Strategic Analysis - Dunkin Brands Group, Inc - Research Paper Example

Strategic Analysis - Dunkin Brands Group, Inc Introduction:- It is one of the most famous fast food restaurants chains in global quick service restaurants industry (Arn\orsson, 2013). Headquarter of the company is situated at Canton, Massachusetts, USA. It operates in 58 countries around worldwide and at 17000 points of distribution (DunkinDonuts.com, n.d.). SWOT Analysis:- Strengths: 1. Brand recognition is high 2. Competitive pricing strategy 3. Loyal customers 4. Variety in its products 5. Service quality Weaknesses: 1. Financial flexibility is limited 2. Geographical presence is concentrated 3. Does not focus on advertisement and marketing 4. Huge competition with other international organization which means decreasing market share growth Opportunity: 1. Introduction of low calorie healthy food 2. Online sales and marketing 3. Increase in coffee consumption Threats: 1. Competition from local bakeries and café 2. Difficult to adjust with snacking habit of some countries 3. Increase in raw material cost 4. People are become conscious of healthier low calorie food Financial Analysis:- Particulars 2012 2013 Current Ratio 1.19 1.34 Gross Profit Margin 78.82 78.17 Net Profit Margin 16.45 20.58 Return on equity 320.13 277.33 Return on Capital Employed 8.83 9.73 average settlement period for debtors 29.39 40.81 average settlement period for creditors 42.68 29.03 From the above table it can be seen that the current ratio has improved over the years. Although the current ratio has improved over the years but still it is less than the standard current ratio of 1.5. Thus, it can be said that the liquidity position of the company is not well. The company needs to improve its liquidity position in order to avoid any certain liquidity crisis. Gross profit margin of the company has slightly decreased over the years and net profit margin of the company has improved over the years. It indicates that the effectiveness and efficiency of the company has improved in generating net profit out of its total sales revenue. Return on equity of the company has decreased over the year, which indicates the efficiency of the company has decreased in generating income out of its total equity. However, return on capital employed has increased over the years, which indicate that the company has generated more revenue out of its total capital employed as compared to the year 2012. Average settlement period for debtors has improved over the years, which indicate that the company is now efficient enough in collecting receivables from is debtors. Nevertheless, the average settlement period for creditors has decreased over the years, which indicate that the company is delaying its payments to the creditors (Businessweek.com, n.d.). Thus from the above analysis it can be said that the company needs to improve its liquidity ratio to meet the necessity of liquid funds. The profitability of the company is average and it can be improved by improving the gross profit margin and the return on equity. Apart from these, payment to creditors should be made quickly in order to improve the brand image among creditors and shareholders (Finance.yahoo.com, n.d.). From the above industry analysis it can be said that the share price of Dunkin Brands Group, Inc. has decreased by 1.31% and index of the restaurant industry where it operates has decreased by .90%. It indicates that the performance of the industry has decreased. Three Strategic Alternatives for the Future:- The first alternative that can be taken into account for future business growth is the using online platform for sales and marketing. This will make the service quicker and easier. The second strategic alternative that can be implemented is the introduction of low calorie health food. Thirdly, Dunkin brand can think of going global by expanding internationally. Chosen Alternative for Implementation:- Spending on international expansion can be a useful strategy for long run as the competitors of Dunkin spend strategically on global market to increase the market share worldwide. Major competitors of Dunkin are Starbucks and McDonald who emerged as the leader of the market with more than 60 % market share together where Dunkin owns 16.1% of the market. Domestically it has been seen that the organization focuses on the blue-collar workers and kids in America where Starbucks and McDonald are highly popular among the young customers and high income group (Bagozzi, Wong, Abe & Bergami, 2000). International expansion will provide opportunity for strong growth worldwide and try the already new market in some part of Asia, Middle East, Africa etc., and the existing core market such as South Korea, Japan, and India. Implementation Plan:- As the major products of Dunkin such as Donut and Coffee are very flexible in nature so it is not very difficult to acquire new market for the company (Johnson & Scholes, 1999). In order to sustain in the market it is necessary to analyze financial requirements to expand the business. Evaluation of the product and service base with the cultural and political variation in different countries will also be necessary. The target market needs to be identified. Also, the licenses, laws, and regulation need to be properly analyzed before conducting business in new location. Strategic Goal & Objectives:- Current strategy of the organization is based on franchise and the product they market. The advantages of this strategy are that lower costs in operations. It is a very good strategy to go global as well. Other strategies include quality of the product as its use the best quality of coffee bean and other raw materials for its product. Its objective includes established the franchise of the brand worldwide and improve the relationship with all its stakeholders to sustain in the industry (Ottenbacher & Harrington, 2009). Tactical / Operational Plans with Time Frame to Implement Each Function:- Operation is one of the most important functions for any business organization and managing operation efficiently is very crucial for the business to sustain in the end (Stevenson, n.d.). The below discussed components need to be present in the operation plan. Business Input: It includes the supply of the raw materials to run the franchises though the company is not directly responsible for this part. NDCP is an organization owned by the franchisee who supplies the business input and responsible for sourcing, storing, and shipping the raw materials. Process: Dunkin procures centralized production system to sustain consistent product quality. Output: Products of the manufacturing process are the output though there are many variants in the menu, which needs to be done on instant basis at the time when customers order for it. Service: The Company is renowned for its quick service. Service providers are trained to give quality service and ensuring food safety Feedback: The whole process will end by getting feedback from the end customer and the other stakeholder. Flow Chart of Proposed Plan:- Balance Score Card:- Balance score card has four different perspectives or matrix such as Financial, Customer, Internal business processes and learning and growth to explain success. Financial Total sales revenue has increased over the years Return on equity decreased Avg. settlement period for debtors has increased Customer Increase internationally Blue collar workers and kids are the target customer Young generation and high income group customers need to be targeted Internal Business Process Successful franchise system Efficient supply chain management Learning and Growth Implementing new marketing strategy for international market Need to focus on advertisement and promotion  (Chou, Rashad & Grossman, 2005) Need to find new geographic market and customer segment References Arn\orsson, S. (2013). Quick Service Restaurant Trends: How are global quick service restaurant trends changing the Icelandic quick service restaurant industry? Bagozzi, R., Wong, N., Abe, S., & Bergami, M. (2000). Cultural and situational contingencies and the theory of reasoned action: Application to fast food restaurant consumption. Journal Of Consumer Psychology,9(2), 97--106. Businessweek.com,. (n.d.). DUNKIN BRANDS GROUP INC (DNKN:NASDAQ GS): Financial Statements - Businessweek. Retrieved from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=DNKN Chou, S., Rashad, I., & Grossman, M. (2005). Fast-food restaurant advertising on television and its influence on childhood obesity. DunkinDonuts.com,. (n.d.). Home | Dunkin Donuts. Retrieved 22 July 2014, from http://www.dunkindonuts.com Finance.yahoo.com,. (n.d.). DNKN Industry: Restaurants | Dunkin Brands Group, Inc. Stock - Yahoo! Finance. Retrieved from https://finance.yahoo.com/q/in?s=DNKN+Industry Jackson, S., Joshi, A., & Erhardt, N. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal Of Management, 29(6), 801--830. Johnson, G., & Scholes, K. (1999). Exploring corporate strategy (1st ed.). London: Prentice Hall Europe. Ottenbacher, M., & Harrington, R. (2009). The product innovation process of quick-service restaurant chains.International Journal Of Contemporary Hospitality Management, 21(5), 523--541. Stevenson, S. (n.d.). The operational plan (1st ed.). Read More