Krispy Kreme

KRISPY KREME DOUGHNUT INC

~CASE ANALYSIS~

PROBLEM STATEMENT

Krispy Kreme Doughnut Inc, which is one of the largest doughnut manufacturing companies in the world, has experience historical success since the conception of the firm in 1932 by Vernon Randolph. More so recently the firm continued to experience these historical results until 2004 when questionable accounting practices as well as a fundamental breakdown in management lead the firm into financial scrutiny throughout that year. As a result of these questionable accounting practices and management issues, investors as well as financial analysis have lost faith in the financial health of the firm and are skeptical. As a result of this skepticism Krispy Kreme’s share price has decreased significantly. Therefore management is diligently working on a solution to this problem in order to restore the financial confidence of investors and analysis. Four different options, which are not mutually exclusive, are being considered to remedy the situation. Swift action and implementation of the suggested strategies are needed.

Alternative Solution Considered

Implement a less aggressive business strategy to preserve the uniqueness of the Krispy Kreme brand name. The pro is that by doing so this will enable Krispy Kreme to keep the market from becoming saturated with it’s products. Also by doing so they will be able to decrease expenses, such as Capital Expenditure and that in turn will have a positive impact on profitability. The con is however, the strategy of being less aggressive in expansion could cause Krispy Kreme to leave “money on the table” due to the fact that there are always emerging untapped market out there just waiting for different product’s or in their case doughnut’s. Although there may be some negative backlash, Krispy Kreme is in urgent need of restoring the faith of the financial health of the firm.

Initiate less aggressive accounting practices to avoid further inquiries about the companies...