KKD Company Strategies Planning Report

KKD Company Mission and Objectives

Question:

Discuss about the Matrix to Assessing Competitiveness of Regions.

The KKD Company is operating its business in various countries and for this it essential to investigate the various strategies planning related to the company, which in turn can help the company to implement various strategies and to implement this for competing in the market (Ginter, Duncan & Swayne, 2018). Moreover, a financial calculation is done to forecast the outcomes of this strategy in future. Hence, this report has made Competitive Profile Matrix, External Factor Evaluation (EFE) Matrix, Internal strengths and weaknesses and some other matrices.

Krispy Kreme Doughnuts (KKD) does not have any published visions statements. The main mission of the company is to satisfy the demands of their customers by providing them with quality products and services.

In this context, the main objective of KKD is to satisfy the needs of the customers with the assistance of collaborative team effort. The aim of KKD is to be the best in its industry (Hitt, Ireland & Hoskisson, 2012).

The strategies of KKD are shown below:

• To fulfill the demands of customers by providing fresh doughnuts
• To transform the business by entering in smaller factory shops rather than wholesale customers
• To promote the company’s local relationship marketing by raising more funds (Hitt, Ireland & Hoskisson, 2012).

The following discussion shows the new vision and mission statement of KKD:

As per the vision statement, the aim of the company will be t provide the customers with joy and happiness through fresh doughnuts, music and art (Hill, Jones & Schilling, 2014).

In order to achieve this vision, the mission of KKD will offer fresh doughnuts with good music and art at the same time. The company will offer a range of doughnuts to its customers in affordable price. In addition, the collaborative team will always be ready to provide quality services to the customers (Hill, Jones & Schilling, 2014).

The habit of healthy eating is a major external threat for KKD. It can be seen that the people of United States and the globe have become more health conscious as they prefer Low-carb diets to fast food. Apart from this, the government is also imposing restriction on fast foods including doughnuts shops. It can affect both the profitability and business opportunities of the company (Wheelen et al., 2017).

• Major fluctuation in coffee price is another external threat for KKD. Some major aspects like droughts in Brazil, fungal infection in 2014 and deforestation has affected the coffee prices. This aspect is contributing towards the loss of revenue of KKD (Rothaermel, 2015).

Opportunity

• The provided case study indicates that the global doughnuts market is looking promising and it can be regarded as a major external opportunity for KKD. The main reason contributing towards this opportunity is the increasing demand of doughnuts all over the world (Wheelen et al., 2017).

		Krispy Kreme Doughnuts		Dunkin’s Brands Group		Tim Hortons		Starbucks
Critical Success Factor	Weight	Score	Weighted score	Score	Weighted Score	Score	Weighted Score	Score	Weighted Score
Brand Reputation	0.25	3	0.75	4	1.0	3	0.75	4	1.0
Marketing	0.05	3	0.15	3	0.15	3	0.15	4	0.20
Product Quality	0.25	4	1.0	3	0.75	2	0.50	4	1.0
Location	0.15	4	0.60	4	0.60	2	0.30	4	0.60
Customer Loyalty	0.10	2	0.20	2	0.20	1	0.10	3	0.30
Customer Service	0.10	2	0.20	4	0.40	1	0.10	4	0.40
Product Range	0.10	1	0.10	4	0.40	4	0.40	4	0.40
Total Score	1		3		3.5		2.3		3.9

Here, weight is measured from 0.1 to 1.0, where less important factors related to success of business is denoted with lower weight and higher weight is indicating most important factors for achieving success. Moreover, scoring scale is measured between 1 to 4 where, 1 means major weakness and 4 represents major success, while 2 means minor weakness and 3 means minor strength (Safiullin et al., 2014). Those ranks have helped to rank critical success factors (CSF) of a company. According to total scale, based on CPM, the Starbucks has captured the leading position in the market.

To construct this matrix, some external factors related to opportunities and threats, are required, which can be obtained from the political, economical, social, technological, legal and environmental (PESTLE) analysis, Porter’s five forces model or from Competitive Profile Matrix (Budiono, 2017). Here, the EFE matrix is constructed based on CFM. After analyzing the whole matrix, the average value can be obtained.

Opportunities	Weight	Rating	Weighted Score
Increasing population in most of the Asian countries	0.03	2	0.06
Increasing number of investors	0.05	1	0.05
Increasing demand for fast-food items	0.05	3	0.15
Positive market environment outside of North America	0.25	2	0.50
Threats	Weight	Rating	Weighted Score
Increasing cost of healthcare	0.20	3	0.60
Changing food habits of people	0.20	2	0.40
Different countries with different food habits	0.07	1	0.07
Political instability in some branches, worldwide	0.02	3	0.06
Economical stability rampant in some international branches	0.07	2	0.14
Increasing tax rate	0.06	3	0.18
Total weighted score	1.0		2.21

After identifying the chief external factors, they are assigned with respective weight, which has range between 0 and 1.0 where 0 represents least important factor and 1.0 represents very important one. Here, the average value of this matrix is 2.21, which is high compare to the lowest value, that is, 1. Hence, according this matrix, the company has a better market position.

The company, through its business process, has earned some strengths and weakness internally where internal strength can help the company to compete in the market by earning excess revenue and also by enhancing its customers base (Chadwick & Dennis, 2017). On the other side, internal weakness has influenced the company adversely for which the company has experienced loss in market due to insufficient investment.

KKD Company Strategies

Strength: The KKD has considered its customers as the chief factor of their company. Hence, they try to provide best customer service along with high quality of foods to satisfy them.  To create a strong brand value in domestic and international market, the company has spent huge efforts to train their employees, properly (King & Miller, 2017). The company has sold its products in different places, where the number of customers are high, for instance, in gas stations, grocery stores, Walmart, convenience stores and other target stores, based on the U.K. the products of the KKD are also available in some well-known retail shops, international market. Moreover, the company has launched its products in many developed and developing countries like Australia, Kuwait and Thailand and so on.

Weakness: The KKD does not set any vision for its company though business mission is present. Business vision tells set a company’s future goal and for achieving this, a company can set its future goal. However, for KKD, it is difficult to set a particular goal because of its absence of vision.

Through IFE matrix, the KKD Company can evaluate its own internal factors, which can further help the company to form new business strategies for its various functional areas, for instance, marketing, operations, financial condition, human resources and accounts and also some other factors on which the business procedure depends (Rezazadeh, Jahani, Makhdoum & Meigooni, 2017). To understand those factors and its impact on the company, it is beneficial to form a matrix with appropriate weight for each factor. Based on this average value, the company can understand its position in market. The range of weight is varied between 0 to 1 where the first one indicates less important factor and the last one represents most important one for performing this business (Hatefi, 2018). With each weight, corresponding raking for individual factor is also needed, which varies between 1 and 4. Here, 1 indicates minor weakness of this business entity while 4 indicates major strength of the one.

Strength	Weight	Rating	Weighted Score
Strong customer service	0.25	3	0.75
Strong business structure	0.15	2	0.30
Brand value recognition	0.10	4	0.40
Distribution centre	0.05	3	0.15
Increasing revenue from domestic and international market	0.05	4	0.20
Weakness	Weight	Rating	Weighted Score
Income deficit by $ 4  million	0.10	3	0.30
Increasing amount of tax	0.15	2	0.30
Increasing amount of long-term debt	0.06	2	0.12
High inventory risk	0.03	1	0.03
Lack of managerial head	0.6	3	0.18
Total weighted score	1.0		2.43

The average value of IFE Matrix is 2.43, which is greater than the average value, that is, 1. Hence, the company has possessed almost a strong position in market compare to other firms, which provide same kinds of product in market.

This Strength weakness, opportunities and threats can help a company to understand the market environment (Dlboki?, 2017). It is essential to analysis understand.

Strength

Weakness

·       Capture international market over 23 countries including the United Kingdom and Australia ·       Large number of factory shops to display doughnuts production ·        Company’s  supply chain as the only supplier of raw materials ·       Controlling of product quality efficiently ·       Revenue hike by 90% during the fiscal year 2015 ·       Company stores, international and domestic franchises and KK supply chain comprise company operations

·       Absence of Chief Operating Officer, Chief Administrative officer or Chief Strategy Office within organization structure ·       Changing trends of food habits ·       Limited verities of foods ·       Insufficient information about customer service ·       Lack of customer amenities

opportunities	Threats
·       The chief selling product is doughnuts while coffee is included later ·       New concepts for promoting products ·       Focusing on more retail services compare to wholesale one ·       Factory service increases customer base ·       More smaller size factory stores ·       More international outlets ·       Efficient business strategy for enhancing market	·       Coffee price based on environmental fluctuation ·       Increasing number of rival firms with significant market share ·       Lack of market analysis ·       Limited number of employees

This strategy can help the company to analyze its products according to the market, based on relative market share and market growth rate (He, Song & Wang, 2015). It has four quadrants that represent stars, question marks, cash cows and dogs. Each quadrant represents different market share of the product.

Through GSM, a company can make different strategies for its each working divisions. In its four quadrants, different quadrant represents different strategies (King & Miller, 2017). The upper two quadrants represent strategies for rapid market growth, while the lower quadrants represent slow market strategies.

This matrix is the total of EFE and IFE matrix, where weights are from those matrices (David, David & David, 2017). The next column represents attractive score (AS) lies between 1 to 4  and then another column of total attractive score (TAS) is also measured.

Key internal factors	Market Development
Strength	Weight	AS	TAS
Strong customer service	0.25	3	0.75
Strong business structure	0.15	2	0.30
Brand value recognition	0.10	4	0.40
Distribution centre	0.05	3	0.15
Increasing revenue from domestic and international market	0.05	4	0.20
Weakness	Weight	Rating	Weighted Score
Income deficit by $ 4  million	0.10	3	0.30
Increasing amount of tax	0.15	2	0.30
Increasing amount of long-term debt	0.06	2	0.12
High inventory risk	0.03	1	0.03
Lack of managerial head	0.6	3	0.18
	1.0
Opportunities	Weight	Rating	Weighted Score
Increasing population in most of the Asian countries	0.03	2	0.06
Increasing number of investors	0.05	1	0.05
Increasing demand for fast-food items	0.05	3	0.15
Positive market environment outside of North America	0.25	2	0.50
Threats	Weight	Rating	Weighted Score
Increasing cost of healthcare	0.20	3	0.60
Changing food habits of people	0.20	2	0.40
Different countries with different food habits	0.07	1	0.07
Political instability in some branches, worldwide	0.02	3	0.06
Economical stability rampant in some international branches	0.07	2	0.14
Increasing tax rate	0.06	3	0.18
	1.0
Total of Attractiveness Score			4.64

Here, the average value of the matrix in 4.64, based on market development.

The Recommendations as well as the long term objectives of KKD are discussed below:

• The first strategy or long-term objective will be the establishment of individual small factory shops of KKD. From the provided case study, it can be seen that KKD is transitioning towards smaller factory shops. In this situation, strategy or objective will be crucial for gaining more market share (Stead & Stead, 2013).
• The second strategy will be the implementation of effective advertisement and promotional strategies in order to make the people known about the new small factory shops. Mass awareness is a crucial aspect for the success of the companies and there is not any exception of this fact in case of KKD. Effective promotions will attract more customers towards the organization (Vogel & Güttel, 2013).
• It can be observed that the third objective of KKD is to deliver fresh doughnuts. Thus, the company needs to purchase and install large refrigerator system in their shops to keep the doughnuts fresh (Bryce, 2017).

Competitive Profile Matrix (CPM)

The following table shows the cost allocation among all the recommendations:

Particulars	Year 1	Year 2	Year 3	Year 4
Nos. of New Shops	100	100	100	100
Investment in PP&E per shop	100000
Investment for New Refrigerator	2250000
Additional Advertisement Expenses	1500000	750000	400000	150000

The above table shows that KKD needs to invest $100000 each for every shop. After that, for the implementation of refrigerators in the new shops, KKD will invest $2250000. For advertisement expenses, KKD will invest $1500000, $750000, $400000 and $150000 in the first, second, third and fourth year respectively.

When comparing the developed strategies of KKD with the recommended strategies, it can be observed that the recommended strategies have been developed to achieve the actual objectives of the company. The first recommendation can be presented as a part of the expansion strategy of KKD. The second recommendations relation to promotion is also connected to first strategy. Thus, it can be said that the first and second recommendation is interconnected with the expansion strategy. The third recommendation is connected with the objective of the company to provide fresh products. Thus, based on the above discussion, it can be observed that all the recommendations are interconnected with the strategies of KKD (Bryce, 2017).        

From the above table, it can be observed that the revenue will be less in the first year due to the heavy investment for the recommendations. After that, there will be increase in revenues due to the increase in shops. It needs to be mentioned that the increase in shops will increase in the amount of operating expenses of KKD that includes the advertisement expenses. The main intention of KKD is to increase the business profit. The above table shows that there will be increase in net income of the company due to the implementation of the strategies (Scott, 2015).

The implementation of the recommendations will have effect on the balance sheet of the company. The above table shows the increase in current assets of the company due to the increase in revenue. At the same time, there will be an increase in the non-current assets due to the purchase of refrigerators, plant, machineries and other equipments. The main reason behind the increase in current liabilities is the increase in credit purchase due to the establishment of a large business. At the same time, the main reason behind the increase in non-current liabilities is the use of debt financing for the implementation of the strategies (Weil, Schipper & Francis, 2013).  

The above table shows the increase in profit margin of the company due to increase in the revenue and profitability due to the implementation of expansion strategy. For the same reason, there will be increase in the current ratios. From the above table, it can be seen that there will be decrease in the debt-to-equity ratio in the coming years. The main reason is more dependency on equity capital for the implementation of the expansion strategy. At the same time, it can be absorbed that there will be increase in return in equity. Increased profitability of KKD can be held responsible for the increase in this ratio. Increase can be seen in the fixed asset turnover ratio. It implies that KKD will be able to get healthy return by using its fixed assets (Horngren et al., 2012).

External Factor Evaluation (EFE) Matrix

The recommended annual objectives and policies are discussed below:

Objectives

• The first annual objective of KKD will be to increase its profitability. The main way to increase profitability is to increase the amount of revenue by providing fresh doughnuts along with other effective services (Lasserre, 2017).
• The second annual objective of KKD will be to ensure the growth of their business with the assistance of different expansion strategies (Lasserre, 2017).
• The third annual objective of KKD will be to implement strategies so that employee retention can be maintained.

Policies

• It is required for KKD to implement effective policies in order to cover different aspects like employee standards, expectations, guidelines, employee benefits, leave strategies, conflict of interest and others.
• KKD is also required to implement major business policies related to different risk management. In this context, some of the major aspects are employee opportunity protection, employee’s health, safety, and others (Lasserre, 2017).

Business organizations all over the world adopt different kinds of straggles for the review and evaluation of implemented strategy. There is not any exception of this fact in case of KKD. They are discussed below:

• The first procedure will be the comparison of actual results with the expected results. This is an effective procedure of strategy evaluation as it helps in identifying the gap between expected and actual result so that loopholes in the strategies can be identified (Reinhart & Schindler, 2012).
• The next procedure is the investigation of the deviations from the plan. This procedure helps in identifying the deviating factors in the strategies.
• The next procedure is the evacuation of individual performance towards the achievement of the organizational goals and objectives. This procedure is helpful in identifying the negative contribution of the employees in strategic management (Reinhart & Schindler, 2012).

Conclusion

According to some strategies, the company has performed well and has obtained a good market position though its competitors also have performed successfully. The above discussion shows that the company will need to invest certain amount of money for the implementation of the recommended strategies. Because of the implementation of these strategies, KKD will be able to increase their profitability that will lead to the increase in the market share of the company.

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