Case Study Description of Dunkin' Donuts (C): Growth Strategy
Dunkin' Donuts franchises and operates retail donut shops for take-home and in-shop consumption. Looks at three growth alternatives: 1) More shops (owned or franchised); 2) A broader product line; and 3) More advertising. Raises important issues related to franchise relations. A merger of Dunkin' Donuts (A) and (B).
Swot Analysis of "Dunkin' Donuts (C): Growth Strategy" written by Hirotaka Takeuchi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dunkin Donuts facing as an external strategic factors. Some of the topics covered in Dunkin' Donuts (C): Growth Strategy case study are - Strategic Management Strategies, Marketing, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Dunkin' Donuts (C): Growth Strategy casestudy better are - – increasing transportation and logistics costs, there is backlash against globalization, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, increasing commodity prices, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China,
technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Dunkin' Donuts (C): Growth Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dunkin' Donuts (C): Growth Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dunkin Donuts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dunkin Donuts 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 Dunkin' Donuts (C): Growth Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Dunkin' Donuts (C): Growth Strategy case study
2. Improving business portfolio management of Dunkin Donuts
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dunkin Donuts
Strengths Dunkin' Donuts (C): Growth Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dunkin Donuts in Dunkin' Donuts (C): Growth Strategy Harvard Business Review case study are -
High switching costs
– The high switching costs that Dunkin Donuts 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.
Operational resilience
– The operational resilience strategy in the Dunkin' Donuts (C): Growth Strategy Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the Dunkin Donuts 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.
Effective Research and Development (R&D)
– Dunkin Donuts 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 Dunkin' Donuts (C): Growth Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Sales & Marketing field
– Dunkin Donuts is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Dunkin Donuts in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Dunkin Donuts digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dunkin Donuts has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Training and development
– Dunkin Donuts has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Dunkin' Donuts (C): Growth Strategy 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.
High brand equity
– Dunkin Donuts has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dunkin Donuts to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Dunkin Donuts is present in almost all the verticals within the industry. This has provided firm in Dunkin' Donuts (C): Growth Strategy 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.
Successful track record of launching new products
– Dunkin Donuts has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dunkin Donuts 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.
Highly skilled collaborators
– Dunkin Donuts 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 Dunkin' Donuts (C): Growth Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Dunkin Donuts is one of the leading recruiters in the industry. Managers in the Dunkin' Donuts (C): Growth Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Dunkin' Donuts (C): Growth Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dunkin' Donuts (C): Growth Strategy are -
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 Dunkin Donuts supply chain. Even after few cautionary changes mentioned in the HBR case study - Dunkin' Donuts (C): Growth Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dunkin Donuts vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Dunkin Donuts has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Dunkin' Donuts (C): Growth Strategy, it seems that the employees of Dunkin Donuts don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Low market penetration in new markets
– Outside its home market of Dunkin Donuts, firm in the HBR case study Dunkin' Donuts (C): Growth Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dunkin Donuts is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Dunkin' Donuts (C): Growth Strategy 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 operating costs
– Compare to the competitors, firm in the HBR case study Dunkin' Donuts (C): Growth Strategy has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Dunkin Donuts 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Dunkin' Donuts (C): Growth Strategy 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 Dunkin Donuts has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Dunkin Donuts 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. Dunkin Donuts 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Hirotaka Takeuchi suggests that, Dunkin Donuts is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Aligning sales with marketing
– It come across in the case study Dunkin' Donuts (C): Growth Strategy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Dunkin' Donuts (C): Growth Strategy can leverage the sales team experience to cultivate customer relationships as Dunkin Donuts is planning to shift buying processes online.
Interest costs
– Compare to the competition, Dunkin Donuts 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.
Opportunities Dunkin' Donuts (C): Growth Strategy | 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 Dunkin' Donuts (C): Growth Strategy are -
Leveraging digital technologies
– Dunkin Donuts can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Dunkin Donuts to increase its market reach. Dunkin Donuts 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.
Creating value in data economy
– The success of analytics program of Dunkin Donuts has opened avenues for new revenue streams for the organization in the industry. This can help Dunkin Donuts to build a more holistic ecosystem as suggested in the Dunkin' Donuts (C): Growth Strategy case study. Dunkin Donuts can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dunkin Donuts can use these opportunities to build new business models that can help the communities that Dunkin Donuts operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Developing new processes and practices
– Dunkin Donuts can develop new processes and procedures in Sales & Marketing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dunkin Donuts 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dunkin Donuts to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Dunkin Donuts to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Dunkin Donuts to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Dunkin Donuts can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dunkin Donuts 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. Dunkin Donuts 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Dunkin Donuts to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Using analytics as competitive advantage
– Dunkin Donuts 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 Dunkin' Donuts (C): Growth Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dunkin Donuts 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, Dunkin Donuts 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, Dunkin' Donuts (C): Growth Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Dunkin' Donuts (C): Growth Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dunkin' Donuts (C): Growth Strategy are -
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Dunkin Donuts 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 Dunkin Donuts 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.
Increasing wage structure of Dunkin Donuts
– 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 Dunkin Donuts.
Shortening product life cycle
– it is one of the major threat that Dunkin Donuts is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dunkin' Donuts (C): Growth Strategy, Dunkin Donuts may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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 Dunkin Donuts business can come under increasing regulations regarding data privacy, data security, 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dunkin Donuts with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dunkin Donuts in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– Dunkin Donuts 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 Sales & Marketing industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Dunkin Donuts.
Stagnating economy with rate increase
– Dunkin Donuts 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.
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.
Weighted SWOT Analysis of Dunkin' Donuts (C): Growth Strategy 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 Dunkin' Donuts (C): Growth Strategy 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 Dunkin' Donuts (C): Growth Strategy 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 Dunkin' Donuts (C): Growth Strategy 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 Dunkin' Donuts (C): Growth Strategy 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 Dunkin Donuts needs to make to build a sustainable competitive advantage.
