the organization, even with the given external threats and opportunities can direct the future and

profitability of the organization.

Chapter Two: Krispy Kreme Doughnut


6/8


Vision

Krispy Kreme Donuts: To be the global leader in donuts and complementary products while creating magic

moments world wide

Mission

Krispy Kreme Donuts: Not stated

Objectives

Krispy Kreme Donuts: Noted Stated

Strategies

Krispy Kreme Donuts: Not Stated


Vision

Krispy Kreme Donuts: The vision of the organization should be more people and consumer oriented and not

self centered so that the strategies can be different towards achieving customer based brand equity.

Mission

Krispy Kreme Donuts: The mission of the organization through its actions is definitely the growth in revenue

however this should be strategically altered to the mission of providing consumers with an excellent taste

and quality and to spread this happiness throughout the world.

Objectives

Krispy Kreme Donuts: The objectives of the organization should be to make people see the healthy side of

donuts and thus increase its sales and revenue through customer attraction.

Strategies

Krispy Kreme Donuts: The strategy of the organization should be to work on increasing customer based

brand equity in order to enhance competitive advantage in the organization. For this a mixture of

advertising and other marketing tactics needs to be employed and the customers need to start realizing that

the Donuts served by KKD are not as detrimental to their health as perceived.


External Opportunities:

Development into diversified product markets

Detection of the problem occurring in the management of the business and thus the fall in business and

profitability


7/8

Develop the social outreach programs to promot e the donuts and to promote the customer based

objectives and mission of the organization.

Reaching the market to really know what the customers want and then to develop the marketing and

strategic policy in accordance to that.

Moving into healthier al ternatives for example sugar free donuts

Capitalization of the holiday seasons and availability of KKD in recreational places. External Threats:

Tough competition and increasing global recognition of Starbucks and Dunkin Donuts.

Global presence of th e competitors

Fall in the number of company stores and rise in franchises and thus a fall in the authority over strategies

and management of the organization as a whole

More health conscious customer base

Development of organic markets

Chapter Three: Hershey


Vision

Hershey Company: Not Stated

Mission

Hershey Company: The mission of the Hershey Company is Bringing sweet moments of Hershey happiness

to the world every day. To the consumers of Hershey this means delivering quality consumer driven

confectionery experiences for all occasions. To the employees this means winning with an aligned and

empowered organization while having fun. To the business partners this means building collaborative

relationships for profitable growth with their customers, suppliers, and partners. To the shareholders this

means creating sustainable value and to the communities this means honoring the heritage through

continued commitment to making a positive difference.

Objectives


Strategies



Vision

Hershey Company: The vision of the organization through its strategies is apparent and is to be able to

provide a more sustainable and consumer oriented growth of chocolate industry.


8/8

Mission

Hershey Company: The mission of the company is well suited and finely structured to include all

stakeholders.

Objectives

Hershey Company: The objective of the organization should be to make customers and other stakeholders

regard Hersheys as the chocolate industry leader internationally.

Strategies

Hershey Company: The strategies of the organization are to provide sustainability and value to not only the

business but to all those who are linked to the organization and the larger chocolate industry internationally.

In that, the focus on the profitability of the organization is driven by the need to provide value to the Milton

Trust and the shareholders.


External Opportunities:

Penetration of the organization into the Asian and the Middle Eastern markets since the customer base

there is less health conscious as of today.

Analysis of the strengths of the competitor s and thus promoting and developing the good in accordance to

that.

Crafting ways to increase customer interaction to know what they want in the shape of chocolate and also

to know what the customers expect from the organization in terms of their social responsibility.

Developing production lines in the Areas from where cocoa beans are imported.

Further development into organic and more healthy products

Capitalization of the holiday season External Threats:

Competition from very strong internation al organizations and thus the struggle for market leadership as

far as chocolate and confectionery is concerned.

Maturing customer base about the health and thus the reduction in calorie intake

Global climatic change and thus the threat to the producti on of sugar and cocoa

Increase in political differences internationally and thus the threat to the trade and capital mobility of the

economies especially in regards to the Asian and Middle Eastern countries as far as United States is

concerned.

Documents

krispy doughnuts i