Don Don Case

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DON DON The Case of a Slovenian Gazelle

This case study was written by Maja Makovec Brenčič and Monika Lisjak, Faculty of Economics, University of Ljubljana, Slovenia, as a part of the Leonardo da Vinci project “Moving towards the case method”. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

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There was an atmosphere of tension before the management meeting at DON DON headquarters on 24 February 2005. The board members and regional sales managers were impatiently waiting to discover what was on the corporate agenda of Aleš Mozetič, the cofounder and chairman of the board of directors of the DON DON company. When Mozetič, a young, charismatic, and very ambitious manager, rushed into the room, the tension reached its peak. He briefly greeted the small group of highly committed managers and then energetically started his speech: Dear colleagues, we have been in the same boat for a long time. Most of you have known the DON DON company since its earliest stages of development, when my sister and I started the business. I still remember the excitement and the enthusiasm when we returned from visiting our relatives in Canada in 1993 and announced to our parents that we would enter the doughnut business . . . and the fervour while setting up machinery for baking doughnuts in the family garage. This was followed by a phase of intense work to open the first plant in Škofja Loka and set up the business process. It was a very intense period of time because Alenka and I performed most of the work ourselves. It took us time to realize that we needed professional help. This acknowledgement represented an important milestone in DON DON’s history because it paved the way for a new transition phase , the passage from an entrepreneurial to a management decision-making system. This phase was characterized by intense growth as we consolidated our position on the Slovenian market, set up new plants, and entered the Croatian market. In recognition of our achievements, we received the bronze gazelle award. None of this would have been possible without your contribution. Thank you, my dear colleagues. For a moment, Mozetič stopped. It was evident that the words he had said evoked many memories in his mind. The managers were also clearly touched by his speech. However, before they managed to recall the most significant events that characterized each phase of the company’s history, Mozetič continued his speech: Nonetheless, we cannot rest on past success. We must look ahead, and I feel that it is time to embark on new international challenges. There are enormous profit opportunities out there and we have the knowledge, capability, and dedication to exploit them. Internationalization is our new strategic imperative!

DON DON
The Don Don company is a family success story. The company’s beginnings date back to the 1990s, when Alenka and Aleš Mozetič visited their relatives in Canada and tried American doughnuts. This was a breakthrough experience because they immediately envisioned the commercial potential of American doughnuts on the Slovenian market. 2

Following their business intuition, in 1993 the two established a small specialized bakery in Bela Krajina, one of Slovenia’s least developed regions. In this first stage, their parents’ financial support was essential because they used the family vineyard as collateral for a loan to buy the first doughnut-baking machinery. The core products marketed under the initial corporate brand name DON DONATS were doughnuts and other fried pastries. Although initially the corporate brand name enjoyed considerable success because it elicited many positive associations connected with the wealthy American lifestyle, it later became a liability. In fact, customers associated the corporate brand name with unhealthy American eating habits. Hence, the two partners decided to shorten the corporate name...
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