Krispy Kreme

1663 Words Jan 24th, 2012 7 Pages
Krispy Kreme Doughnuts, Inc. (KKD) is an exclusive brand that offers doughnuts, beverages, collectibles, and franchise opportunities. It started as a small bakery in Winston Salem, North Carolina on July 13, 1937; and has evolved into a publicly traded firm boasting 395 retail stores and over three million dollars in sales (second quarter 2010). This was not always the case however, by the end of 2004, the economy began to slow. This caused businesses in competition with Krispy Kreme to flood their market hindering plans that Krispy Kreme had of expansion. Eventually they would have to scale back due to declining sales. Consumer interest in low carbohydrate diets such as the “Atkins” and “South Beach” diet plans are somewhat to blamed for …show more content…
Porter’s Five Forces model looks into an industry and allows for deeper analysis of business strategy that is involved with each company. It strives to identify the justifying factors that are related to five forces that determine the competitive environment and overall attractiveness of an industry. In the case of KKD’s their competitive position is put against fast food industry. Potential entrants of this industry depend on what stage of the industry life cycle it is in at the time, however most of the time the threat of potential entrants is low. This is because the majority of the firms currently in the industry have developed economies of scale that provides them with a cost advantage over new entrants. KKD has cost advantages due to its supply chain and since they manufacture their own doughnut-making equipment and produce doughnut mixes their economies of scale is entirely internal thus making the doughnut making process very efficient. Their access to distribution sells directly to the customer by means of their stores with counters and drive-through windows. They also sell out of the stores in grocery and convenience stores. Their brand is known for their doughnut signs as well as doughnut-making theaters where customers can come watch the doughnut making process through glass windows.
The bargaining power of suppliers is low. This is because franchise stores and company stores

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