Smith Family Financial Planning Harvard Case Solution & Analysis


Krispy Kreme is an organization that despite its history dates back to 1937, has just commenced to experience rapidly increasing sales, expansion and customer vigilance in recent years. Recently, the company has gotten into financial and liquidity constraints and is struggling to survive. Here is an assessment of Krispy Kreme's past and current business performance, both internally and in connection to the external environment that is operating within. The study will conclude two perspectives and Krispy Kreme must implement recommendations predicated on these evaluations. The progenitor of Krispy Kreme is Vernon Randolph.

Current corporate philosophy aims to perpetuate making the Kreme crisp the centerpiece of the company and to grow the international business. It is vigorously believed that Krispy Kreme has a unique product, a donut heated with a distinctive saccharine flavor.

Krispy Kreme was pristinely a sodality, but is now a corporation. As a corporation, Krispy Kreme has constrained liability, the ability to obtain financing for expansion, and a perpetual life. It withal has the, captivating to potential employees, facilely mutable property and the ability to obtain financing from sundry external source management. Autocratic leadership style is utilized. Two thirds of Krispy Kreme stores are franchised. Franchises pay up to a cost of $ 40,000 per store open and pay royalties.

 Krispy Kreme has differentiated themselves with stores, firms have a green roof and glass windows open, sanctioning customers to visually perceive donuts being made. The distribution of shopping facilities sanctions a unique customer experience, differentiating Krispy Kreme competitors such as Dunkin 'Donuts, Tim Horton and Winchell's Donut House. The product line consists of more than twenty different varieties of donuts.

An astronomically immense push to sell the coffee was hoping to keep potential customers go to Dunkin 'Donuts. In 2001, Krispy Kreme bought Digital Java, Inc., in an effort to compete with the sales of other retailer’s donut drinks. Krispy Kreme incremented their sale by 40%, as it was able to expand its product offering and quality. Sales of coffee and drinks Krispy Kreme became more remunerative lucrative, but did not engender as many sales as competition made in the area of ​​beverages. Although Krispy Kreme has commenced selling coffee, its main goal has always been in selling donuts. Nothing was done to promote coffee and other drinks, it was expected that customers buy when they optically discerned that they were available and they tell their friends about incipient products.

One of the downfalls of Krispy Kreme in recent years is its inability to differentiate the product line of Dunkin 'Donuts and other competitors. Donuts sold to wholesalers were no longer sultry out of the oven and we're no different than any other donut. Furthermore, Krispy Kreme's failure to disunite itself from what competitors are selling caused consumers to lose interest in the products of the company itself. Krispy Kreme's competitors like Dunkin 'Donuts and Starbucks have been prosperous because they are able to offer not just a product, but a number of things that appeal to incipient and old customers still bring a steady profit. After the consumers had the experience of "Sultry donut", they left them with nothing to return to.


Q-1: Analysts are predicting that Krispy Kreme will be able to perform highly effectively and continue to grow rapidly in the coming two years. Do you agree with their analysis?

The analysis that is performed by the analyst who predicted Krispy Kreme will perform in an efficient manner and will expand its business operation in the coming year is justifiable as it can be determined by reviewing the forecasted financial statements of the Krispy Kreme which consists of a balance sheet and income statement.Smith Family Financial Planning Case Solution

The fore casted balance sheet determines that the organization will include 62 newly stores in their portfolio in the year 20003, however, the acquisition of the stores is mainly done through the franchising of the stores. During the period of 2003-2006, the area developers are allowed to open around 200 stores in the region. The organization has spent almost $37 million to construct and equip the factory stores which are owned by the company itself and to plan the re-modification of the company stores and to maintain and develop the equipment manufacturing facility.

On the other hand, it is estimated that around $20,000 to $40,000 will be received by the Krispy cream on behalf of opening each new store through area developer agreement and under developer agreement, the contribution that will be made by each store will consists of 4.5% paid in the form of royalty fees on all sales, and 1% contribution made towards the company advertising. .....................

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