Analysis of Dunkin Brands - Essay Example

Business February 28, Answers to Exam Questions Company mission: “Make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores.” The statement is complete as it tells what the company is all about, what it intends to do and distinguishes the company from other stores. It also translates the company philosophy and values when it said courteous and considers waiting time of customers. 2. Outside stakeholders groups. Describe the actual or hypothetical claims of 2 groups and how the company could reconcile the claims with corporate strategy. Claim of Consumer Reported Eating Trends (CREST) that Quick Service Restaurant (QSR) visits of customer has been flat and there is no assurance of sustained growth and the hypothetical claim that QSR is a thing of the past. Company reconciles these claims with its financial records that shows more growth through QSR.(Dunkin 2012 Annual Report p. 6) 3. Corporate social responsibility. Identify the long term mission and describe how they leverage core capabilities to achieve the mission Long term mission of Dunkin Brand is to focus on long term sustainability. They have leveraged their expertise on research and development to come up with ideas that could help their stakeholders. To help their franchisees save on energy and water, save on costs for simple repairs, and engage in energy efficiency, Dunkin came up with a toolkit that solves this problem. It is also developing resources for a sustainable packaging solutions, and working on reusable cups and spoon.Dunkin is completing its research of sourcing of sourcing cage-free eggs and gestation crate-free pork by 2013. It also gives financial support to the local community through its various programs.(Riley, Christine.2013) 4. External environment a. Rank the remote environment factors in order of importance. According to its importance, these are: 1. Economic factors 2. Social Factors 3. Political factors 4. Technological factors 5. Ecological factors b. Describe your basis for this ranking Remote environment factors are issues which business have little or no control at all. For this reason, I consider economic factors as number one because it deals a lot on the economy of the company which it operates. i. e. the tendency of people to spend, availability of credit, level of disposable income, and trends of growth which could not be controlled by the organization. I ranked Social factors as second because understanding lifestyles of people, values, beliefs and opinions are significant in business decisions but business can go along with it. Political factors is ranked third, because following government regulations can be worked out; technological factors as fourth because it can be accepted as innovations and designs could be improved and last is ecological factors. This is the relations of the company to other living things such as air, soil and water which could be corrected through its CSR relations c. Identify your number one competitive force shaping strategy and defend your choice. The number one competitive force shaping strategy of Dunkin is product adaptation and availability. Instead of developing new product, it focuses on growing the market for the current product and making sure it is available thru more franchise stores. d. Identify their US market and market position The number one competitor of Dunkin is Starbucks. As of 2012, Starbucks has 11,231 stores in US. while Dunkin has only 6,772. MacDonald’s has more stores but it is not concentrated on selling coffee (Misonzhink, Elaine , 2011) E. Describe the strategy of existing rivals to gain Market share in the US. Strategies of existing rivals to gain market share in the U.S are market growth, product developments, and turnarounds.(Wendel Clark n.d.) For example, Starbucks develops the market and bring in a turnaround by introducing a different ambience of coffee place, a hangout for tired workers instead of the usual QSR model of coffee shops. It has also invested in product development to serve different tastes of coffee to give them a competitive advantage. (Hennessy, Rachel. 2012) f. Critique these competitive strategies to gain market entry. Strategies to gain market entry are technical innovation, product adaptation, availability and security strategy, low price and total adaptation and conformity. (FAO Corporate Documentary Repository.) By technical innovation, company believes it has a superior product that can beat competition; by product adaptation – when it has made modifications to existing products; Availability and security strategy means company is ready to overcome risks in transporting the goods to customers where others will not; low price strategy is when company offers lower pricing; and total adaptation when company becomes a copy cat of a product 5. Internal a. SWOT Analysis of Dunkin Brands Strengths – Known brand worldwide Customers have developed brand loyalty to the product Best place for breakfast and coffee Has a worldwide chain of franchisees Serves varieties of doughnuts Weaknesses Competition reduces market share Problems with franchisees result to court cases Lacks penetration on emerging markets Opportunity Online marketing opens new segment Introduction of low calorie snacks Increase its presence in other developing countries Increase of disposable income in developing countries Threat Competition from local bakeries and coffee shops Increase in cost of raw materials Lifestyle change of consumers to healthier foods Eating habits of people are hard to change Stiff competitions from giants in the industry b. What key competitive factors do you identify in the value chain analysis. Competitive factors that I consider most important in the value chain analysis are the marketing , sales and service. Marketing and sales involve activities that inform customers about the product, encourage them to buy, and facilitating the purchase. Service is equally important since it assures that the product is delivered effectively to the buyer after it is sold.(IFM Management Technology Policy) c. Describe the competitive value of their core competency. Core competency of Starbucks that allow them to deliver value to its customers, are innovation and quality. They innovated the taste in coffee drinking, and the quality of serving in modernized and relaxing atmosphere. d. Critique the competitive value of their tangible assets. – A company uses assets and resources in the conduct of its business, and they must understand which among its assets influences competitive advantage. In case of Dunkin Brands it utilized financial resources to establish markets and franchises abroad. e. Critique the competitive value of their intangible assets. Intangible assets are those things that cannot be seen but contributes value. Examples are methodologies, trade name, methodologies, and royalties. Brand name is one of the intangible assets that contributed most to the growth of company. Consumers have developed brand loyalty to the product. f. Critique the value of their organizational capabilities Management of Dunkin hires International Managers in its operations. They harness IM’s skills and abilities to form processes and programs to guide successful operations. For instance, it has developed an Asset light platform for franchisees to build their network of stores and treat it as an economic unit. This strategy outperformed its rivals and has brought profitability to the company.(Fontevechia Agustino, 1/31/2013) g. Show an Annual 2012 vs. 2011 Revenue and Net profit comparison Shown below is the Annual Report of Dunkin comparing its revenues and net income for 2012 vs. 2011. It will be noted that revenues have increased in 2012 as well as its net income. Its net income rose by 3.18% in 2012 as compared to 2011. g. Show an annual 2012 vs. 2011 market share top 3 competitors. From the Ibis Report, we see that in 2011 Starbucks has a market share of 32.6% followed by Dunkin with 16.1%, and others 51.3%. Others are composed of combined small cafes. There is a lack of information as to 2012 market shares. Source: Ibis World. h. Identify their stages in the Life Cycle and describe why you believe this. A life cycle of a product has four stages, the introduction, the growth, the maturity, and decline. Starbucks and Dunkin are both in its maturity stage because it has been in the market for so many years, it is already known and accepted and they are starting to saturate locations. At this time, sales grow very fast then they begin to stabilize. Others (51.3%) are still in growth stages for their names and brands still lacks recall. i.. Identify the success factors in the industry and critique their current and future ability to achieve these. Success factors in the coffee industry are the product, customers, employees and marketing. To be successful in the coffee business is to be able to claim that you have the best coffee/product that beats competition. Customers also contribute to success because a product without customers is flop. So you need to know who and where are the customers so that you can bring the product closer to them. Employees are your frontline to customers so it is important that they are highly trained to meet customers. The last one is marketing wherein you need to let the people be aware of the coffee shop or the product. Promos, TV ads and posters help in the popularization of the product. The company’s expertise backed up by financial resources are assurances that they can achieve these. References Dunkin 2012 Annual Report p. 6, pdf FAO Corporate Documentary Repository.. Chapter 7. Market Entry Strategieshttp://www.fao.org/docrep/w5973e/w5973e0b.htm IFM Management Technology Policy. Decision Support Tools. http://www.ifm.eng.cam.ac.uk/research/dstools/value-chain-/ .Fontevechia Agustino, 1/31/2013 Dunkins Asset-Light Platform For Franchisee Entrepreneurs Pushes It Past Competitors. Forbes.http://www.forbes.com/sites/afontevecchia/2013/01/31/dunkins-asset-light-platform-for-franchisee-entrepreneurs-pushes-it-past-competitiors/ Ibis World. .Coffee and Snacks Shops in the U.S. February 2011. pdf Riley, Christine.Dunkin Brands publishes 2012 Corporate Social Responsibility Report: Focused on Sustainable Solutions. 2013. http://www.dunkindonuts.com/DDBlog/2013/06/dunkin_brands_publi.html#sthash.eNUXCb2v.YpCrfZD8.dpbs web.nchu.edu.tw/~mchu/Hu_web/Week_6.ppt Misonzhink, Elaine , 2011. Starbucks Recaptures its Position at the Head of the U.S. Coffee Market. National Real Estate Investor http://nreionline.com/retail/starbucks-recaptures-its-position-head-us-coffee-market Wendel Clark. Examples of Grand Strategies. http://smallbusiness.chron.com/examples-grand-strategies-businesses-14377.html Hennessy, Rachel. 2012. Three reasons why Starbucks still shines, despite market shortcomings. http://www.forbes.com/sites/rachelhennessey/2012/08/06/3-reasons-why-starbucks-still-shines-despite-market-shortcomings/ http//news:dunkinbrands.com/ImageLibrary/DownloadMedia.ashx?MediadetailsD-301 Read More