Case
organizations have tried to strengthen their competitive position with vertical integration. Krispy Kreme has established sizable cost savings, as well as alleviated the uncertainty of being dependent on suppliers for the crucial components needed to stay in business through backward integration. Their major competitors are all solely in the production and retail of coffee and baked goods.
Many retailers in the doughnut industry have several distribution channels. The larger establishments, such as Krispy Kreme, Dunkin Donuts, and Tim Hortons have distribution centers that supply the stores with essential supplies in core areas of their business. In addition, some retailers use supermarkets, convenience stores and other retailers as channels for distributing their products.
When looking at the barriers to enter into this industry, I believe that there are moderate barriers that exist. Capital requirements to construct a retail operation or franchise territories can range as high as $5 million. Experience and proven organizational capabilities are necessary to compete in this industry.
The globe is becoming smaller and smaller with every passing day thanks to technology. Technology has given many nations better standards of living, better businesses, and most importantly much healthier lives. New and more innovative equipment is available for producing doughnut products. The implementation of the latest technology in all business aspects, e.g. manufacturing, administration, finance, marketing, gives this industry unlimited opportunities to enter new markets and meet the demand of both existing and new customers.
The product characteristics in the doughnut industry are highly homogeneous. The products of different producers are essentially identical, where many buyers perceive little real difference from seller to seller. However, avid consumers of doughnuts tend to be brand loyalist and aware of product differentiations.