Krispy Kreme Doughnuts Firm’s Global Market Essay (Critical Writing)

Company Profile

Krispy Kreme Doughnuts was established in 1937 with its first store in North Carolina by Vemon Rudolph who had bought a secret recipe for donuts from a French Chef. Since then the company has grown internally and externally through improvisation and expansion of new stores throughout the US. In 1973 after the death of its founder the company was sold to Beatrice Foods which later gave back the holding of the company to a small group of associates who were previous franchisees of the company. The company went public in April 2000 and opened its first international outlet in Canada in the year 2001.

Marketing Strategy

The company offers franchise opportunities to investors worldwide who wish to open the store and get full franchise support from the company. The company has managed to enter different markets in different countries including Canada, Mexico, Middle Eastern countries, Australia, and Asian countries such as Korea, Japan, Indonesia, Malaysia, and the Philippines. The current report will provide an overview of a potential market in Asia for Krispy Kreme Doughnuts and make recommendations regarding the market and the culture that is practiced in this market.

Target Country

The country selected for this report is China which lies in Asia and has emerged in the last 20 years or so as the economic powerhouse. The country has both traditional and modern values tied together in a matrix which gives it a global perspective. This market would be analyzed by using a marketing analysis tool PESTLE and assess different factors prevalent in the market to make recommendations for the company.

Political

1. China has remained a communist country even 50 years onwards since it declared its existence. However, the government also runs a cabinet that looks after local issues in different states.
2. There is no substantial opposition party existing thus imposing some concerns regarding the authoritarian regime in the country.
3. China has 23 provinces, 5 autonomous regions, and 4 municipal communities (CIA, 2009) however the power is not spread out and the reigns are only in the hand of the Chinese Communist Party.
4. China has a strong executive, legislative, judicial, and constitutional framework which allows it to offer a healthy economic environment for businesses.

Economical

1. China has emerged as an economic and financial hub.
2. China has opened its central planned system in the late 1970s to the market-oriented economy which allowed foreign companies to seek better opportunities in China.
3. Foreign Direct Investment exceeded US$81bn in the year 2007 (CIA, 2009) and many foreign companies have shifted their manufacturing setups to China.
4. The exchange rate of Chinese currency is the Yuan which has a pegged value of US$. This removes the uncertainties in currency valuations.
5. China is the world’s second-largest economy after the US and it aims to become the largest by the year 2025.
6. The GDP (PPP) is US$7.8 trillion and in 2008 it showed a growth of 9% lowest in the last 7 years because of a sharp decline in the last quarter of 2008 due to the current global recession (CIA, 2009).
7. China has the largest working population of 809.9 million people (CIA, 2009). The working class has also experienced better living standards and savings have improved as well.

Social

1. China is the world’s densely populated county with a population exceeding 1.3bn people.
2. Almost 42% of the Chinese population lives in urban areas. There is continuous migration of people from rural areas to cities in search of better work opportunities (CIA, 2009).
3. The Chinese society is considered to have wide income gaps that exist between rural and urban areas. There is vocalized opposition against the government and agencies for these disparities.
4. The Chinese culture has remained traditional for many years and its values have remained as those practiced by Chinese ancestors. However, with the exposure to western cultures, recognition of foreign brands, and change in people’s living standards there is a visible change in the ways of life which could be seen as a shift to modern civilization at all levels of society.
5. Foreign brands are respected for the quality and image that they carry which has allowed companies to gain profits from this market.

Technological

1. China has become a major competitor in technology producer. A recent survey indicates that China is at the same level as the US in terms of its contribution to science and technology (Toon, 2008).
2. In addition to developing high-end technology, China has been able to produce it at a cheaper cost compared to its major competitors.

Legal

1. The legal framework is strong in China. However, product & brand infringement is a big issue faced by foreign companies.
2. Many foreign companies have entered lawsuits against counterfeiters and unauthorized companies using their brands diluting their image.

Environmental

1. The Chinese government has vowed to strengthen its commitment to global environmental issues such as carbon and other toxic wastes production and emission.
2. According to recent research, the Chinese fast food industry is considered to offer to be imperfect in terms of inadequate laws and regulations, unregulated consumption, safety issues, and weaknesses in the distribution systems (CRI, 2009).

Recommendations

China although an economic success, indicates few disparities in wealth distribution, weaker regulations about the food industry, and safety issues. The government remains positive on foreign investment entering the country. It is recommended through this report that the China outlook remains very strong and the cultural trends suggest that fast food products such as Krispy Kreme Doughnuts would be high on consumers’ preference list in times to come.

References

CIA. (2009). CIA Publications – China. Web.

CRI. (2009). Research Report of the Fast Food Industry in China. China: China Research and Intelligence.

Toon, J. (2008). Study Shows China as World Technology Leader. Web.