executive report part a The report comprises of the strengths and weaknesses of the target company which is Krispy Kreme. The company operates in the food and beverage industry, and is a well-known, global doughnut company and coffee house with multiple chains. Contents Ability to Gain Market Share 3 Weakness 3 Financial Weaknesses 4 Operational Weaknesses 4 Strengths 5 Range of Merchandise 6 Financial Strengths 7 Concentration 8 Product differentiation 9 Consideration 9 References 10 Ability to Gain Market Share Krispy Kreme believes that they have the ability to gain market share on a global scale. First, they plan to infill markets that they are already in by expanding existing franchise partners and growing existing Company-owned markets. They believe this approach will permit them to leverage supply chain efficiencies and capitalize on their strong brand awareness. Second, they intend to pursue expansion opportunities with new franchisees to grow their shop footprint in both underpenetrated and new markets. Third, they plan to evaluate new markets, regions, and areas where Krispy Kreme has limited or no existing market presence. They expect to announce new development agreements in the future as they seek to increase the number of new shops that franchisees have contractually committed to open. In the past two fiscal years, they have announced new shop development agreements with domestic franchisees in Dallas, Houston, Maryland, northern Virginia, Arkansas, and southern California; and internationally in South Korea, Colombia, Taiwan, Bangladesh, and Russia. In addition, the Company opened new shops in a number of existing Company markets. They have a suite of shop formats to fit individual market needs, which they believe will facilitate Company and franchisee shop expansion. Their goal is to achieve annual, double-digit percentage growth in their system wide unit count over the next several years. New competition within any industry is a threat for every company. With the ease of entry of new companies into the market; they, however, don't straightforwardly affect Krispy Kreme’s business. On the other hand, their entrance builds the general competition in the industry, which decreases price control in the market. One of the biggest concerns with Krispy Kreme’s competitors is that they have greater resources; which allow them to react faster to the quick-changing food service industry. Another concern with new competitors is a more aggressive price range with a wider range of products for customers to choose from.Weakness One weakness for Krispy Kreme is a portion of their revenues come from franchisees that are independently owned and operated. These franchisees could take action that harms their business. Even though Krispy Kreme takes steps to properly train and support their franchisees, those franchisees operate their restaurants independently. Franchisees may operate their business in a manner that is not ...

1. executive report part a
The report comprises of the strengths and weaknesses of the
target company which is Krispy Kreme. The company operates
in the food and beverage industry, and is a well-known, global
doughnut company and coffee house with multiple chains.
Contents
Ability to Gain Market Share 3
Weakness 3
Financial Weaknesses 4
Operational Weaknesses 4
Strengths 5
Range of Merchandise 6
Financial Strengths 7
Concentration 8
Product differentiation 9
Consideration 9
References 10
Ability to Gain Market Share
Krispy Kreme believes that they have the ability to gain market
share on a global scale. First, they plan to infill markets that
they are already in by expanding existing franchise partners and
growing existing Company-owned markets. They believe this
approach will permit them to leverage supply chain efficiencies
and capitalize on their strong brand awareness. Second, they
intend to pursue expansion opportunities with new franchisees
to grow their shop footprint in both underpenetrated and new

2. markets. Third, they plan to evaluate new markets, regions, and
areas where Krispy Kreme has limited or no existing market
presence. They expect to announce new development
agreements in the future as they seek to increase the number of
new shops that franchisees have contractually committed to
open. In the past two fiscal years, they have announced new
shop development agreements with domestic franchisees in
Dallas, Houston, Maryland, northern Virginia, Arkansas, and
southern California; and internationally in South Korea,
Colombia, Taiwan, Bangladesh, and Russia. In addition, the
Company opened new shops in a number of existing Company
markets. They have a suite of shop formats to fit individual
market needs, which they believe will facilitate Company and
franchisee shop expansion. Their goal is to achieve annual,
double-digit percentage growth in their system wide unit count
over the next several years.
New competition within any industry is a threat for every
company. With the ease of entry of new companies into the
market; they, however, don't straightforwardly affect Krispy
Kreme’s business. On the other hand, their entrance builds the
general competition in the industry, which decreases price
control in the market. One of the biggest concerns with Krispy
Kreme’s competitors is that they have greater resources; which
allow them to react faster to the quick-changing food service
industry. Another concern with new competitors is a more
aggressive price range with a wider range of products for
customers to choose from.Weakness
One weakness for Krispy Kreme is a portion of their revenues
come from franchisees that are independently owned and
operated. These franchisees could take action that harms their
business. Even though Krispy Kreme takes steps to properly
train and support their franchisees, those franchisees operate
their restaurants independently. Franchisees may operate their
business in a manner that is not consistent with laws and
regulations or in accordance with Krispy Kreme’s standards and
requirements; which inevitably puts Krispy Kreme’s image and

3. reputation in jeopardy. Another weakness that is currently
being addressed is the possible security risk for guests, web-site
users, and team members because of aging information
technology. Krispy Kreme is currently working to improve
their information technology system in order to protect valuable
information. Financial Weaknesses
The company does not usually pay the dividends in cash, it aims
at employing the generated cash to further investments. This
means that the shareholder does not usually get money in the
end; but instead the business gives them a chance to buy more
shares with the proceeds derived from dividends. The common
stock in the last financial year yielded less than it did in the
previous year. For instance, the common stock of the fiscal year
ending February 2014 was $26.63, and $21.08 for the fiscal year
ending February 2015. The other weakness is that at the end of
the financial year, Krispy Kreme had less working capital of
around $77 million, which was less than the previous year of
$81million. In conclusion, the acquisition of Krispy Kreme may
give Dunkin’ Donuts a chance to have more working capital to
operate in different markets and activities.Operational
Weaknesses
The weakness in terms of operation can be traced to how its
products are being achieved by consumers. Some argue that the
doughnuts usually have high fat content. With the increasing
worries about fat related diseases, the company may not yield as
much from sales if such information reaches consumers.
Furthermore, though it has a wide network, there are still some
areas that have not been fully covered, hence leaving a potential
market uncovered.
Krispy Kreme does have some risks where profitability is
vulnerable to cost increases. Some of the more impactful are
the increased cost of raw materials, fuel, and financing by
franchisees. The access of financing available to Krispy Kreme
franchisees with reasonable terms is something that could
adversely affect their potential to grow and increase
profitability.

4. Other top contenders, such as McDonald's, Starbucks, and
Burger King, are a long way ahead in the classification of
creative drink and nourishment foods on their menu. The
organization has nearly an 8% share in the breakfast market,
much behind McDonald's. Although, in the course of the last
couple of years, the Dunkin’ brand has picked up notoriety due
to its operational quality and steady exertion towards consumer
loyalty.
Krispy Kreme faces pressure from new or current competition to
lower prices of products, and to offer more of a variety of
products. Since other companies offer different types of
products to accommodate more tastes at once, inevitably,
competitors will draw in more people than Krispy Kreme.
Another example of how pressure from competitors can reduce
Krispy Kreme’s sales is the amount of stores available. Krispy
Kreme doesn’t offer as many places for customer to purchase
products as others in the industry, therefore, reducing sales and
profits.
The consumption of coffee and donuts is on the rise in the
Middle East due to the increase in disposable income of the
working force in China, Malaysia, and Singapore. By opening
more than 20,000 locations in these regions, with the hope of
expanding them to more than 30,000 locations, the market will
saturate and thus
A number of factors have affected, and will continue to have a
significant impact on Krispy Kreme’s sales numbers. Customer
trends and preferences, economic conditions, and competition
from competitors are factors that have a high impact on this
industry because it creates unpredictable fluctuations in sale
volume. Other factors, such as changes in laws and regulations,
and the cost of raw materials, may be more predictable but can
be still as detrimental to the business. Another possible threat
that Krispy Kreme may encounter is information technology
failure, which could lead to customer’s identifiable data being
compromised.
Another challenge Krispy Kreme is facing is the upward trend

5. of a healthier lifestyle among the people in the world. This
trend is making people be more cautious of high calorie, sugary
foods. Secondly, another serious threat is that local cafeterias
and bakeries pose completion to the market since there is no
clear cut legislation barring entry of companies into the
market.Strengths
The company celebrated its 75th birthday in 2012. The company
has a strong brand, and is already known worldwide. Krispy
Kreme is already in 24 countries, which may bring new light to
the special bond Dunkin’ Donuts has already created with
existing and potential customers.
“Our market research indicates that Krispy Kreme’s breadth of
appeal extends across all major demographic groups, including
age and income. In addition to their taste, quality and
simplicity, Krispy Kreme doughnuts are an affordable,
indulgent sweet treat. Many of our customers are accustomed to
purchasing our doughnuts by the dozen for their office, clubs
and family” (KKD Corporation, 2015)
The acquisition will bring in many opportunities such as
fundraising, and developing the untouched domestic locations.
It will add diversity and expand Dunkin Donuts product line
along with adding a competitive advantage in the market. The
company has a wide distribution channel with over one
thousand shops. The network serves to show how far it has gone
to reach all the potential customers. With such a wide channel,
it has been able to administer to its market and feed it
successfully. It has further been able to explore new markets.
The accelerated growth is a promising feature for Dunkin
Donuts, which gives assurance of further growth. The company
is also pursuing franchise interests in order to handle the
markets that have not been satisfied. Such interest makes the
acquisition a more plausible one. Moreover, through
technology, the mobile guest has enabled communication with
its clients, hence getting fast feedback. In addition, it has
maximized brand awareness and continues to maximize in their
ability to handle both wholesale and retail business. Such

6. channels are effective in making sure that the information
concerning the brands is able to grow far and wide.
Krispy Kreme has many opportunities to grow and expand
because of their ability to operate in four different business
segments: Company Stores, Domestic Franchise, International
Franchise and The Krispy Kreme Supply Chain. Selling
products in different business segments allows their products to
reach many different customers and to maximize brand
awareness. Another big opportunity for Krispy Kreme is their
state of the art technology and their steps to enhance their core
menu. This will draw in more customers and keep them coming
back.
People have begun using Krispy Kreme donuts as a tool to
fundraise, which has shown steady growth since 1955. By 1963
production had changed in methodology, where machines had
become the new source for product making. Ten years later, the
company has grown to a total of 60 shops in the southeast.
Unfortunately the founder of the company died and the company
was held in trust by a bank. Years later the first retail-only store
opened in 1989. The famous hot light was developed in 1992,
which informs customers that fresh, glazed donuts are onsite. In
keeping with the new age, Krispy Kreme invented the hot light
app, a variation of the hot light, in 2012. A year earlier, in
2011, the company launched their signature coffee blends,
bringing in more loyal customers. Furthermore, Krispy Kreme
stayed inline with their growth goal by opening their 1,000th
store in 2015.Range of Merchandise
Krispy Kreme currently makes and sells a wide variety of high-
quality doughnuts, including their signature Original Glazed
Doughnut. Their shops typically offer 16 or more doughnut
varieties, including eight varieties that are offered at all Krispy
Kreme shops. Sales of doughnuts comprises approximately 89%
of total retail sales, with the rest in beverage sales. Sales of
yeast-raised doughnuts comprise approximately 75% of total
wholesale sales, with cake doughnuts and all other product
offerings comprising approximately 25% of total wholesale

7. sales.
Krispy Kreme continues to develop and leverage complementary
products to meet consumer need for convenience, regional taste
preference, and variety. Beverages play a large role in providing
convenience and satisfaction for guests, including coffee, which
has been part of the brand for many decades. They have a
complete beverage program which includes drip coffees, iced
coffees, both coffee-based and non-coffee-based frozen drinks,
juices, milks, water, frozen/blended beverages, and packaged or
fountain beverages..Financial Strengths
Krispy Kreme has experienced a 6.5% growth in revenue over
the last two fiscal years, making it to $490.3 million in 2015.
Also, the company’s adjusted net income increased to almost
12% to $48.3 million. In addition, the cash flow generated by
the business amounted to over $60 million. The debt of the
company at the end of the year was less than $10 million, and
cash at the end of the year was almost $51 million for 2015.
Such a debt level is reasonable, and shows the commitment that
the company has in reducing the debt levels. The earnings per
share of the company increased to almost 15% to $0.70. Such
increase augurs well to the shareholders, who can thus be able
to invest more in the company. Financially, it can be said to be
a promising acquisition that will not hamper growth in Dunkin
Donuts.
Impairment charges and lease termination costs were $955,000
in the fiscal year 2015, compared to $1.4 million in 2014. The
components of these charges are set forth in the following table:
The Company tests long-lived assets for impairment when
events or changes in circumstances indicate that their carrying
value may not be recoverable. These events and changes in
circumstances include: store closing and refranchising
decisions, the effects of changing costs on current results of
operations, observed trends in operating results, and evidence of
changed circumstances observed as a part of periodic
reforecasts of future operating results, and as part of the

8. Company’s annual budgeting process. Impairment charges
generally relate to company stores expected to be closed or
refranchised, as well as to store management; which should not
generate sufficient future cash flows to enable the Company to
recover the carrying value of the stores’ assets. When the
Company concludes that the carrying value of long-lived assets
is not recoverable (based on future projected undiscounted cash
flows), the Company records impairment charges to reduce the
carrying value of those assets to their estimated fair values. The
fair values of these assets are estimated based on the present
value of estimated future cash flows, on independent appraisals,
and in the case of assets, the Company currently is negotiating
to sell, based on the Company’s negotiations with unrelated
third-party buyers. Impairment charges related to Company
Stores long-lived assets were $901,000 in fiscal 2015. Such
charges relate to an underperforming store which management
believed would not generate sufficient future cash flows to
enable the Company to recover the carrying value of the stores’
assets, but which management had not yet decided to close. The
store’s impaired assets consist of a building constructed on
leased land and certain other equipment.
Lease termination costs represent the estimated fair value of
liabilities related to unexpired leases, after reduction by the
amount of accrued rent expense, if any, related to the leases,
and are recorded when the lease contracts are terminated or, if
earlier, the date on which the Company ceases use of the leased
property. The fair value of these liabilities were estimated as
the excess, if any, of the contractual payments required under
the unexpired leases over the current market lease rates for the
properties, discounted at a credit-adjusted risk-free rate over the
remaining term of the leases. The provision for lease
termination costs also includes adjustments to liabilities
recorded in prior periods arising from changes in estimated
sublease rentals and from settlements with
landlords.Concentration
With the swift healthcare bill sweeping across the nation, the

9. companies are listening carefully to the demands of the
customers and the changes in lifestyle so that they remain
relevant in the business. High attention also opens minds, which
will led to creativity and innovation. The expansion of the
market base abroad in China, India, and Malaysia helps to focus
on what people attitudes are and what they need.
Product differentiation
Krispy Kreme has also thrived by embracing product
differentiation. The menu keeps expanding and improving. With
Dunkin’ promising to venture into tea products in the future,
they are sure to command a large market share by offering a
unique menu for its customers, and gain a competitive
advantage over its competitors.Consideration
The report comprises of the strengths and weaknesses of the
target company Krispy Kreme. The wide network combined with
the pre-existing Dunkin’ Donuts, will mean that more channels
of distribution will be available. Dunkin’ Donuts will be able to
have more market share, as well as capture a potential one. The
infrastructure will give Dunkin’ Donuts a chance to exploit new
markets and sell its products where they have not previously
reached. The promising financial information, such as revenue
growth, means that Dunkin’ Donuts will not be starting from
scratch once investing in the new acquisition. Krispy Kreme’s
network will assist in easier penetration into new markets, and
will further assist positive financial figures. By focusing on the
known weaknesses, Dunkin’ Donuts will be in a position to
acquire a new venture without any operational or financial
hitches.
References
Böhm, A. (2009). The SWOT Analysis. München: GRIN Verlag.
Cowan, L., & Jargon, J. (2011). Premium IPO: Dunkin' Brands
Surges 47%. The Wall Street Journal, 64.
Ferrell, O., & Hartline, M. (2012). Marketing Strategy. New
York: CengageLearning.
KKD Corporation. (2015). Krispy Kreme. (E. online, Editor)

10. Retrieved July 14, 2015, from Financial Information :
http://investor.krispykreme.com/phoenix.zhtml?c=120929&p=ir
ol-
SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS
9maWxpbmcueG1sP2lwYWdlPTEwMTkwNjU1JkRTRVE9MCZ
TRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkP
TU3
Yahoo Finance. (2015). Krispy Kreme Doughnuts, Inc. Profile.
Retrieved July 20, 2015, from
http://finance.yahoo.com/q/pr?s=KKD+Profile
Case Study: A System Approach
Review the case study in the article, Texas Health Harris
Methodist-Cleburne: A System Approach to Surgical
Improvement.
After reviewing the case study, construct a written paper that
addresses the following:
· Explain organizational theories evidenced in this case study.
· Analyze how Texas Health Harris Methodist-Cleburne is a
learning organization.
· Explain the organizational structure displayed in this case
study.
· Describe the leaders involved in this case study.
· Discusses the role of the leaders in this case study.
Including an introduction and conclusion paragraph, your paper
must be three to five double-spaced pages (excluding title and
reference pages) and formatted according to APA style as
outlined in the Ashford Writing Center. Including the textbook,
utilize a minimum of three (one of which is the case study
article used for review) scholarly and/or peer-reviewed sources
from the Ashford University Library that were published within
the last five years. Document all references in APA style as
outlined in the Ashford Writing Center APA Checklist.

11. Carefully review the Grading Rubric for the criteria that will be
used to evaluate your assignment