Krispy Kreme: The Franchisor That Went Stale SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Krispy Kreme: The Franchisor That Went Stale
The case depicts Krispy Kreme's franchise system growth and decline as a lesson to entrepreneurs running a company as a franchisor. Burton D. Cohen, retired senior vice president and chief franchise officer for McDonald's Corporation from 1980 to 1999, explains the strengths and weaknesses in Krispy Kreme's franchising strategy during the period from 1997 to 2006. Areas examined in the case include: franchisee agreements, accounting practices, volatility in stock valuation, franchise system growth, franchise ownership structure, product distribution strategy, and commissary growth. The case depicts how Krispy Kreme started and how it ended up in a low point.
Authors :: Burton D. Cohen, Julie Bennett, Johnny Bubb
Swot Analysis of "Krispy Kreme: The Franchisor That Went Stale" written by Burton D. Cohen, Julie Bennett, Johnny Bubb includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Krispy Franchise facing as an external strategic factors. Some of the topics covered in Krispy Kreme: The Franchisor That Went Stale case study are - Strategic Management Strategies, Entrepreneurship, Operations management, Strategy and Organizational Development.
Some of the macro environment factors that can be used to understand the Krispy Kreme: The Franchisor That Went Stale casestudy better are - – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, geopolitical disruptions, cloud computing is disrupting traditional business models,
there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Krispy Kreme: The Franchisor That Went Stale
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Krispy Kreme: The Franchisor That Went Stale case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Krispy Franchise, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Krispy Franchise operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Krispy Kreme: The Franchisor That Went Stale can be done for the following purposes –
1. Strategic planning using facts provided in Krispy Kreme: The Franchisor That Went Stale case study
2. Improving business portfolio management of Krispy Franchise
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Krispy Franchise
Strengths Krispy Kreme: The Franchisor That Went Stale | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Krispy Franchise in Krispy Kreme: The Franchisor That Went Stale Harvard Business Review case study are -
Strong track record of project management
– Krispy Franchise is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Krispy Franchise has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Krispy Franchise has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Organizational Development industry
– Krispy Kreme: The Franchisor That Went Stale firm has clearly differentiated products in the market place. This has enabled Krispy Franchise to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Krispy Franchise to invest into research and development (R&D) and innovation.
Innovation driven organization
– Krispy Franchise is one of the most innovative firm in sector. Manager in Krispy Kreme: The Franchisor That Went Stale Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Krispy Franchise is present in almost all the verticals within the industry. This has provided firm in Krispy Kreme: The Franchisor That Went Stale case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Krispy Franchise has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Krispy Kreme: The Franchisor That Went Stale - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Krispy Franchise are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Krispy Franchise is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Burton D. Cohen, Julie Bennett, Johnny Bubb can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Krispy Franchise in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Krispy Franchise has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Krispy Kreme: The Franchisor That Went Stale HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Krispy Franchise has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Training and development
– Krispy Franchise has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Krispy Kreme: The Franchisor That Went Stale Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Krispy Kreme: The Franchisor That Went Stale | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Krispy Kreme: The Franchisor That Went Stale are -
Interest costs
– Compare to the competition, Krispy Franchise has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
No frontier risks strategy
– After analyzing the HBR case study Krispy Kreme: The Franchisor That Went Stale, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to strategic competitive environment developments
– As Krispy Kreme: The Franchisor That Went Stale HBR case study mentions - Krispy Franchise takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Krispy Franchise has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Krispy Franchise even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Workers concerns about automation
– As automation is fast increasing in the segment, Krispy Franchise needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Krispy Franchise supply chain. Even after few cautionary changes mentioned in the HBR case study - Krispy Kreme: The Franchisor That Went Stale, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Krispy Franchise vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Krispy Franchise is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Krispy Kreme: The Franchisor That Went Stale can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Krispy Kreme: The Franchisor That Went Stale HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Krispy Franchise has relatively successful track record of launching new products.
Lack of clear differentiation of Krispy Franchise products
– To increase the profitability and margins on the products, Krispy Franchise needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Krispy Franchise is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Krispy Franchise needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Krispy Franchise to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Krispy Franchise has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Krispy Kreme: The Franchisor That Went Stale should strive to include more intangible value offerings along with its core products and services.
Opportunities Krispy Kreme: The Franchisor That Went Stale | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Krispy Kreme: The Franchisor That Went Stale are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Krispy Franchise can use these opportunities to build new business models that can help the communities that Krispy Franchise operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Using analytics as competitive advantage
– Krispy Franchise has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Krispy Kreme: The Franchisor That Went Stale - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Krispy Franchise to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Krispy Franchise can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Krispy Kreme: The Franchisor That Went Stale, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Krispy Franchise can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Krispy Franchise can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Krispy Franchise can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Krispy Franchise is facing challenges because of the dominance of functional experts in the organization. Krispy Kreme: The Franchisor That Went Stale case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Krispy Franchise can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Krispy Franchise has opened avenues for new revenue streams for the organization in the industry. This can help Krispy Franchise to build a more holistic ecosystem as suggested in the Krispy Kreme: The Franchisor That Went Stale case study. Krispy Franchise can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Krispy Franchise can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Krispy Kreme: The Franchisor That Went Stale suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Building a culture of innovation
– managers at Krispy Franchise can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Loyalty marketing
– Krispy Franchise has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Krispy Franchise can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Krispy Franchise to increase its market reach. Krispy Franchise will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats Krispy Kreme: The Franchisor That Went Stale External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Krispy Kreme: The Franchisor That Went Stale are -
Increasing wage structure of Krispy Franchise
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Krispy Franchise.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Krispy Franchise business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Krispy Franchise can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Krispy Franchise demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Stagnating economy with rate increase
– Krispy Franchise can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Krispy Franchise can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Krispy Kreme: The Franchisor That Went Stale .
Regulatory challenges
– Krispy Franchise needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Krispy Franchise needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Krispy Franchise with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Krispy Franchise is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Krispy Franchise high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Krispy Kreme: The Franchisor That Went Stale Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Krispy Kreme: The Franchisor That Went Stale needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Krispy Kreme: The Franchisor That Went Stale is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Krispy Kreme: The Franchisor That Went Stale is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Krispy Kreme: The Franchisor That Went Stale is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Krispy Franchise needs to make to build a sustainable competitive advantage.