Krispy Kreme External Anaylsis

1230 Words Apr 17th, 2008 5 Pages
External Environment

The US economy is still recovering from a recession. Despite the poor economic conditions, Krispy Kreme managed to have a steady growth in revenues. Krispy Kreme however is in a low cost industry therefore the rise and fall in the market does not affect their revenues as significantly as higher priced luxury goods.

If and when Krispy Kreme decides to go global they will enter a whole new world of adaptation to different markets. They will no longer be able to offer their staple hot fresh plain glazed doughnuts and expect them to sell in every market. France for instance has built a world reputation on fresh baked goods; therefore their key branding technique would not be as
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There are few barriers to entry into the doughnut market.

Interfirm Rivalry/Threat of new entrants
The interfirm rivalry is mixed in the case of Krispy Kreme. Barriers to entry into the doughnut market are fairly small, since doughnuts are simple to manufacture and the raw materials are plentiful and inexpensive. On the other hand mass production of doughnuts requires more capital than most businesses are willing to put up. This leaves Krispy Kreme to compete in an industry that has several large competitors, and many “Mom and Pop” restaurants. The large competitors are companies such as: Daylight Doughnuts, LaMars, Cinnabon,
Dunkin Doughnuts, and, in Canada, Tim Hortons. Interfirm rivalry in these companies is high because doughnuts, historically, have been a slow growth industry. This leaves the only room for growth in expansion opportunities either in geographic areas or in expanding product lines.

Threat of Substitute products
Competition for America’s fast food dollars is a constant war. Therefore it is no surprise that substitute products, in one form or another come out every day. In this industry companies are not only competing against other doughnut and pastry shops, but also against every other quick service restaurant in their market. These companies are constantly attempting to siphon revenues away from other restaurants to sustain growth. Therefore companies in this industry

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