Krispy Kreme Case Study Question 1. The main element of Krispy Kreme's strategy is to provide a better donut and attract customers in new ways. They have taken great steps to ensure customer satisfaction from the use of their proprietary flour recipe to their automated donut making machines. They chose to primarily target markets with 100,000 households. They were also exploring smaller stores for secondary markets. Krispy Kremes' strong brand, highly differentiated products, high-volume production capacity and multi-channel market penetration strategy have worked well. With every new store opening there are lines waiting at the door all night to experience Krispy Kreme quality. In Denver, more than 3,000 people lined up more than three blocks on opening day. They have the production areas clearly visible and a neon light that turns on when the "Hot Donuts" actually come off the line. Krispy Kreme makes customers feel good about treating themselves. Even the name Krispy Kreme brings a smile to people's faces. Question 2. I think Krispy Kreme's financial performance has been good. Since its initial public offering in April 2000 it has grown from 140 stores to one with 218 locations in 33 states and Canada. Preliminary results for fiscal 2002 showed sales topping $621 million, up 39 percent from the previous year. Revenue rose 30% to $392 million. Krispy Kreme is a product company and the most profitable part of the business is selling donuts due to the high volume of loyal customers. Many Wall Street analysts consider Krispy Kreme overvalued. Analysts said that in April 2000 the shares were headed at best for a range of $15 to $20, which is where the best-known food-related stocks are. Instead it has hovered around $40 a share for much of the year. The stock rose to a high of $54, and many analysts doubted whether Krispy Kreme's strategy and potential growth merited a stock price nearly 70 times expected 2002 earnings per share. I agree with the statement "the numbers just don't work." Question 3. SWOT ANALYSIS