Innovation Growth H/W

/in /by

There is a minimum 100 word response per question.

1)    Discuss fully the 6 categories of new products and provide a detailed justification for how you would categorize the Tastykake Sensables line. Apply the concepts from chapter 1 and support your position with facts from the case.

2)    Explain fully all aspects of the New Product Development 5 Stage Process.  Evaluate the Tastykake Sensables new product development activities by comparing and contrasting to the process described in chapter 2.

3)    Create a product innovation charter (P.I.C.) for Tastykake.  Explain in detail all aspects of a product innovation charter discussed in chapter 3.

4)    Develop a concept statement for Tastykake Sensables. Explain fully the 3 aspects of the product concept and 2 approaches to writing a concept statement discussed in chapter 4.

5)    Discuss fully the 4 steps in the problem analysis procedure, reverse brainstorming. Chapter 5

6)  Discuss fully the 3 types of attributes, analytical attribute techniques, and determinant gap maps for snack products. Chapter 6

7) Discuss fully adaptive conjoint analysis and the USA, Japanese, and German made car example. Chapter 7

8) a) Compare and contrast with examples, umbrella brand with individual brand strategies discussed in chapter 16.
Go to http://www.tastykake.com/products/  b) List 6 product types featured on that page and provide your reasoning for classifying the Tasty Baking Company brand strategy as either umbrella or individual.c) View the Tastykake packaging on www.amazon.com to get information to support your position.

9)  Discuss the 6 categories of brand names identified in chapter 16 and explain which category best describes the Tastykake brand name.

10) Identify and discuss 6 changes at Flowers Foods (Tastykake) from 2016 to 2018.  Refer to the Fact Sheets I provided.
For example, 2016 Sales $X vs 2018 Sales $Y

11) Identify and discuss 6 changes from the 2016 to 2019 Snack Food Industry.

Are Tastykake products Chips? Nuts? How does the report classify Tastykake products?  What changes have occurred in this category?

12) How would you classify the sale and marketing of some snack food products:

ethical and legal,

ethical, but illegal,

unethical, but legal,

unethical and legal.

How would you classify the sale and marketing of Tastykake products?

What is the ethical dilemma? Imagine you are a consultant… what actions would you recommend to Tastykake executives?

Business: The second-largest producer and marketer of packaged bakery foods in the U.S. 2016 sales: $3.9 billion Bakeries: 49 efficient bakeries in 18 states Employees: Approx. 10,800 Products: Breads, buns, rolls, snack cakes, tortillas Top brands: Nature’s Own, Wonder, Dave’s Killer Bread, Cobblestone Bread Co., Tastykake, Mrs. Freshley’s Market: Retail and foodservice. Fresh bakery foods to +85% of the U.S. population through a network of independent distributors; frozen bakery items and snack cakes to customers’ warehouses nationwide.

INVESTOR FACT SHEET | JUNE 2017 | NYSE: FLO | Market Cap: $3.9B

VISION As America’s premier baker, we craft foods that make people smile. We are driven by a passion to boldly grow our business through inspiring leadership, teamwork, and creativity.

VALUE CREATION STRATEGIES Reinvigorate core business Align brands to consumers, invest in brand growth and innovation, support distributor partners

Capitalize on product adjacencies Build leading foodservice position, grow in-store bakery, seek opportunities in healthy snacking

Reduce costs to fuel growth Simplify and streamline operating model; better leverage national footprint

Invest in capabilities & growth Enhance financial planning and analyst capabilities, performance management system

CATEGORY STRENGTH $28.0 billion retail sales* $7.4 billion foodservice sales**

LONG-TERM GOALS Sales growth: 2% – 4% EBITDA margin: 13% – 14% EPS growth: 8% – 10%

Fresh/DSD Frozen/Warehouse

FY 2016 SNAPSHOT

49 BAKERIES & FRESH/FROZEN DISTRIBUTION COMPANY STRENGTHS

P R O D U C T M I X D I S T R I B U T I O N S A L E S C H A N N E L S 1Mix business sold 1/17. 2Thrift stores, vending, all other Chart data should not be used for historical comparisons since some business has shifted between segments and because of changes in geographic definition.

17% Fresh snack cakes

6% Frozen breads, rolls

76% Fresh breads, buns, rolls, and tortillas

1% Mixes1

84% Direct store delivery (DSD)

16% Direct to

customers’ warehouses

30% Mass merchandiser/ discount

5% Convenience store

5% Other2

23% Foodservice

37% Supermarket/ Drug

IRI Flowers Custom Database Total US MultiOutlet – 52 weeks ending 01/01/17. Flowers Private Label Sales SDW. Chart data should not be used for historical comparison because of changes in geographic definition. IRI Flowers Custom Database – 52 weeks ending 01/01/17

• Nature’s Own is the #1 loaf bread brand in total U.S. with $1.0 billion in retail sales in 2016.

• In total U.S., Nature’s Own Honey Wheat is the #1 fresh packaged bread item and Nature’s Own Butterbread is the #1 white loaf item.

• Wonder, nearing the century mark, has 98% consumer awareness in the U.S.

• Dave’s Killer Bread is the #1 organic bread brand in total U.S.

• CBC breads and buns make every day eating occasions more special.

• The iconic snack cake brand from Philly is capturing new fans around the country.

• Award-winning Mrs. Freshley’s offers a wide variety of snack cakes sold through warehouse distribution nationwide.

• Regional white bread brands have been family favorites for generations.

• Strong brands and a team committed to transforming the company

• Clear objectives to grow sales, expand margins, and deliver shareholder value

• Executing today on initiatives to reinvigorate the core, obtain fuel for growth, and improve financial performance

• Designing an operating model to deliver sustainable, long-term growth

BRAND SHARE, TOTAL U.S. Breads, Buns, Rolls

14.8% Flowers branded

4.1% Flowers store brand

6.0% Pepperidge Farm

BRAND STRENGTH

23.8% Independent/ specialty bakers

30.4% BBU/Sara Lee

20.9% Other bakers’ store brands

*IRI Custom Database – 52 weeks ending 01/01/17

**Technomic FY2016

***IRI Custom Database – 52 weeks ending 12/25/16

****Willard Bishop Super Study 2015 Kroger/Safeway/Ahold

Numbers should not be used for historical comparison because of change in IRI data.

• Across the grocery store segment, fresh bread and rolls is the third-largest category, in dollars, behind only carbonated beverages and beer/ale/alcoholic cider.***

• Bread is the No. 1 grocery category in weekly true profits.****

• 98.6% of households buy fresh packaged bread.***

 

 

*In addition to cash, stock and debt are used

to fund acquisitions.

$0.70

$0.60

$0.50

$0.40

$0.30

$0.20

$0.10

Cap ex

Acquisitions* Pension

Share repurchases Dividends

FY12

FY13

FY14

FY15

FY16

$509.1

$631.4

$238.0

$621.3

$360.1

DSD SALES BY CATEGORY1

WAREHOUSE SALES BY CATEGORY1

Approx. % of FY16 sales

Approx. % of FY16 sales

1Segment charts should not be used for historical comparisons since some business has been shifted between segments.

64% Branded retail

14% Store-branded

retail

37% Foodservice

26% Branded retail

4% Other

18% Store- branded retail

11% Vending

4% Contract production

FLOWERS FOODS’ OPERATING SEGMENTS

DIRECT STORE DELIVERY (DSD) — 84% OF SALES

Contact: J.T. Rieck, VP IR/Financial Analysis, 229.227.2253, [email protected], Flowers Foods, 1919 Flowers Cir., Thomasville, GA 31757, flowersfoods.com

CAPITAL ALLOCATION in millions

DIVIDENDS PER SHARE 2003 – 2016

WAREHOUSE DELIVERY — 16% OF SALES

SALES % growth

0.4%

3.9%

0.8%

$3,927

$3,779

$3,749

15

14

16 in millions

GROSS MARGIN*

15

14

16 48.4%

48.0%

48.0%1

COMPONENTS OF ADJ. EBITDA*

1Includes direct labor & indirect manufacturing expenses 2Includes selling & administrative expenses

ADJUSTED EBITDA* % margin

11.4%

11.4%

11.7%

$4471

$4411

$4291 15

14

16

ADJUSTED NET INCOME* % of sales

5.1%

4.9%

5.2%

$1911

$1971

$1921 15

14

16

ADJUSTED DILUTED EPS* % change

<1.1>%

<1.1>%

2.2%

$.911

$.921

$.901 15

14

16

• Broad product range—breads, buns, rolls, snack cakes, tortillas

• $3.3 billion in sales for FY16 • Access to more than 85% of US population • Fresh bakery foods delivered daily • Motivated independent distributor partners

INDEPENDENT DISTRIBUTOR (ID) MODEL • Independent distributors who control and

direct independent businesses • Entrepreneurial model that motivates IDs to

increase sales through outstanding service and merchandising

• Approximately 5,100 territories • More info at flowersfoods.com/IDprogram

• Fresh snack cakes, frozen breads and rolls

• $642.7 million in sales for FY16

• National distribution

• Direct to customers’ warehouses by frozen and non-frozen contract carriers

21.8% Shipping +

Distribution

11.4% Adj.

EBITDA 28.9% Ingredients + Packaging

15.2% All Other2

22.7% Conversion1

% of FY16 Sales

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1Excluding one-time events; 2014 was a 53-week year. *Reconciliations of non-GAAP measures are available at flowersfoods.com. Click on Investor Center and select Financial Documents.

22% Restaurant/

institutional/ other

in thousands

in thousands

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Strategic Paper Recommendation

/in /by

For your final project, you will assume the role of a senior vice-president of a consulting company. Your company has recently been asked to advise and assist Krispy Kreme Donuts as they develop their strategic plans. You have been asked to review the matrices and information provided, and develop your best recommendations on how the company should proceed. It is suggested that you familiarize yourself with the company history and background.  Your planning team has provided you with some current information including vision statements, strategies and objectives.

Once you have reviewed the background information you will need to analyze each of the matrices provided and present your findings. Once you have analyzed each of these matrices you will need to develop a summary statement and a recommendation for further action.  Your final report will include:

1.    Introduction (include history and background)

2.    Analysis of CPM

3.    Analysis of EFE

4.    Analysis of IFE

5.    Analysis of SWOT

6.    Analysis of SPACE Matrix

7.    Analysis of BCG

8.    Analysis of Grand Strategy Matrix

9.    Analysis of QSPM

10.  Analysis of Income Statement and Balance Sheet

11.  Su

mmary of analysis (1 – 2 pages in length)

12.  Recommendations (2 – 3 pages in length)

 

Please remember to cite any sources that you reference. Your report will be going to the president and board of directors of Krispy Kreme and should be free of any grammatical or punctuation errors. You will need to present clear, succinct and direct analysis of the information provided. It is expected that each analysis will be 2 – 4 paragraphs in length, the summary approximately 1 – 2 pages, and your final recommendations 2 – 3 pages. As with any report, an introduction is expected.

KRISPY KREME MATRICES/REPORTS

Current Strategies and Objectives

Krispy Kreme Donuts has listed the following as its current objectives:

1. Reduce the investment required to produce a given level of sales and reduce operating costs by operating smaller satellite stores instead of larger, more expensive factory stores .

2. Achieve greater production efficiencies by centralizing doughnut production to minimize the burden of fixed costs.

3. Achieve greater consistency of product quality through a reduction in the number of doughnut-making locations.

4. Enable store employees to focus on achieving excellence in customer satisfaction and in-shop consumer experience.

5. Stimulate an increase in on-premises sales of doughnuts and complementary products by increasing the number of retail distribution points to provide customers more convenient access to the company’s products.

 

Regarding strategies, the Form 10-K filed April 17, 2012 notes a few:

 

1. Open up new (or convert traditional factory stores to) “hot shops” that provide a hot doughnut experience for customers throughout the day, instead of the traditional experience of having the hottest, freshest doughnuts available only at certain times of the day—these “hot shops” would be added to the traditional fresh shops and kiosks as the primary methods for market penetration while reducing operating costs.

2. Open up new company-owned satellite stores for additional market penetration.

3. The company also plans to extend its testing of soft serve dairy products into additional locations in fiscal 2013 as part of its product development.

4. Close stores that are not performing to company standards.

Vision

Krispy Kreme Donuts “Vision and Values” can be found on their web site (http://investor.krispykreme.com/includes/stupop.html).

“We Believe…

· Consumers are our lifeblood, the center of the doughnut

· There is no substitute for quality in our service to consumers

· Impeccable presentation is critical wherever Krispy Kreme is sold

· We must produce a collaborative team effort that is unexcelled

· We must cast the best possible image in all that we do

· We must never settle for ‘second best’; we deliver on our commitments

· We must coach our team to ever-better results”

Vision Statement

From Krispy Kreme Donut’s “Vision and Values” provides the following Vision Statement: “To be the global leader in doughnuts and complementary products, while creating magic moments worldwide.”

Competitive Profile Matrix (CPM)

    Dunkin’ Donuts Starbucks Tim Hortons
Critical Success Factors Weight Rating Score Rating Score Rating Score
Advertising 0.11 4 0.44 3 0.33 2 0.22
Product Quality 0.15 3 0.45 3 0.45 2 0.30
Product Diversity 0.08 2 0.16 1 0.08 2 0.16
Price Competitiveness 0.08 3 0.24 2 0.16 3 0.24
Management 0.10 3 0.30 3 0.30 2 0.20
Financial Position 0.10 3 0.30 2 0.20 3 0.30
Customer Loyalty 0.10 4 0.40 3 0.30 3 0.30
Global Expansion 0.13 3 0.39 4 0.52 1 0.13
Market Share 0.10 3 0.30 3 0.30 1 0.10
Sales Distribution 0.05 2 0.10 3 0.15 2 0.10
Total 1.00   3.08   2.79   2.05

 

1. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

 

 

External Factor Evaluation (EFE)

Key External Factors Weight Rating Weighted Score
 

Opportunities
1. Families crave convenience because of busy lifestyles 0.08 3 0.24
2. Asians love sweets and are open to trying foreign foods 0.05 2 0.10
3. Starbucks lacks a diversified and distinctive pastry line 0.10 3 0.30
4. Dunkin’ Donuts does not have hot doughnuts to sell 0.07 4 0.28
5. Many children love sweet treats 0.03 2 0.06
6. Tim Hortons has yet to expand beyond the U.S. and Canada, and its product line does not appear to be competitive 0.04 2 0.08
7. South America, Africa, and Southern Asia are markets to conquer 0.09 1 0.09
 

Threats
8. Dunkin’ Donuts presently dominates the doughnut market, particularly in northeastern U.S. 0.12 1 0.12
9. People are becoming more health-conscious, which does not bode well for high-sugar, high-fat treats 0.08 2 0.16
10. Starbucks has approximately 25 times the amount of stores worldwide that Krispy Kreme Donut has 0.08 1 0.08
11. Restricted cash flow from banks and massive layoffs have stifled the world economy, decreasing discretionary income 0.06 2 0.12
12. Europeans prefer their local brands of doughnuts 0.05 2 0.10
13. Britons tend not to have cars, which inhibits drive-thru customers, and their eating habits and office etiquette differ from Americans 0.06 2 0.12
14. Shareholders may sell Krispy Kreme Donut stock for lack of returns and dividends compared to other similar firms in the industry 0.09 1 0.09
       
Total 1.00   1.94

 

 

2. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

 

Internal Factor Evaluation (IFE)

Key Internal Factors Weight Rating Weighted Score
 

Strengths
1. Affordable, high-quality doughnuts with strong visual appeal and “one-of-a-kind” taste 0.09 4 0.36
2. Neon “Hot Doughnuts Now” sign encourages people outside the store to make an impulse purchase 0.06 3 0.18
3. Market research shows appeal extends to all major demographic groups including age and income 0.08 4 0.32
4. “Hot shop” stores save money while keeping Krispy Kreme Donuts customer experience intact 0.07 3 0.21
5. Vertical integration helps ensure high quality product 0.07 3 0.21
6. Consistent expansion; now in 16 countries 0.08 3 0.24
7. Product sold at thousands of supermarkets, convenience stores, and retail outlets through U.S. 0.06 3 0.18
       
 

Weaknesses
1. Return on equity, assets, and investments all negative in the trailing twelve months; skill of management is questionable 0.10 1 0.10
2. Shareholders have not received dividends recently, and are not expected to in near future; stock price in state of flux 0.07 1 0.07
3. Closing stores when stores should be opening globally at steady rate to keep up with competitors’ growth 0.06 2 0.12
4. Management states in recent 10-K that it is struggling with how to make stores profitable 0.07 1 0.07
5. Product line slow to expand with nothing outside “sweet treats” to draw in health-conscious customers 0.04 2 0.08
6. Advertising not aggressive enough to appeal to areas outside southeast of U.S. where most stores are 0.03 2 0.06
7. Revenues down, net losses in each of past three years 0.08 1 0.08
8. Per 10-K, continued disputes with franchisees could hurt future business 0.04 2 0.08
       
Total 1.00   2.36

 

3. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

 

Strengths-Weaknesses-Opportunities-Threats Matrix (SWOT)

  Strengths Weaknesses
 
1. Affordable, high-quality doughnuts with strong visual appeal and “one-of-a-kind” taste
 

2. Neon “Hot Doughnuts Now” sign encourages people outside the store to make an impulse purchase
 

3. Market research shows appeal extends to all major demographic groups including age and income
 

4. “Hot shop” stores save money while keeping KKD customer experience intact
 

5. Vertical integration helps ensure high quality product
 

6. Consistent expansion; now in 16 countries
 

7. Product sold at thousands of supermarkets, convenience stores, and retail outlets through U.S.

 
1. Return on equity, assets, and investments all negative in the trailing twelve months; skill of mgmt is questionable
 

2. Shareholders have not received dividends recently, and are not expected to in near future; stock price in state of flux
 

3. Closing stores when stores should be opening globally at steady rate to keep up with competitors’ growth
 

4. Management states in recent 10-K that it is struggling with how to make stores profitable
 

5. Product line slow to expand with nothing outside “sweet treats” to draw in health-conscious customers
 

6. Advertising not aggressive enough to appeal to areas outside southeast of U.S. where most stores are
 

7. Revenues down, net losses in each of past three years
 

8. Per 10-K, continued disputes with franchisees could hurt future business

 
Opportunities SO Strategies WO Strategies
1. Families crave convenience because of busy lifestyles
2. Asians love sweets and are open to trying foreign foods
 

3. Starbucks lacks a diversified and distinctive pastry line
4. Dunkin’ Donuts does not have hot doughnuts to sell
 

5. Many children love sweet treats
 

6. Tim Hortons has yet to expand beyond the U.S. and Canada,and its product line does not appear to be competitive
 

7. South America, Africa, and Southern Asia are markets to conquer

 

 1. TV, radio, and print ads demonstrating 27 varieties of doughnuts against non-descript pastry offerings by Starbucks (S3, O3)

 

2. All store signs in supermarkets and conveniences where product is sold have picture of young child eating a Krispy Kreme doughnut (S7, O5)

 

3. Continued grand openings of stores in highly-populated cities such as Sao Paulo, Brazil & Johannesburg, South Africa (S6, O7)

 1. Make doughnuts filled with fruit, put fruit cups on menu, and develop wide variety of fresh fruit smoothies; offer ways to incorporate nuts and protein into foods (W5, O3)

 

2. Aggressive Internet ads demonstrating the appeal of Krispy Kreme Donut hot doughnuts (W6, O4)

 

3. Open small but profitable “hot shops” in South America, Africa, and Southeast Asia in order to expand globally (W3,O7)
Threats ST Strategies WT Strategies
1. Dunkin’ Donuts presently dominates the doughnut market, particularly in northeastern U.S.
 

2. People are becoming more health-conscious, which does not bode well for high-sugar, high-fat treats
 

3. Starbucks has approximately 25 times the amount of stores worldwide that Krispy Kreme Donut has
 

4. Restricted cash flow from banks and massive layoffs have stifled the world economy, decreasing discretionary income
 

5. Europeans prefer their local brands of doughnuts
 

6. Britons tend not to have cars, which inhibits drive-thru customers, and their eating habits and office etiquette differ from Americans
 

7. Shareholders may sell KKD stock for lack of returns and dividends compared to other similar firms in the industry

 

 1. Compare “hot” doughnut appeal of Krispy Kreme Donut to cold doughnuts of Dunkin’ Donuts in TV and Internet ads (S1,T1)

 

2. Do “roadshow” across Europe as means of advertising, driving truck and mobile “hot shop” to major European cities and filming their reactions for European ads (S2, S4, T5, T6)

 

3. Express strengths and outline concrete strategies in clear format within 10-K in order to restore shareholder confidence in future of Krispy Kreme Donut (S1-S7, T7)

 1. Expand product line with low-calorie foods (W5, T7)

 

2. Recruit top executive talent from other fast-food firms (W1, T7)

 

3. Survey franchisees to discover ways to repair business relationships and retain growth of franchise model; study McDonald’s model for tips (W8, T1, T3)

 

4. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

Strategic Position and Action Evaluation Matrix (SPACE)

Financial strength (FS) factors include: Profit (+1); Sales Growth (+2); and Cash Flow (+2)

1 + 2 + 2 = 5; 5/3 = 1.67.

 

Competitive advantage (CA) factors include: Customer loyalty (-2); Product quality (-1); and Market share (-5)

-2 + -1 + -5 = -8; -8/3 = -2.67.

 

**For the above, KKD’s financials were compared against competitors Dunkin’ Donuts, Starbucks, and Tim Hortons. (http://finance.yahoo.com/q/co?s=kkd)

 

Environmental Stability (ES) factors include: Barriers to entry into market (-4); Risk involved in business (-3); and Ease of exit from market (-4)

-4 + -3 + -4 = -11/3 = – 3.67

 

Industry Strength (IS) factors include: Profit potential (+2); Financial stability (+1); and Technological know-how (+4)

2 + 1 + 4 = 7/3 = 2.33

 

Conservative FS

+6

 

+5

 

+4

 

+3

 

+2

 

+1

 

 

 Aggressive
 

CA -6 -5 -4 -3 -2 -1

 

Defensive -1

 

-2

 

-3

 

-4

 

-5

 

-6

 

ES

  

+1 +2 +3 +4 +5 +6 IS

 

Competitive

 

 

 

5. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

 

Boston Consulting Group Matrix (BCG)

Krispy Kreme Donuts has three business segments, and they are presented here along with their annual revenues per Form 10-K filed: Company Stores ($266M), Franchise ($26M) and Krispy Kreme Supply Chain ($93M), with approximately $384M in total revenues for the year ending February 1, 2012. This means that each business segment represented the following percentage in revenues: Company Stores (69.2%), Franchise (6.7%), and Krispy Kreme Supply Chain (24.1%).

Profits for each business segment are as follows: Company Stores ($-2M); Franchise ($18M); and KK Supply Chain ($25M), for a total of $41M in profits. Therefore, Company Stores has 0% of the profits; Franchise has about 41%; and Krispy Kreme Supply Chain has about 59%.

We’ll assume that Company Stores has 3% of the market share and a -13% growth rate; Franchise has 3% of the market share and a 10% growth rate; and Krispy Kreme Supply Chain has 3% of the market share and -7% growth rate.

 

High 1.0 Medium 0.5 Low 0.0

 

High +20

 

Stars (II)

 

 

 

 Question Marks (I)

 

 

 

 
 

Cash Cows (III)

 

 

 

  

Dogs (IV)

 

 

 

Low -20

 

 

6. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

Grand Strategy (GS) Matrix

 

 

 

 

 

 

 

 

 

 

 

 

WEAK

COMPETITIVE POSITION

  

RAPID MARKET GROWTH

  

 

 

 

 

 

 

 

 

 

 

STRONG COMPETITIVE POSITION
   

Quadrant II

1. Market Development

2. Market Penetration

3. Product Development

4. Horizontal Integration

5. Divestiture

6. Liquidation

  

Quadrant I

1. Market Development

2. Market Penetration

3. Product Development

4. Forward Integration

5. Backward Integration

6. Horizontal Integration

7. Related Diversification

 

  
   

Quadrant III

1. Retrenchment

2. Related Diversification

3. Unrelated Diversification

4. Divestiture

5. Liquidation

 

  

Quadrant IV

1. Related Diversification

2. Unrelated Diversification

3. Joint ventures

  
   

SLOW MARKET GROWTH

  

 

 

 

7. Analysis: Please analyze the information presented above. Discuss which quadrant of the Grand Strategy matrix Krispy Kreme Donuts is in and what possible strategies they should utilize.

 

 

Quantitative Strategic Planning Matrix (QSPM)

In the QSPM two strategic alternatives were compared: whether KKD should discontinue its Company Store segment and concentrate solely on building the Franchise segment via the “hot shop” model, or whether it should continue the slow and steady growth of its Company Stores and Franchise business segments through its traditional business model.

STRATEGIC ALTERNATIVES
  1) Discontinue company stores and concentrate solely on building Franchise via “hot shop” stores 2) Continue slow and steady growth of Company Store and Franchise business segments through traditional business model (without “hot shops”)
Key Factors Weight AS TAS AS TAS
Opportunities
1. Families crave convenience because of busy lifestyles 0.08 —   —  
2. Asians love sweets and are open to trying foreign foods 0.05 —   —  
3. Starbucks lacks a diversified and distinctive pastry line 0.10 —   —  
4. Dunkin’ Donuts does not have hot doughnuts to sell 0.07 4 0.28 3 0.21
5. Many children love sweet treats 0.03 —   —  
6. Tim Hortons has yet to expand beyond the U.S. and Canada, and its product line does not appear to be competitive 0.04 4 0.16 3 0.12
7. South America, Africa, and Southern Asia are markets to conquer 0.09 3 0.27 2 0.18
Threats
1. Dunkin’ Donuts presently dominates the doughnut market, particularly in northeastern U.S. 0.12 3 0.36 1 0.12
2. People are becoming more health-conscious, which does not bode well for high-sugar, high-fat treats 0.08 —   —  
3. Starbucks has approximately 25 times the amount of stores worldwide that KKD has 0.08 2 0.16 1 0.08
4. Restricted cash flow from banks and massive layoffs have stifled the world economy, decreasing discretionary income 0.06 —   —  
5. Europeans prefer their local brands of doughnuts 0.05 —   —  
6. Britons tend not to have cars, which inhibits drive-thru customers, and their eating habits and office etiquette differ from Americans 0.06 —   —  
7. Shareholders may sell KKD stock for lack of returns and dividends compared to other similar firms in the industry 0.09 2 0.18 1 0.09
  1.00  
Strengths
1. Affordable, high-quality doughnuts with strong visual appeal and “one-of-a-kind” taste 0.09 —   —  
2. Neon “Hot Doughnuts Now” sign encourages people outside the store to make an impulse purchase 0.06 4 0.24 3 0.18
3. Market research shows appeal extends to all major demographic groups including age and income 0.08 —   —  
4. “Hot shop” stores save money while keeping KKD customer experience intact 0.07 4 0.28 1 0.07
5. Vertical integration helps ensure high quality product 0.07 —   —  
6. Consistent expansion; now in 16 countries 0.08 —   —  
7. Product sold at thousands of supermarkets, convenience stores, and retail outlets through U.S. 0.06 —   —  
Weaknesses
1. Return on equity, assets, and investments all negative in the trailing twelve months; skill of mgmt is questionable 0.10 3 0.30 1 0.10
2. Shareholders have not received dividends recently, and are not expected to in near future; stock price in state of flux 0.07 —   —  
3. Closing stores when stores should be opening globally at steady rate to keep up with competitors’ growth 0.06 3 0.18 1 0.06
4. Management states in recent 10-K that it is struggling with how to make stores profitable 0.07 4 0.28 1 0.07
5. Product line slow to expand with nothing outside “sweet treats” to draw in health-conscious customers 0.04 —   —  
6. Advertising not aggressive enough to appeal to areas outside southeast of U.S. where most stores are 0.03 —   —  
7. Revenues down, net losses in each of past three years 0.08 3 0.24 1 0.08
8. Per 10-K, continued disputes with franchisees could hurt future business 0.04 1 0.04 2 0.08
 
Total 1.00   2.97   1.44

 

8. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

 

Income Statement and Balance Sheet

KRISPY KREME DOUGHNUTS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended Feb. 1, 2012 (In thousands, except per share amounts)

Revenues $ 383,984

Operating expenses:

Direct operating expenses (exclusive of depreciation and amortization

shown below) 345,007

General and administrative expenses 23,458

Depreciation and amortization expense 8,709

Impairment charges and lease termination costs 548

Settlement of litigation — (14,930 )

Other operating (income) and expense, net 1,501

Operating income (loss) 4,761

Interest income 331

Interest expense (10,679 )

Loss on extinguishment of debt —

Equity in losses of equity method franchisees (786 )

Other non-operating income and (expense), net 2,815

Loss before income taxes (3,558 )

Provision for income taxes 503

Net loss $ (4,061 )

 

KRISPY KREME DOUGHNUTS, INC.

CONSOLIDATED BALANCE SHEET

Feb. 1, 2012 (In thousands)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 35,538

Receivables 19,229

Accounts and notes receivable — equity method franchisees 1,019

Inventories 15,587

Deferred income taxes 106

Other current assets 4,327

Total current assets 75,806

Property and equipment 85,075

Investments in equity method franchisees 1,187

Goodwill and other intangible assets 23,856

Other assets 9,002

Total assets $ 194,926

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Current maturities of long-term debt $ 1,413

Accounts payable 8,981

Accrued liabilities 29,222

Total current liabilities 39,616

Long-term debt, less current maturities 73,454

Deferred income taxes 106

Other long-term obligations 23,995

Commitments and contingencies

SHAREHOLDERS’ EQUITY:

Preferred stock, no par value; 10,000 shares authorized; none issued and outstanding—common stock, no par value, 300,000 shares authorized; 67,512 and 65,370 shares issued and outstanding 361,801

Accumulated other comprehensive income (loss) (913 )

Accumulated deficit (303,133 )

Total shareholders’ equity 57,755

Total liabilities and shareholders’ equity $ 194,926

 

9. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information.

 

 

Summary of Conclusions

10. Analysis: Please provide a summary of the analyses that have been developed based on the information provided. (1 -2 pages in length)

 

 

 

 

 

Recommendations

 

11. Analysis: Please analyze the information presented above and discuss what conclusions you can draw from this information. (2 – 3 pages in length)

 
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FIN Questions

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Data

DATE S&P 500 Index Gold Prices
1975 90.19 139.30
1976 107.46 133.80
1977 95.10 160.45
1978 96.11 207.83
1979 107.94 455.08
1980 135.76 594.92
1981 122.55 410.09
1982 140.64 444.30
1983 164.93 389.36
1984 167.24 320.14
1985 211.28 320.81
1986 242.17 391.23
1987 247.08 486.31
1988 277.72 418.49
1989 353.40 409.39
1990 330.22 378.16
1991 417.09 361.06
1992 435.71 334.80
1993 466.45 383.35
1994 459.27 379.29
1995 615.93 387.44
1996 740.74 369.00
1997 970.43 288.74
1998 1229.23 291.62
1999 1469.25 282.37
2000 1320.28 271.45
2001 1148.08 275.45
2002 879.82 347.50
2003 1039.25 376.10

1

Group Project FIN 320 – Fall 2020 Part I Total Points: 37.5 This part of the project deals with portfolio return/risk calculations. To complete the project, you will hand in a set of answers to the questions listed below along with any supporting calculations and graphs. This project should be neat and well organized so that I can easily find your answers to each of the questions. 1. Data: This project makes use of annual data for two risky securities: the S&P 500 Index and Gold.

Annual values for each of these securities during the 29-year period from 1975-2003 are provided in a spreadsheet named GroupProject1Data.xls. The spreadsheet is available on the class web page. You will also need an estimate of the annual risk-free rate. To get this rate, you should take the most recent annual rate on U.S. Government Securities (note: select the Treasury Security you feel is most relevant for a one-year investment horizon). These rates can be found on the following web page: http://www.federalreserve.gov/releases/H15/update/

 

List your estimate of the annual Risk-Free rate here: ______________________ What date did you use to identify this interest rate? ______________________ What U.S. Treasury category did you use to identify this rate? ______________________

2. Return Calculations: Calculate annual returns for each of the two securities for each of the 28 years from 1976 through 2003. Calculate the average annual return, the standard deviation of annual returns, and the correlation between the returns of the two securities during this period and fill in the table provided. (Note: all of these calculations are based on annual security returns not index values). Attach the spreadsheet showing all of the relevant calculations as Exhibit 1.

S&P 500 Gold

Average Annual Return Standard Deviation of Annual Returns Return Correlation(S&P,Gold)

 

 

 

 

2

3. Capital Allocation Lines: Assume that the mean return, standard deviation, and correlation estimates you calculated above provide a reasonable forecast of the expected returns and risks of these securities for the coming year. Based on these forecasts, plot the two risky securities on an expected return – standard deviation graph. Also, plot the risk-free security. Be sure to label all three securities on the graph. Draw the Capital Allocation Line for each of the risky securities (S&P and Gold). Attach the graph as Exhibit 2.

4. Risky Portfolios: Calculate the expected returns and standard deviations of portfolios that combine the

two risky securities (S&P and Gold), varying weights from 0% to 100% in increments of 5% (note: this should result in 21 portfolios). Attach the spreadsheet showing all relevant calculations as Exhibit 3.

5. The Opportunity Set and the Optimal Risky Portfolio: Plot the risk-free security and the 21 portfolios

described in question 4 on an expected return – standard deviation graph. Be sure to clearly label the S&P 500, Gold, and the risk-free security on the graph. Identify and label the Minimum Variance Portfolio on the graph. Identify and label the Optimal Risky Portfolio on the graph and draw the Capital Allocation Line (CAL) for this portfolio. Attach the graph as Exhibit 4. What are the portfolio weights in the Optimal Risky Portfolio? ____________________________

 

What is the standard deviation of the Minimum Variance Portfolio? ____________________________ 6. Capital Allocation using the Optimal Risky Portfolio: Pick a target annual return between 2% and 10%.

Using the risk-free security you identified above and the Optimal Risky Portfolio you found in question 5, calculate the portfolio weights (in the risky and risk-free) that would be required to achieve this target annual return. Calculate the standard deviation of this portfolio. Label this point on the graph in Exhibit 4 and fill in the table below.

 

Optimal Risky Portfolio

Target Annual Return Weight in the Optimal Risky Portfolio

Weight in the risk-free security

Portfolio standard deviation

 

 

3

7. Sensitivity Analysis: (a) Repeat questions 4 and 5 assuming the correlation between the two risky securities is ρ=0.30 (but

using the same expected return and standard deviation forecasts). Attach the spreadsheet showing all relevant calculations as Exhibit 5 and the expected return – standard deviation graph as Exhibit 6.

What are the portfolio weights in the Optimal Risky Portfolio? ______________________

 

What is the standard deviation of the Minimum Variance Portfolio? ______________________

How do the Minimum Variance Portfolio, the Optimal Risky Portfolio, and the CAL for the Optimal Risky Portfolio compare to those from question 5?

(b) Repeat question 6 assuming using the Optimal Risky Portfolio from question 7(a). Fill in the table

below. (Note: Use the same target return as in question 6.)

Optimal Risky Portfolio

Target Annual Return Weight in the Optimal Risky Portfolio

Weight in the risk-free security

Portfolio standard deviation

How does the standard deviation of this portfolio compare to that from question 6? (c) What do the results from questions 7(a) and 7(b) tell us about the relation between security

correlations and diversification?

 

 

 

4

Group Project FIN 320 – Fall 2020 Part II Total Points: 37.5

 

The second part of the project deals with the Capital Asset Pricing Model and Market Model estimation of the CAPM. To complete the project, you will hand in a set of answers to the questions listed below along with any supporting calculations and graphs. 1. Data: This project makes use of weekly returns for one year on a market index (the S&P 500) and two

international Exchange Traded Funds (ETFs) listed on the American Stock Exchange. You will use the S&P 500 as a proxy for the “market portfolio”. You will then choose two international ETFs from among the international funds listed on the American Stock Exchange web page (go to http://www.amex.com/etf/prodInf/EtPiMain.jsp and select “international” to see a list of these ETFs). Weekly prices for each of the ETFs with sufficient data are provided in a spreadsheet named GroupProject2Data.xls. The spreadsheet is available on the class web page. You can use the data from the spreadsheet or obtain the data from the AMEX web site. Throughout the project, you will assume an annual risk-free rate of 1.5%. You can estimate the weekly risk-free rate by dividing the annual rate by 52.

2. Return Calculations: Calculate weekly returns for the S&P500 and each of the international funds for each of the 52 weeks during the sample period (note: there are 53 weekly prices to calculate 52 weekly returns). For each security, calculate the mean return, standard deviation, and variance of weekly returns, and fill in the relevant data in the table below. Be sure to list the ticker symbols for the international funds you have chosen. (Note: these summary calculations are based on weekly returns not prices). Attach the spreadsheet showing all relevant calculations as Exhibit 1.

Summary Statistics for Weekly Returns Mean Return Standard Deviation Variance

S&P 500 International Security 1: Ticker = International Security 2: Ticker = Risk-free rate – –

 

3. The Capital Market Line: Using the mean returns and standard deviations you calculated in question 2, plot the S&P 500 (the market) and the two international funds on an expected return – standard deviation graph. Using the weekly risk-free rate given above, draw the capital market line (CML). Be sure to label all of the securities (including the risk-free security) on the graph. Attach the graph and related calculations as Exhibit 2. Are the positions of the international securities on the graph consistent with CAPM? Why or why not?

 

 

5

4. The Market Model: Calculate weekly excess returns for each of the international funds and the S&P 500 (the market) by subtracting the weekly risk-free rate from each weekly return. For each of the two international funds, create an X-Y scatterplot with the excess returns of the international fund on the Y- axis and the excess returns of the market (S&P) on the X-axis. Add a trendline (security characteristic line) to each graph. Using either the trendline options or other excel functions, calculate the Alpha and Beta for each of the international funds and fill in the related information in the table below. Attach the graph and related calculations as Exhibit 3.

Market Model Estimates Alpha Beta R2

S&P 500 International Security 1: Ticker = International Security 2: Ticker =

5. Market vs. Firm-Specific Risks: One of the benefits of the market model is that it allows us to decompose

total risk (variance) into two components. Using the equation we discussed in class, calculate the market component of risk and the firm-specific component of risk for each of the securities. Fill in the related table below and Attach any related calculations as Exhibit 4.

 

Decomposition of Risk Total Risk Market Risk Firm-Specific

Risk S&P 500 International Security 1: Ticker = International Security 2: Ticker =

Which of the three securities is the riskiest based on total risk? How does your answer change if you consider only systematic risk? How does your answer change if you consider only firm-specific risk?

6. The Security Market Line: Using the risk-free rate and the mean returns and Betas of the international

securities and the market (S&P), create an expected return – beta graph. Be sure to label all of the securities on the graph (including the risk-free security). Draw the Security Market Line (SML) for this set of securities. Attach the graph and related calculations as Exhibit 5. Are the international funds priced correctly according to CAPM? If not, what would be your buy/sell recommendations for these international funds?
 
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Harvard Business Revue Case Study Buzzfeed Paper

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Assignment 1: BuzzFeed Case Study Analysis & Application

Instructions
1. Read the HBR Case Study “BuzzFeed: The promise of Native Advertising.”

2. Write your Analysis and Application (using the provided template) in response to the below questions; organize your Case Analysis & Application as follows:

a. Introduction (Suggested length: 1-2 paragraphs)
i) Provide a brief summary of the case study. You can also include information from the BuzzFeed website and other sources to supplement this case with more recent I information.

b. Analysis/Application
Answer the following questions:
i) Think of a BuzzFeed style list that is related to your business (past, current or future) which would attract a lot of attention. What headline would you choose? Why? On what social media platforms would it be shared most often?
ii) Are people tired of this type of content?
iii) Does BuzzFeed still maintain a competitive advantage? Why or why not?
iv) BuzzFeed has been a leader when it comes to shareable content. Melissa Rosenthal states “You can trick people into clicking, but you can’t trick them into sharing.” What does she mean? How can you get your clients to share your content?
v) How do ideas spread on social? What steps can you take to produce contagious media?

c. Conclusion
Formatting Requirements:
-Typed in a Word document using the provided template
-Double spaced using font size 12
-References must be included in the form of a reference page (APA format suggested)
-Your analysis should be no more than 5 pages in length (excluding the cover page and references).

 
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