Case 7 Dunkin'Betting Dollars on Donuts Using Chapter '3" content from the Schermcrhorn, John R. Jr. EspioringManagem-enr, Seventh Edition, please completely answer the following questions. To earn full points; it is important to utilize content and examples from the text to support your answers. Unce a niche company operating in the northeastern United States, Donkin ' is opening hundreds ofstores and entering new markets. The in to giant is also expanding itsfood and coffee menus to ride the wave offresh trends ond to apneoi to a new generation of customers Can the co rnponyr keep up with its own ropid growth? Serving the Caffeinated Masses There's a lot more to a coffee shop thanjust change in the tipjar. Some 4m billion cups of coffee are consumed every year, making it the most popular beverage globally. Estimates indicate that more than 15f} million Americans drink a total of465 million cups ofcoffee a day. With Starbucks driving tastes for upscale coffee, some customers may wonder whether any coffee vendors remember the days when drip coffee came in only two varietiesregular and decaf. But Dunkin' does, and it's betting dollars to donuts that consumers nationwide will embrace its reputation for value, simplicity, and a superior Boston Kreme donut. Americans are familiar with the Dunkin1 brand through its more than 3,5 domestic outlets, which have their densest cluster in the Northeast and a growing presence in the rest of the country. But the brand has also managed to carve out an international niche with international shops in 36 countries. D'unkin1 shops are not only found in expected markets such as Canada and Brazil, but also in some unexpected locations like Qatar, South Korea, Pakistan, and the Philippines. Changing CourSe to Follow Demand For most of its history, Dunkin's primary product focus was implicit in its name: donuts. and coffee in which to dip them. Firsttime customers acquainted with this simple reputation were often overwhelmed by the wide varieties ofdonuts stacked endtoend in neat, mouthwatering rows. But faced with erce and innovative competitionthink Starbucks Caribou, and Seattle's Best among othersDunkin' opted for a time-honored business tradition: Follow the leader. The company now offers a competitive variety of espressobased drinks complemented with a broad number of sugarfree avorings. including caramel, vanilla, and Mocha Swirl. You can also breakfast on Dunkin's bagel and croissantbased breakfast sandwiches or sausage pancake bites, or have a Big N' Toasted. Spot on with Partnerships Dunkin's history of offering simple and straightforward morning fare has given it the competitive advantage of distinction as the anti-Starbucksearnest and without pretense. Like Craftsman tools and Levi'sjeans, the company appeals to unpretentious people who enjoy well crafted products. Although Dunkin' often partners with a select group of grocery retailerssuch as Stop 3!. Shop and Walmartto create a storewithin-astore concept, the company won't set up shop injust any grocery store. \"We want to be situated in supermarkets that provide a superior overall customer experience," said John Fassak, vice president ofbusiness development. \"chourse. we also want to ensure that the supermarket is large enough to allow us to provide the full expression of our brand . . . which includes hot and iced coffee, our line of highquality espresso beverages, donuts, bagels, muffins, and even our breakfast sandwiches." But why stop at grocery stores? Taking its cooperation philosophy a step further, Bunkin' has also entered the lodging market with their first hotel restaurant at the Great Wolf Lodge in Concord, North Carolinaone ofHorth America's largest indoor water parks. D'unkin1 offers a variety of store models to suit any lodging property, including full retail shops, kiosks, and self serve hot coffee stations perfect for gift shops and general stores, snack bars, and convention registration areas. You'll also find Dunkin's packaged coffees for sale on grocery store shelves.just like Starbucks. They accomplished this through a distribution alliance with Procter 3r. Gamble. So, Dunkin' is clearly on the move. 1|t'v'ho knows where the brand will pop up next? Sweet Future or a Gold Cup? If Dunkin' can find the sweet spot, by being within most consumers' reach but fallingjust short of a Big Brotherlike omnipresence, the company's strategy of expansion may well be rewarded handsomely. But this strategy is not without its risks. In the quest to appeal to new customers, offering too many original products and placements could dilute the essential brand appeal of coffee and donuts and alienate longtime customers who respect simplicity and authenticity. On the other hand, new customers previously unexposed to Dunkin' might see it as \"yesterday's brand" without the new offerings. For the time being, Dunkin' seems determined in its quest for domination ofthe coffee and breakfast market. Will Bunkin' strike the right balance ofproducts and placement needed to mount a formidable challenge against competitorsr.l Check the News! Things have been heating up the fast-food industry, and it's a spicy shift. McDonalds introduced its first new McNugget flavor in the United States in almost 4f} years . . . the Spicy Chicken l'v'lcN u get. Arby's presented roastbeef fans with Jalapeo Bites, Burger King unveiled a spicy chicken sandwich, and now Dunkin' has leapt into the avorful fracas with its own savory offering, the Spicy Ghost Pepper Donut, a simple cake donut with very special icingstrawberry mixed with one of the hottest chilis in the world. So, what do you think? Is the Donut innovator at the fore front ofa trend, or dunking a cup too far? Case Analysis Questions 1. Discussion [5 Points] How does Porter's ve forces analysis describe the food industry in which Dunkin' and Starbucks compete? 1What are the strategic implications for Dunkin'? 2. Discussion (5 Points) Could Dunkin' use strategic alliances to even better advantage than it does now? How could cooperative strategies help it succeed further with its master plan for growth? 3. Problem Solving (10 Points) Until recently, the Starbucks brand was much better known around the world than Dunkin'. As Dunkin's CEO, what global strategy- globalization, multidomestic, or transnational-would you follow to position Dunkin' as a real challenge to Starbucks in the international markets, and why