Analyzing Dunkin' Donuts' International Business Growth Strategy

This report provides a detailed analysis of Dunkin' Donuts' international business growth strategy, focusing on its approach to expanding into new markets. It highlights the company's competitive strategy, which centers on cost leadership, and its reliance on franchising as a key market entry strategy. The report examines Dunkin' Donuts' organizational structure, supply chain management, and human resource practices across borders, emphasizing the importance of strong franchise relationships and effective operational control. The company's success is attributed to its store consistency, ability to build a strong franchise network, and diligent supply chain management, which ensures the delivery of quality products to meet consumer demands. The report also touches upon the challenges of managing human resources in a global context and the strategies Dunkin' Donuts employs to mitigate organizational risks and foster employee development.

REPORT ON DUNKIN DONUTS INTERNATIONAL BUSINESS GROWTH STRATEGY 1.
Report on Dunkin Donuts International Growth Strategy
Name
Institution

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Executive Summary
The expansion of business operations to international markets is not an easy task for the
most organization management team. It requires the development of effective strategies and
development of market research aimed at understanding the ease of doing business in those new
markets and determination of successful factors influencing entry into the markets. The study
provides a detailed report analysis of business international growth strategy of Dunkin Donuts
Company as well as help in identifying critical issues that the management of the company
would want to consider by providing the required attention or solution.
Introduction
The rapid growth of the modern corporate world concerning competitiveness has forced
most companies to invest in building their capacity for creating economies of scale. To achieve
these most companies have therefore focused on developing expansion strategies to new
markets. However, there is the need for strategic planning through the suitable use of corporate
resources to facilitate successful market penetration (Cavusgil et al., 2014). Development of an
international expansion growth strategy involves critical analysis and development of market
entry strategies and is a component of essential choices concerning the company primary market
focus, target customer groups, channel distribution strategy, brand positioning, product, and
service value creations as well as resource allocation. Expanding a business globally or seeking
to achieve increased economies of scale requires the development of different international
growth plans (Hitt & Xu, 2016). In most case, some business chooses to develop a new strategy
while other may use the existing global business strategies. Whichever case, according to
strategic management specialists, Michael Porter, there are three strategies which if successfully

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implemented as a way of developing an international growth strategy contributes to a substantial
competitive advantage for the company. These generic strategies include the differentiation
strategy, cost leadership strategy, and the focus strategy. Therefore this study aims at providing a
detailed report on the business international growth strategy for Dunkins Donuts Company.
Overview of Dunkins Donuts Company and its current Operating Position
Dunkin Donuts is an American multinational or global doughnut company that was
founded in the year 1950 by Willian Rosenberg. Since its establishment, the company has grown
to become one of the leading coffee and baked goods chains or company in the world. The
company has been serving customers internationally for over 40 years and currently operates
more than 12000 restaurants or stores in 36 countries. Despite its concentration in US stores, the
company has one of their largest international markets in South Korea which represents
approximately 4% of the company international sales (Hoffmann, 2014). It operates under the
coffee and snack global market or industry and has been able to achieve an increased growth
success as a result of their store consistency and ability to establish a strong franchise. Its growth
strategy is focused on cost leadership not only on the US snack and coffee industry but also
globally. Currently, the company has been able to develop 23% of market share in the coffee and
snack market with over 7000 stores in the US and estimated sales revenue of $ 658 million. The
company leading competitor is the Starbucks which controls 32.6% of the public market share in
the US and operates over 11000 stores with sale revenue of $ 13.2 billion per year.
Figure 1: Revenue Growth for the Organization

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Source; Dunkin website, https://www.dunkindonuts.com/
Review of Dunkins Donuts Company international competitive strategy
The company global competitive strategy is becoming a cost leader in the coffee and snack shop
industry or market. To achieve a competitive advantage in the market through cost leadership
strategy, the company aims at producing more. This strategy contributes to a higher asset
turnover as well as ability to spread out the company fixed costs over a large number of values.
The company also seeks to achieve cost leadership by offering a variety of standardized goods or
products helping the company to limit the amount of product or service customization the
company has to make (Samson & Sheela, 2016). As part of the company international
competitive strategy, the company has also focused on buying on bulk, bidding competitively
over contracts as well as working with the company vendors to keep the inventories low (Buzza,
2016). By doing so, the company has been able to control over their international supply chain.
Lastly, the company has been able to build a healthy relationship with its suppliers as an
essential strategy to keep their operational costs.
Figure 2: Competitive Differentiation Strategy

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The company has also developed their growth strategy around three main pillars which
focus on developing more shops. These shops are owned by the company as well as franchised
which has helped the company build strong franchise relationships over time ((Musso &
Francioni, 2014). For instance, approximately 7000 stores out of 10000 stores operated by the
company are franchise stores. Therefore the company growth success is attributed to its store
consistency and ability to build a strong franchise.
Dunkin Donuts Existing Organizational Design Structure and Control Issues
The development of effective organizational design and structure is significant in the
event of a company growth strategy. Poor corporate design and construction contributed to
increased contradiction, confusion within roles, slow decision making and lack of proper
coordinating as well as failure to share ideas. Organizational design defines the process through
which the corporate managers make appropriate regulatory choices that contribute to the
development of a particular organizational structure ((Castellani et al., 2018). Dunkin Donuts has
developed a standard structure through a chain of many franchise businesses through which
control is organic and decentralized. Its structure is built on the development of coffee and

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donuts brands across the various markets. The structure of the structure of the company
influences the operational activities and control. The company has therefore developed its
formation under the divisional structure which is further divided into privately owned franchise
available to the public for purchase.
Each franchise or restaurant established is headed or controlled by a restaurant or unit
manager who is responsible for overseeing the operational activities of that unit. Each franchise
is governed by its own rules and regulations and is comprised of unit managers, shift leads as
well as shift supervisors. The staff of the franchise works under non-supervisory basis ((Hitt &
Xu, 2016). The company can attract skilled and qualified employees through external and
internal recruiting strategies. However, based on the organizational growth strategy, the
employees are required to possess the customer service attitude. Therefore such an
organizational structure has been vital in helping the company run the operations of its chain of
stores in different regions and countries. With a decentralized structure, the company has been
able to reduce the control issues resulting from the many franchise business which required the
company to establish strong relationships with the owners (Zhu, 2016). The organizational
structure will, therefore, be significant in enhancing the expansion growth strategy of the
company despite increased concerns to continue building strong relationships with the franchise
owners.
Entry strategies used to enter into new markets
One of the critical elements of successful entry into new markets or regions is choosing
the best marketing strategy. It is a great mistake for the company marketing department or the
management team to assume that what worked in other areas or markets will as well work in the

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new target market (Yoder et al., 2016). It is therefore essential for the marketing team to conduct
market research by assessing the current market situation, the market size as well as the trends in
the market. It is also essential to determine the levels or how intense competition is in the new
market as well as the laws and regulations governing business activities in the region.
Figure 3: Summary of Effective Entry Strategy
The company has therefore been able to develop an effective marketing strategy that has
enabled it to penetrate its operations in 36 countries internationally. However, its successful
entry into the new markets has been through the business efforts to acquire or adopt a franchising
strategy. Franchising refers to a business strategy that allows one party to operate a business
under your brand name (Vujović et al., 2017). The franchise grants the franchisee the right to use
the company brand name as well as its operating systems. It is an effective strategy regarding

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cost since it demands slightly fewer investments compared to licensing. The approach is also less
demanding regarding capital than setting up a new business entity. The franchising strategy has
contributed to the success of Dunkins international expansion growth strategy. The company has
been able to build strong franchise relationship with approximately 70 percent of their operations
been franchise owned (Silva et al., 2017). For example in the United States, nearly out of 10000
stores, 7000 of them are franchise businesses operated under different management structures but
using the company brand name and operating systems as well as the company marketing
campaigns.
Operational control, production/ supply chain management of Dunkin Donuts Company
The company has been able to work diligently to maintain an adequate supply chain
management. This has enabled the company to achieve overall success and become one of the
best coffee chains in the world. The company supply chain and production activities have been
controlled and developed towards meeting their consumer demands and needs (Singh & Delios,
2017). One of the companies operational control strategy has been the development of the
limited time offer deals which has contributed to the significant success of the company as a
brand in different markets and the restaurant industry. The company operational control has been
enhanced by the adoption of worksoft software that has enabled the company to increase the
speed of their business process testing.
Its successful supply chain management ensures that every item produced by the
company from the coffee beans to the sugar as well as the Styrofoam cups go through the chain.
The company does not own the coffee during its transition through the supply chain until it
reaches the hub. Even at that particular point, the coffee is not still under the hands or control of

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the franchise and therefore has to be monitored, managed and improved if need be (Rugman &
Verbeke, 2017). The supply chain effectiveness has also been enhanced by the use of voice
logistics technology as well as the use of advanced software’s to help the supply chain managers
in ensuring proper flow of the goods. The company on time delivery on time strategy has hugely
done well in providing reliable services to the consumers.
Dunkin Donuts Management of Human Resources across borders
It is not an essay task to manage the human resources of a business that has extensive
international experience. However, Dunkin Donuts Company has been able to develop effective
strategies to reduce the organizational risks brought about by poor human resource management
as it can significantly impact the performance of the brand in the international markets (Olson et
al., 2018). The rational resource management strategy is focused on achieving operational
excellence, improving their focus on employee and franchise staff development as well as
stimulates growth through training and equipping the employees and other staff with customer
awareness skills.
To manage the human resource across borders, the company has been able to develop
effective partnerships with the franchisees which have enabled them to achieve the business as
well as the employees working in a particular store. The unit managers, therefore, have the
responsibility of managing the staff under their care which makes it easier for the company (Rees
& Smith, 2017). The company has levels of engagement, and their readiness in solving any
issues concerning the company employees has enabled the company to have minimal human
resource issues to handle. The company has also been able to attract the right talent with a focus

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on excellent customer attitudes. However, there is a need to develop more training programs
aimed at providing the franchise staff with excellent customer experience skills.
Identify any critical issues or opportunities for the management
From the report above, Dunkins Donuts Company has been able to apply their growth
strategies very well which has given them a competitive advantage in the market as well as
helped the company increase their productivity. Developing a cost leadership strategy has been
essential to their success as it provides them with a competitive advantage in the restaurant
industry (Castellani et al., 2018). The implementation of franchising strategy has also been very
successful in helping the company gain easy penetration into different new markets and regions
and therefore contributing positively to the achievement of the company expansion and growth
strategy globally.
Figure 4: Summary of a competitive strategy

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However, due to their economies of scale or their international presence, issues relating
to franchise relationships have come up which poses a significant challenge to the company to
seek to establish more strong relationships with their franchisees (Musso & Francioni, 2014).
The company management team has a responsibility to develop training programs for increased
efficiency in service delivery to their customers. The company current plan to increase the
number of the number of restaurants in the US by 1500 stores is a great move however it is
important to also focus on expanding their international presence to other nations or regions.
Recommendations to the Management for improvement
The management of Dunkin Donuts has done a commendable job in driving the company
into excellence. The development of business growth strategies and their implementation can be
said to be very successful. With an increased commitment to the company strategic goals and
improvement on few issues of concern, I believe the current management will steer the company
into future success and rival their industry competitors the Starbucks Company by becoming the
market leader in the coffee and snack industry or market globally. However, few issues need to
be corrected by the management of the company. It is therefore recommended that the company
should develop training programs for the franchise staff on offering excellent customer
experience as this will contribute to increased customer loyalty. The management should also
design and roll out training specifically for the front line colleagues. There is also a need for the
administration to develop more strong relationships with the franchise by understanding the
various concerns raised and responding through appropriate support as this will play a vital role
in enhancing the brand image. There is also a need to develop more strategies aimed at product

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cost related initiatives to support the company main growth strategy of cost leadership in the
industry.