Krispy Kreme Doughnuts in 2006: Is a Turnaround Possible?

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Krispy Kreme Doughnuts in 2006: Is a Turnaround Possible? The purpose of this paper is to analyze strategically about a case of the company, its strategies and issues. Also, another purpose is to examine the company both direct environment analysis and internal analysis ie financial, marketing and product strategies. Finally, it will provide recommendations and conclusion for firm to reach ultimate goal which is increase constant profit. An Overview - Company Situation and strategy Krispy Kreme Doughnuts, Inc. (KKD) which began as a family-owned business back in 1937 has started from a wholesale business selling to local grocery stores, extended business to company-owned retail stores and franchising business. Since taking the company public in 2000, KKD had shined out on Wall Street, where its stock price and profit quickly rose. Revenue and earnings grew at 20-25 percent per year. The stock has tripled in price since its initial public offering of 3.45 million shares at $21 per share. Until mid of 2004, the company faced a lot of problems which included declining in sales, falling revenues, failing franchisees, closing stores, having problems with the U.S. Securities and Exchange Commission over false and misleading financial statement, and law suits. These leaded KKD to hold back the expansion plans that had been projected. In late 2005, the stock traded around $6 per share, down almost 90% from its all-time high of close to $50 per share. The new strategy had been executed which focused more on a specialty retail strategy than a wholesale bakery strategy, promoted sales at company’s own retail stores and used the ‘hot doughnut experience’ as marketing tactic with customers . An additional strategy is to expand the number of outlets nationally using both company owned stores and area franchisees. There are 3 different channels to earn revenues and

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