Krispy Kreme Case Analysis

TO:

FROM:

DATE: November 12, 2006

SUBJECT: "Krispy Kreme Doughnuts Going Global?"

This memo contains the answers to Questions 1 through 4 from the International Marketing assignment titled, "Krispy Kreme Doughnuts Going Global?" The questions are offset in the shaded area and the answers are provided below each question.

(1) Where should Krispy Kreme go next? List the next ten countries they should enter in order of most viable. Describe the criteria you used to develop your list.

I identified, evaluated and ranked the countries in which I think Krispy Kreme should enter next. The results of the analysis are summarized below. The criteria, presented in order of their importance and followed by a narrative description are:

1. Political / Legal

2. Economic

3. Cultural

Political / Legal

Political and legal considerations were given first priority in this analysis with primary emphasis given to whether a country's legal or political system prohibits or impedes foreign investment. If a country's political or legal system discouraged or prevented foreign investment, that country was disqualified from further consideration. Factors considered when assessing the political and legal environment:

1. Ease of doing business

2. Transparency International's Corruption Ranking

3. Relative political stability

4. Enforcement of ownership rights

5. Degree to which foreign investment is encouraged

Economic Environment

A country's economic environment plays a significant role in the success of businesses operating within that country. Countries with struggling or shrinking economies were not included in the top ten ranking. Economic indicators and trends selected for this analysis:

1. Gross Domestic Product (GDP)

2. Gross National Income (GNI)

3. Market size (population and population density)

Cultural Environment

Assuming a country had a favorable political, legal and economic environment; its cultural environment was evaluated. Culture impacts demand and the marketing mix; therefore, if a country's culture was deemed unfavorable, it was not included in the top ten ranking. Similarly, if a country's culture seemed especially favorable, that aspect is denoted later in the analysis. Cultural factors considered in this analysis:

1. Hofstede's Cultural Typology

2. Structural eating habits and trends

3. Acceptance of prepared and take-out food

4. Dietary considerations (to assess product adaptation requirements)

5. Perceptions of doughnuts as a breakfast food or a snack food

6. Preference for freshly prepared foods

7. Language and how "Krispy Kreme" translates

The aforementioned criteria were used to determine the ten most viable countries/regions for Krispy Kreme's international expansion. The list of countries/regions, presented in descending order, with especially attractive characteristics denoted adjacent to the apposite country, is presented in Table 1 on the following page.

Table 1

Rank Country Attractive Cultural Characteristics

1 Hong Kong Densely populated, open to Western ideas with positive U.S. country of origin effects, prefers freshly prepared foods, e.g. sushi, doughnuts are snacks (assumes product adaptation) implying all day consumption, brand and product recognition, speaks Chinese and English (business people); Collectivist culture promotes sharing (office heroes)

2 Japan Densely populated, prefers freshly prepared foods, e.g. sushi, doughnuts are snacks (assumes product adaptation) implying all day consumption, brand and product recognition, speaks Japanese and English (6 years of written English is part of formal education system); Collectivist culture promotes sharing (office heroes)

3 Singapore Densely populated, open to Western ideas with positive U.S. country of origin effects, prefers freshly prepared foods, doughnuts are snacks (assumes product adaptation) implying all day consumption, brand and product recognition, speaks Chinese and English (business people); Collectivist culture promotes sharing (office heroes)

4 South Korea Densely populated, open to Western ideas with positive U.S. country of origin effects, prefers freshly prepared foods, e.g. sushi, doughnuts are snacks (assumes product adaptation) implying all day consumption, brand and product recognition, speaks Korean and English (business people); Collectivist culture promotes sharing (office heroes)

5 Taiwan Highly and densely populated; very young population; speaks Chinese and English; open to Western ideas with positive U.S. country of origin effects, prefers freshly prepared foods, e.g. sushi, doughnuts are snacks (assumes product adaptation) implying all day consumption, brand and product recognition; Collectivist culture promotes sharing (office heroes)

6 Mainland China (Beijing) Highly and densely populated, open to Western ideas with positive U.S. country of origin effects, prefers freshly prepared foods, e.g. sushi, doughnuts are snacks (assumes product adaptation) implying all day consumption, brand and product recognition, speaks Chinese and English (business people); Collectivist culture promotes sharing (office heroes)

7 Thailand Relatively densely populated, open to Western ideas with positive U.S. country of origin effects, doughnuts are snacks (assumes product adaptation) implying all day consumption, brand and product recognition, speaks Chinese and English (business people);

8 Australia Psychic proximity; English language; huge country but population concentrated in urban centers; brand and product recognition

9 Mexico Physical and psychic proximity; familiar with English language; large population, 20 million in Mexico City,