strategic-management

All stores are required to have a specific point of sale (POS) system. In addition to
providing the ability to manage on-premises sales, the POS system provides headquarters
and permits stores to communicate with each other. The headquarters site in Winston-Salem
retrieves sales information from the POS system and price changes can be downloaded to
the POS system within a store.
Krispy Kreme also has an enterprise resource planning (ERP) system that supports
both the financial and operating needs of the organization. Embedded within the ERP
system is a data warehouse that also supports the Company Stores and KK Supply Chain.
The mix manufacturing facility is in Winston-Salem. Krispy Kreme had opened a plant in
Effingham, Illinois, but closed it in January 2008. The result was a total consolidation of
all mix manufacturing at Winston-Salem.
Mix manufacturing is critical in supporting the high quality of Krispy Kreme
doughnuts. To ensure high quality, the following has been instituted:
1. To ensure freshness, truckloads of the main ingredients are received on a regular
basis,
2. Each incoming shipment of ingredients is tested, and
3. Each batch of mix is tested.
In addition to mix manufacturing, Krispy Kreme also produces the primary
doughnut-making equipment. Franchisees are required to use such equipment.
The two main distribution centers are located in Winston-Salem and the greater Los
Angeles area. The various types of stores are serviced through these centers.
Global Issues
Markets outside the United States are a great source of growth for KKD. In the last fiscal
year, Krispy Kreme saw a net increase of 94 new international stores while experiencing a
net loss of 20 stores in the United States. Much of this expansion is in the Middle East and
Asia. The rationale for expanding in these areas is their favorable demographics, relatively
high levels of sweet goods consumption, and the acceptability of Western brands. As of
February 3, 2008, KKD planned to open an additional 170 stores in fiscal year 2009 and
beyond.
Future Risks
Krispy Kreme recently reported that its franchisees have grown stronger and it may open
160 more new stores internationally in 2010 and beyond while acknowledging its domestic
franchisees still face financial strain. This international strategy is consistent with prior
announcements. However, the key questions still remain. Can Krispy Kreme survive? What
should its turnaround strategy be?
References
Anderson, J. Richard. “Lessons from Krispy Kreme.” Journal of Business Case Studies 4,
no. 4 (2008).
Duff, Cynthia. “Krispy Kreme Doughnuts Inc.—2004.” In Strategic Management, ed.
Fred David (New York: McGraw-Hill, 2005).
“Dunkin’ Brands, Company Profile.” Datamonitor. Reproduced in Business Source
Premier EBSCOhost, Belk Library. Elon, NC: Elon University, 2008.
Gutierrez, B. M. “Krispy Kreme’s Struggles Have It Looking Overseas for Growth
Opportunities.” The Business Journal of the Greater Triad Area (September 5, 2008).
http://banker.thomsonib.com
http://en.wikipedia.org/wiki/Krispy_Kreme
http://finance.yahoo.com/news/15-Companies-That-Might-Not-usnews-14279875.html
http://www.krispykreme.com
“Krispy Kreme CEO Resigns; New Chief Executive Named.” The Business Journal of the
Greater Triad Area (January 7, 2008).
Krispy Kreme Form 10-K for the fiscal year ended February 3, 2008. Winston-Salem,
NC: Krispy Kreme.
CASE 12 • KRISPY KREME DOUGHNUTS (KKD) — 2009 127