Dunkin Donuts : Growth Strategy
Executive Summary
Definition: - Which would be the best option for Dunkin Donuts: Growth Strategy.
X To consider opening of primarily franchisee developed or company owned stores.
X To expand the existing product line.
X To extend ¡§Network TV¡¨ program.
Recommendations:-Out of these three areas of opportunity that could prove vital in stimulating the Dunkin Donuts growth strategy, I would like to prefer option 1 i.e. opening of ¡§Franchisee-developed Stores¡¨ over company owned stores.
Rationale: - My above recommendation is strongly supported by following key points:
X The company has already proved their niche in Franchising business as is evident by the performances of the Franchise Division between Fiscal Years 1974 and1978 while the contribution of company owned stores is nominal during these years.
X Average annual sales per shop increased from $195,000 to $268,700 between 1974 and 1978 due to successful consolidation strategy.
X The company objective was to increase new shop openings to 90 in 1979 and 150 by 1982 since opening of franchised shops declined drastically during the consolidation strategy between1970 and1973.
X Franchisee-developed stores is a relatively risk-free means of expanding market coverage as in this case franchisee owner themselves cater the need of capital and budgeting requirement.
X They are highly motivated owners and would actively participate in day-to-day operations as they are developing their own real estate.
X There is a high possibility of upgrading store operations by franchisee owners that would attract more customers in their regions without a financial burden on the company.
X Franchised and Franchisee-developed stores have more weight-age over company owned stores in terms of company¡¦s balance sheet A good balance sheet is definitely more appealing to potential investors.
X According to Dunkin Donuts¡¦s recent investment report, the company-owned stores didn¡¦t meet the management¡¦s
Definition: - Which would be the best option for Dunkin Donuts: Growth Strategy.
X To consider opening of primarily franchisee developed or company owned stores.
X To expand the existing product line.
X To extend ¡§Network TV¡¨ program.
Recommendations:-Out of these three areas of opportunity that could prove vital in stimulating the Dunkin Donuts growth strategy, I would like to prefer option 1 i.e. opening of ¡§Franchisee-developed Stores¡¨ over company owned stores.
Rationale: - My above recommendation is strongly supported by following key points:
X The company has already proved their niche in Franchising business as is evident by the performances of the Franchise Division between Fiscal Years 1974 and1978 while the contribution of company owned stores is nominal during these years.
X Average annual sales per shop increased from $195,000 to $268,700 between 1974 and 1978 due to successful consolidation strategy.
X The company objective was to increase new shop openings to 90 in 1979 and 150 by 1982 since opening of franchised shops declined drastically during the consolidation strategy between1970 and1973.
X Franchisee-developed stores is a relatively risk-free means of expanding market coverage as in this case franchisee owner themselves cater the need of capital and budgeting requirement.
X They are highly motivated owners and would actively participate in day-to-day operations as they are developing their own real estate.
X There is a high possibility of upgrading store operations by franchisee owners that would attract more customers in their regions without a financial burden on the company.
X Franchised and Franchisee-developed stores have more weight-age over company owned stores in terms of company¡¦s balance sheet A good balance sheet is definitely more appealing to potential investors.
X According to Dunkin Donuts¡¦s recent investment report, the company-owned stores didn¡¦t meet the management¡¦s