Case Name: Krispy Kreme Date: 04 September 2018
Krispy Kreme was one of the fastest growing company when in the late 90’s, they
expanded more to Southeast of United States of America. The company whose main products is
doughnuts went public in the year,2000 and got good response with huge rise in share market.
The rising growth of the company fell down in the 2004 and they are still recovering from that.
State the Problem: Deficiency of investment
Issue#1:
As Krispy Kreme Inc suffered loss in 2005 to 2008, one of the main issues were the lack of
investor’s confidence.
Issue #2:
The loss in the company also resulted a rapid drop in market value of equity.
Analysis
Internal:
With further study of the case, it had been indicated that there were series of accounting
missteps and faults within the corporate governance structure which resulted in poor decision
making.
External:
WPC 480-Strategic Management
Krispy Kreme Inc decided to grow more by expanding all over United State of America. But as it
turned out, the company did not plan the rapid expansion effectively which resulted the
company to experience its first unprofitable quarter in May 2004 as a Public company.
Co
mpetitive:
Over the years, Krispy Kreme has been a hot brand for doughnuts and specially for its Glazed
Doughnuts. But, with the change of American dietary trends with more healthier options
offered by competing companies like Dunkin Donuts, Krispy Kreme has lost customers
Conclusions
Conclusion #1:
Issues with financial management system resulted to suspicious and bad financial reports and also
caused investors to revise their expectation about future growth of the company.
Conclusion #2:
In 2004, investors were anxious to invest their money as a result of the rapid market share fall. At
similar time, decision of expanding the company landed it on the edge of bankruptcy.
Conclusion #3:
While Krispy Kreme was already impacted with strategic and managerial decisions made by
company leaders, the competing company Dunking Donuts made strategic move to provide
customers with much healthier choice than 200 calories glazed doughnut.
Recommendations
Recommendation #1:
As I finished studying the case, I strongly recommend closing the Krispy Kreme locations that has
not been profitable at all and focus more in the locations that are in good shape and well-received
by their locals. With necessary marketing research and data evidence company can close or expand
their company profitably.
Recommendation #2:
My second recommendation is to change the Financial management team and make an inquiry
about accounting errors that took the company on the edge of bankruptcy. This will help the
management to not make the same mistakes again and follow the FASB issued principle for future
financial reporting.
Recommendation #3:
To gain the lost customers again, Krispy Kreme needs to change their marketing strategies at first by
gathering appropriate data for customers desires. As some of the competing companies are offering
more healthier option, Krispy Kreme should include more options in their menu for customers to go
along with the new American dietary trend.
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