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Introduction
Krispy Kreme was found in 1937 by Vernon Rudolph. Over the years Krispy Kreme has encountered many problems internally and externally. In this report, we will discuss these issues and analyze each of them.
These are the issues that we think has jeopardized Krispy Kreme’s position in the market:
Rapid expansion
Neglecting franchisees
Misleading financial statements
Change in market demand
The Analysis & Critiques
Rapid Expansion
Many businesses often forget that expansion and growth are not always the answer for becoming more profitable companies. For example in this case, Krispy Kreme has tried to growth itself from 144 to 500 stores within 5 years (Bruner p.84). This goal is feasible if the management focuses itself on the expansion; however, based on the critique by Glenn M. Guard from Legg Mason, Krispy Kreme’s management has focused itself on how to make its stock price more attractive to the shareholders.
We believe this is due to un-clear communication and un-focus management. Krispy Kreme set two goals: to increase stock price and to expand; however, the expansion aspect of the goals are not well managed and implemented. There isn’t sufficient market research done on the new locations that Krispy Kreme is opening up. In fact, the managers are too busy “modifying” their financial statements so that the stock price is appealing to their shareholders. The impact of this “un-organized” expansion has caused Krispy Kreme to open new stores in poor locations with improper training for the franchisees, which later forced Krispy Kreme to buy back these stores due to underperformance.
Neglecting Franchisees
We believed that Krispy Kreme is being too greedy ...