Course Code: MGN-502 Course Title: Management Practices and Organizational Behaviour

Course Instructor: Ms. Ritu Diya Kanda (17980)

Academic Task No.: 1 Academic Task Title: Case study about Dunking’ Donuts

Date of Allotment: 21st August 2013 Date of submission: 31st August 2013

Student’s Roll no: A12 Student’s Reg. no: 10805150 10805990 10806058 10806212 10807251Evaluation Parameters: (Parameters on which student is to be evaluated- To be mentioned by students as specified at the time of assigning the task by the instructor)

Learning Outcomes: (Student to write briefly about learning’s obtained from the academic tasks)

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other student’s work or from any other source except where due acknowledgement is made explicitly in the text, nor has any part been written for me by any other person.

Student’s Signature: Arun Kumar ,Sahil Bansal, Alok, Manik, Navdeep Singh

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Dunkin' Donuts is an American global doughnut company and coffeehouse chain based in Canton, Massachusetts. It was founded in 1950 by William Rosenberg in Quincy, Massachusetts.

Executive Summary:-

Dunkin' Donuts is a business in food retail. They are the world's largest coffee and baked goods

chain. Dunkin’ Donuts have been in business since 1950 and have been franchising since 1955.

This franchise serves more than 2 million customers a day. Dunkin' Donuts sells 52 varieties of

donuts and more than a dozen coffee beverages as well as bagels, breakfast sandwiches and

other baked goods.

It is important to look at consumer usage and future trends before entering into the market.

Dunkin Donuts is part of the snack shop market. The snack shop market had almost 10 billion is

sales worldwide in 2003 alone. Snack shops have an advantage because they are popular

among all consumer groups. Dunkin’ Donuts has retained a consistent database of customers,

while also gaining additional consumers through the progression of time and emergence of

newer markets.

History:-

Dunkin’ Donuts was begun in 1050 by William Rosenberg with a single shop in Quincy, Massachusetts. In 1946, he founded Industrial Luncheon Services, a company that delivered meals and snacks to workers in the Boston area.

The success of Industrial Lucheon Services convinced Rosenberg to start the Open Kettle, a doughnut shop in Quincy, Massachusetts. Two years later Open Kettle changed its name to Dunkin’ Donuts. He began franchising additional outlets in 1955, and by 1979 there were a thousand Dunkin; Donuts outlets in the Northeast. Through a series of transactions in the 1980s and 1990s, Dunkin’ Donuts became the quick service restaurant operation of the British firm, Allied Domecq PLC. In 2002, as Allied Domecq looked for growth opportunities, it’s Dunkin; Donuts (DD) business was described as a “sleeping giant” as much for its fiercely loyal clientele as its $2.8 billion in sales and more than 3,800 U.S outlets.

Mission Statement:- “Dunkin’ Donuts will strive to be the dominant retailer of high

quality donuts, bakery products and beverages in each metropolitan market in which we

choose to compete.”

Products

Dunkin Donut serves the following items :

1) Donuts

2) Fritters

3) Crullers

4) Biscuits

5) Munchkins

6) Bagels

7) Muffins

8) Danish pastry

9) Cookies

10) Brownies

11) Bagel Twists

12) Breakfast sandwiches

13) Hash browns

14) Oven toasted items

15) Coffee beverages

16) Bulk Coffee17) Espresso, Cappuccino, and Lattes

18) Iced Coffee19) Iced Lattes

20) Latte Lite Espresso21) Turbo

Culinary Excellence:-

Dunkin‘Donuts is committed to providing guests with the best-tasting, high-quality food and

beverages. To meet that commitment, we assembled a culinary dream team of acclaimed chefs

to create new and innovative menu choices to meet the evolving needs of Dunkin‘ Donuts‘

busy, on-the-go customers, raising expectations about what is possible in a quick service meal.

As people find themselves busier than ever, and are snacking more frequently throughout the

day, Dunkin‘Donuts‘ culinary team is meeting guests‘ changing eating habits and expectations

for fast, satisfying menu items that can be enjoyed any time of day. In addition to the brand‘s

famous coffees, lattes, donuts, bagels and muffins, Dunkin‘ Donuts has delicious breakfast

sandwiches -- available all day -- with several choices featuring breakfast favorites such as

smoked cherry wood bacon, egg whites, freshly baked croissants and toasted English muffins.

Dunkin‘Donuts has also introduced new oven-toasted bakery sandwiches, in several varieties

including Texas Toast Grilled Cheese, Chicken Salad and Tuna Salad. Dunkin‘Donuts also

continues to offer a full lineup of innovative snacks and beverages, including Bagel Twists,

Coolatta slush drinks, hash browns, cookies and more. Dunkin‘Donuts‘culinary team also

directed the introduction of the brand‘s DDSMART line of better-for-you menu items.

DDSMART includes many delicious food and beverages with fewer than 300 calories, such as

Egg White Flatbread Sandwiches and Wake-up Wraps, coffee and espresso beverages, teas and

a Coolatta with skim milk. Dunkin‘Donuts‘team of skilled culinarians is led by Executive Chef and

Vice President of Product Innovation Stan Frankenthaler. Frankenthaler is a three-time James

Beard Award nominee and author of The New York Times best-seller, The Occidental Tourist.

Before joining Dunkin‘Brands, he was owner and chef of Salamander restaurant in Boston,

named by Zagat‘s as one of the city‘s "Top Ten Restaurants." Dunkin‘ Donuts‘ culinary team also

includes Executive Pastry Chef Christopher Boos, who represented the United States in the

Coupe du Monde de la Patisserie (the World Pastry Cup), and Sous Chef Phillip Kafka, former

commis chef at Harrods in London. Dunkin‘Donuts‘team also features two of the world‘s

foremost experts on coffee, Jim Cleaves and Ellen Rogers. Jim is a licensed Q Grader, having

passed the world‘s most rigorous coffee evaluations skills testing program, while Ellen is an

International Coffee Expert in coffee tasting and analysis and a Coffee Quality Institute Board

Trustee. Together, they are responsible for developing and introducing new coffee beverages

and blends.

Dunkin’ Donut (DD) SMART:-

Eating smart when on the go can be hard. But the DDSMART menu from Dunkin‘Donuts makes

it easy. The selection of ‘better-for-you’ foods and beverages ensures our restaurants offer

great-tasting choices that fit your lifestyle and meet your dietary wants and needs. Food and

beverages with the DDSMART Logo are reduced in calories, fat, saturated fat, sugar or sodium

by at least 25% compared to a base product or other appropriate reference product, and/or

contains ingredients that are nutritionally beneficial.

THE MARKET:- In the competitive world of the coffee industry and any industry for that matter it’s crucial for companies to have a clear understanding of what they do best, and where they can be the best. Dunkin’ Donuts has defined its strategic heartbeat as the everyday, easy coffee stop that inspires rituals that revive. In other words, Dunkin’ Donuts provides food and drink that’s fast, fresh, and affordable for busy people, leading busy lives. These days there is an incredible interest across the country in premium coffee. The average consumer is now demanding what Dunkin’ Donuts has been providing for nearly 60 years. Dunkin’ Donuts’

standards for coffee excellence are among the highest in the United States, which is no easy feat. Producing coffee takes more steps than producing wine, and Dunkin’ Donuts’ coffee experts travel around the globe to ensure quality at each step. Dunkin’ Donuts identified a new restaurant category called “Quick Quality.” This represents a promise of fresh food fast and a higher evolution of the standard quick service experience. Dunkin’ Donuts wanted to make a more meaningful promise to deliver on the value proposition consumers expect, and then some: a promise to offer fresh food, fast, and to offer more choices, served quickly, in a quality way. That means lots of innovative new products — served fresher and faster than ever before.

BRAND VALUES:- Dunkin’ Donuts customers are passionate about their Dunkin’ Donuts experience, which for millions of customers is an everyday ritual. The company conducted a study where customers were asked to go without Dunkin’ Donuts coffee for one week. The results showed that people felt life was harder, that their day lacked order without Dunkin’ Donuts coffee, and that competitors couldn’t fill the social and emotional need they get from a daily visit to a Dunkin’ Donuts store. People who work for Dunkin’ Donuts have a passion for what they do. And that’s because Dunkin’ Donuts located the passion of the company — the strategic heartbeat — which is the thing that the company does best. For example, Dunkin’ Donuts defined the strategic heartbeat of the company as the everyday, easy coffee stop that, by serving the best-tasting coffee, inspires rituals that revive.

Q.1. what does a Porter's Five Forces analysis reveal about the industry in which Dunkin' Donuts and Starbuck's compete and what are its strategic implications for Dunkin' Donuts?

Answer: I think in this case, it reflects the level of rivalry among organizations in an industry, the potential for entry into an industry and the threat of substitute products. First, the Starbuck and Donuts they are all belongs to coffee market and they competing each other. And about the second factor, the Dunkin Donuts enter the coffee market is later than Starbuck, but more and more competitors enter this industry make the industry profits lower. Although there have a huge coffee market in the world each year, but there absolutely have some other new substitute products enter it. Such as Nescafe and McDonald's coffee. But in many consumers' heart, they just wish to buy only two types of coffee, regular and decaf. But only Dunkin' Donuts does. This represent its quality is high. This means the Dunkin' Donuts use niche strategy to earn a big potential market share.

Porter's Five Forces investigates the attractiveness of an industry by focusing on the threat level of various factors influencing the industry. These forces include: bargaining power of buyers, bargaining power of suppliers, threat of new entrants, threat from substitutes and rivalry among existing players.

1. Bargaining Power of Buyers

Referring to the chart above, there is a relatively low level of threat from the bargaining power of buyers. This is due to the fact that there are a large number of buyers with relatively small purchases. The coffee industry is based around individual customers buying a cup or two of coffee and a snack, but usually not much more than that. It is important to note, however, that customers do not face any significant switching costs when moving between coffee shops. This gives some power to the buyers. Furthermore, coffee drinkers could make the product in their own house rather than buying it, which also gives them more power.

2. Bargaining Power of Suppliers 

In reference to the chart above, the bargaining power of suppliers poses a very low threat. This is due in large part to the fact that the inputs for the industry are standard as opposed to differentiated. This allows companies to switch quickly and easily between suppliers. For these reasons, suppliers are not necessarily locked in to a specific firm in the industry.

3. Threat of New Entrants

As depicted in the chart above, there is a relatively low threat of new entrants into the U.S. coffee and snack shop industry. One reason for this low threat level is that existing firms have a cost and performance advantage. They are well- established and have already learned how to continually lower costs and improve performance.

Furthermore, these well-established companies with large market shares have strong brand identities within the industry. A new entrant to the industry can expect retaliation from existing companies due to the strong competition for market share. The rivalry among existing companies will be discussed in more depth later. Although, somewhat difficult, it is still possible for new entrants to thrive in this market. For example, licenses, insurance, or other qualifications that may be required are not hard to obtain In addition, since customers incur minimal switching costs when switching suppliers, they are able to buy from multiple stores.

4. Threat from Substitutes

As shown in the chart above, there is a very high threat from substitutes in the coffee and snack shop industry. Many coffee drinkers consider tea, hot chocolate, and energy drinks to be reasonable substitutes for coffee. In addition to these coffee substitutes, customers can choose to brew their own coffee rather than buy it from a shop. Since these substitutes do the same job as store-bought coffee, customers will not incur costs in switching products.

5. Rivalry among Existing Players

As the chart above demonstrates, there is a high rivalry among existing players in the coffee and snack shop industry. One reason for this is that the industry is no longer growing at a rapid pace; it is considered to be in a mature market. Since there are not any significant product differences among competitor’s customers do not incur high costs if they switch from one player to another. This is, in part, due to the fact that the products are not highly complex, nor do they require significant customer-producer interaction. Brand identity within the industry is also a huge factor for the rivalry, as two major brands have captured the majority of the market. It is important to note, however, that the industry does not have over capacity at the moment.

The strategic implication for Dunkin' Donuts is they need use some SWOT analysis to find some more profit space.

Q.2 In what ways is Dunkin' Donuts presently using strategic alliances, and how could cooperative strategies further assist with its master plan for growth?

Answer: Dunkin' Donuts often partners with a select group of retailers-such as Stop & Shop and Wal-Mart. This activity has found another new market in those people who need to have a rest in shopping.The cooperative strategies is very useful in fierce market, it can low the cost of open new coffee store and acquire more profit.

From the beginnings as a single restaurant in Quincy, Massachusetts, Dunkin‘Donuts is now a

global brand with more than 10,000 locations in 32 countries. The growth is testimony to the

fact that people everywhere appreciate what Dunkin‘Donuts offers: high quality food and

beverages served all day in a friendly, fast environment at a great value. In the United States,

Dunkin‘ Donuts has maintained steady, strategic and disciplined growth, opening new

restaurants in our core markets in the Northeast and in cities all throughout MidAtlantic,

Southern and Midwestern states. We now have more than 7,000 restaurants in 36states and

the District of Columbia. From Boston to Buffalo, New York to New Orleans, Philadelphia to

Florida, Chicago to Charlotte, Dunkin‘Donuts is an important part of daily life for millions of

Americans.

And while Dunkin‘Donuts has nationwide brand recognition, we believe we have significant

opportunity to expand our number of restaurants in the United States as well as around the

world. We believe we can double our footprint in the U.S. to 15,000 Dunkin‘Donuts restaurants

over the next 20 years. And it‘s not just America running on Dunkin‘– Dunkin‘Donuts has a

strong presence internationally, with more than 3,000 Dunkin' Donuts locations in 31

international countries across four continents. The company maintains steady global expansion,

opening new restaurants in Europe, Asia, the Middle East, and Latin and South America. Asia-

Pacific is a particularly exciting area for growth.

Dunkin‘Donuts has already opened more than 88 locations in Greater China since launching

there in 2007, and has nearly 900 shops in South Korea. In 2010, the brand re-entered Russia

with new restaurants in Moscow, and in 2011 we announced plans to open 500 Dunkin‘Donuts

restaurants in India. In 2012, the first Dunkin‘Donuts restaurants were opened in India and

Guatemala.

Q.3 Which of the globalization strategies Will work best in Dunking’ Donuts’s global expansion and why?

Answer:-

International/Global environment- The brand Dunkin Donuts does not have the chain in America only, but also managed to curve out international niches. It is not only expected markets such as Canada and Brazil but also in some unexpected areas like Qatar, South Korea, Pakistan, Philippines.

This has various implications for Dunkin Donuts. For instance: diversifying risk, entry into newer markets, larger customer base and so on.

Socio-Culture - Due to the change in people living style, Dunkin tried to help people find their product in the reach of the customer. Dunkin Donuts also caters to the change in demographic characters through their new range of products.

Therefore socio-cultural norms and consumer tastes affect it’s the products made by Dunkin’ donuts.

Expanding Outlets- It is a goal of DD to be as outreaching as possible to its customers. Therefore it does so by expanding its number of outlets throughout America and beyond its borders as well.

Dunkin’ Donuts has its densest cluster in the Northeastern region of the country and is now having a growing presence in the rest of the country. Moreover it is also creating a brand image in other countries though opening outlets there. Example countries are Canada, Brazil, Qatar, South Korea, Pakistan and the Philippines.

As a part of its strategy the company plans to expand aggressively. It has a goal of expanding to 15000 outlets by the year 2020. This goal is further achievable as the company has a franchise system – this makes the acquisition of capital and operator smoother. It is noteworthy however that the company wants to limit its expansion to not being too omnipresent.

It is also partnering with large supermarkets to achieve widespread market prominence. This is done to create a store-within a store concept. The supermarket has to be large enough to allow DD full expression of its brand. This is important for enhancing overall performance of the strategic allies.

Expanding Products- Dunkin’ Donuts also sees an opportunity of grabbing a new base of customers. The company recognizes the new generation and is trying to come up with products that appeal to their taste. As a result of such, the company has expanded its range of products to several types of hot and cold beverages, baked goods and confectionery items other than donuts and the new breakfast to go menu. Along with that, Dunkin Donut maintains its simple

and straight-forward morning snacks. This gives it a competitive edge of distinction against its competitors.

This may enable Dunkin’ Donuts to persist in the competitive industry with newer dimensions.

Q.4 FURTHER RESEARCH – Gather on industry trends, as well as current developments with Dunkin’ Donuts and its competitors. Use this information to build an up-to-date SWOT analysis for Dunking’ Donuts. If you were the CEO of the firm, what would you consider to be the strategic management implications of this analysis and why?

Answer:-Competitors:

Dunkin Donuts mainly competes with high end coffee providers like Starbucks. Starbucks is a major competitor of Dunkin’ Donuts which creates competition in the area of upscale coffee. However DD can still compete in the coffee industry with its simple drip coffees – regular and decaf.

Also, having its focus on donuts and other baked goods it also competes with the likes of Krispy Kreme.

Dunkin' Donuts, McDonald's, Starbucks and other fast-food chains have been expanding their menus to attract customers who are spending cautiously in a weak economy. As a result, most chains are selling coffee drinks, blended beverages like smoothies and frappes, as well as a variety of sandwiches and other food.

DUNKIN' DONUTS GROWS IN U.S.

Canton, Massachusetts-based Dunkin' Brands, which also owns Baskin-Robbins ice cream, raised its 2012 profit forecast to $1.25 to $1.27 per share, from $1.22 to $1.25 previously. The new forecast is on track with analysts' current estimates.

It expects sales growth at established U.S. Dunkin' Donuts restaurants to be at the low end of its 4-5 percent target range for the full year.

SWOT analysis for Dunking’ Donuts

Strength

1. Strong Brand name, recognized world over2. Brand loyalty amongst customers3. Over 1000 varieties of doughnuts4. Popular for a number of bakery products like pastries, bagels, muffins, biscuits, etc. and hot beverages like coffee, tea

5. Ideal place for having breakfast and coffee

6. Innovative ways to retain customers by issuing coupons and discounts

7. Worlwide chain of franchisees totaling to 10,000 locations across 32 countries

8. one of the most experienced in the industry

9. Association with major sports teams

10. Effective marketing and advertising strategies

Weakness

1. Competition from other international snacking joints means limited market share growth2.Constant rift with the franchisee owners and numerous instances of suing them3. Still hast penetrated into the emerging economies which can be a huge segment

Opportunity

1. Increase its presence in newer countries and regions of the world2.To introduce low calorie snacks3.Increase in disposable income of people in developing countries

4. Increase its reach through effective online marketing

Threats

1. People moving to healthier ways of eating2.Competition even from local cafes and bakeries3.Increase in the cost of raw materials

4. Difficult to change the snacking habits of people in certain countries like India and China

Competitors

1. Krispy Kreme2.Mc Donalds3.Starbucks4. Mad over Donuts

Three critical hurdles or challenges that management faces in any repositioning program

1. Design: What type of restructuring is appropriate for dealing with the specific challenge, problem, or opportunity that the company faces?

2. Execution: How should the restructuring process be managed and the many barriers to restructuring overcome so that as much value is created as possible?

3. Marketing: How should the restructuring be explained and portrayed to investors so that value created inside the company is fully credited to its stock price?