Case Study 4: Dunkin’ Donuts: Betting Dollars on Donuts
Dunkin’ Donuts has a history of offering simple and straightforward morning snacks which has given it its competitive advantage. They are one of the world’s largest Coffee and baked goods chain. Dunkin Donuts is working to grow in all directions. They now have almost 6,400 outlets, with most of them being in the northwest, they are looking to pop up on every corner throughout the rest of the country. The shops are not only found in the United States, but they have managed to open up internationally with 2,440 shops in 31 different countries. The Porters’ Five analysis reveals that Dunkin Donuts is in direct competition with Starbucks. Some 400 billion cups of coffee are consumed every year, and Dunkin Donuts and Starbucks are competing for the Coffeehouse storefront. While Starbucks drives tastes for upscale coffee, Dunkin Donuts is, “betting dollars to donuts,” that consumers nationwide will embrace its reputation for value and simplicity. With Starbucks and Dunkin Donuts being so aggressive there are not many competitors who have enough resources to compete in the coffeehouse marketplace. When places like McDonalds started offering Coffee along with their breakfast menus, Dunkin Donuts was faced with the challenge of the morning meal market, they made an update and added to their donuts, with bagels and croissant-based breakfast sandwiches, and an oven toasted line including flatbread sandwiches and pizzas. They have also begun shifting their donut production from individual stores into centralized facilities that have the ability to serve up to 100 stores, giving them the ability to influence price and production. Starbucks and Dunkin Donuts both have their own customer base, each having unique items. Dunkin Donuts focuses on offering simple and straightforward morning snacks, which has given them the competitive advantage of distinction as the “anti-Starbucks- earnest and without pretense,” appealing to unpretentious people who enjoy the little things in life. Strategic Implications for Dunkin Donuts include the reconstructing process of design, execution, and marketing. This process should begin with a SWOT analysis, which begins with a systematic evaluation of the organization’s resources, capabilities, basic strengths and weaknesses, as well as opportunities and threats. Dunkin Donuts has come up with a brilliant plan to further their growth. They have formed many strategic alliances. They partner with many grocery retailers, such as Wal-Mart and Stop & Shop, creating the “store within a store concept.” They have also taken it further, they have now entered the lodging market with their first hotel restaurant at the Great Wolf Lodge in North Carolina, which is one of North America’s largest indoor water parks. Dunkin Donuts is in process of working on their worldwide expansion program, they offer a variety of store models to suit any lodging property, including full retail shops, kiosks, and self-serve hot coffee stations. With their strategic planning and expanding, and joining in partnerships, Dunkin Donuts is pretty much found everywhere. They are now located in their first ever theme park restaurant at Hershey Park, have coffee kiosks located in Fenway Park, Yankee Stadium, and Banknorth Garden. As well as new stores in Boston, Dallas-Fort Worth and New York City airports. The company’s use of cooperative strategies will allow them to grow by using their partnerships with other organizations who have the same goals. It can give them abilities to cut costs by outsourcing, having distribution alliances, and supplier’s alliances. As Dunkin Donuts CEO there are going to be some challenges, as the Starbucks brand is known around the world, there are some things Dunkin Donuts can do to position itself for just as much notoriety. The global strategy that will best work and what they have already started doing, is to embrace its...
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