Strategy Planning

Strategy Planning

SWOT Matrix

STRENGTHS-S

1. KKD one-of-a-kind taste

2. Total Revenue grew in 2003 by 30% from 2002

3. Marginal increase in Operating Expenses from 2002 to 2003

4. Total Revenue grew in 2004 by 50% from 2002

5. Profit rose by 50% in 2004 from 2002

6. 338 stores operating in 41 states

7. KKD offers doughnuts at a discounted price for community events

8. Enticing doughnut making "theaters"

9. KKD store production capacity from 4000 dozen to more than 10,000

10. Diversified into Coffee roasting and brewing WEAKNESSES-W

1. KKD has very few stores compared to the competition

2. Very little or no international presence.

3. High calorie food

4. Assets dropped in 2004 from 2003

5. Total liabilities rose in 2004 from 2003

6. Legal and ethical problems in the Sr. Management

7. No name brand recognition for Digital Java coffee market.

OPPORTUNITIES-0

1. International market is not being served

2. Raising demand for low calorie, healthy diet food options.

3. Families spending more money eating out.

4. Loyal customer base

5. KKD’s web site is not as user friendly as that of competition.

6. Less number of stores domestically compared to competition.

7. Not much known in Coffee roasting and brewing market segment SO STRATEGIES

1. Reach out to loyal customer base and increase choices (S1, O4)

2. Expand e-commerce division (S3, O5)

3. Expand domestically. Find strategic locations (S6, O6)

4. Think forward integration; with Walmart, Target etc. (S8, O3)

5. Promote coffee brewing market (S10, O7) WO STRATEGIES

1. Introduce healthy “low-calorie” doughnuts with the same taste (W1, O2)

2. Partner with international chain (W2, O1)

3. Enhance the Coffee market segment (W7, O7)

THREATS-T

1. Fast food institutions are major contributors to obesity.

2. Recovering from bankruptcy.

3. Loosing customer base to dine in restaurants. ST STRATEGIES

1. Advertise variety, brand recognition, and community awareness (S7, S8, T1, T3)

2. WT STRATEGIES

1. Expand international presence through partnership

2. Diversification (W3, T3)

SPACE Matrix

INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

Financial Strength (FS) Score Environmental Stability (ES) Score

Total Revenue grew in 2003 by 30% from 2002 3 KKD e-commerce segment -3

Marginal increase in Operating Expenses from 2002 to 2003 3 Coffee roasting and brewing market -2

Total Revenue grew in 2004 by 50% from 2002 4 Highly competitive market (KKD, DD, Starbucks) -3

Profit rose by 50% in 2004 from 2002 4 Corporate ethics -2

Sales grew 11% in 2004 Vs DD 6% 4

Share price quadrupled to more than $40 between 2000 and 2004. 4

Average 3.6 Average 2.5

Competitive Advantage (CA) Score Industry Strength (IS) Score

13.1% of U.S doughnut market, up from 4.8 in 1999 -4 Potential domestic market expansion, West and South West 4

Excellent name brand recognition and customer loyalty -4 Big profit potential 3