Question

Krispy Kreme – A Mexican Delight? Krispy Kreme has focused on global expansion over the past several months. It has developed joint ventures to offer Krispy Kreme doughnuts in Australia, England, and Canada. Most recently, a Krispy Kreme outlet opened in Mexico City, Mexico, and the company wants to open at least 20 more stores. The organization now has plans for joint ventures that will enable franchises to open in Japan. You and a partner own a Krispy Kreme franchise in Texas, and the business has been doing well. When you initially opened, carloads of people lined up around the building for weeks, and when the “HOT” sign is on, business continues to be good. You are now considering pursuing another franchise opportunity with Krispy Kreme. Since your partner travels to Mexico regularly, you are wondering if perhaps a franchise there will be as popular as yours has been here. At the time when you opened this Krispy Kreme, you had the business/marketing knowledge, and your partner provided most of the start-up capital. Since that time, though, your partner has earned a marketing degree as well and you have accumulated money for investment; thus, your roles would be equivalent this time. You have both agreed to think about the investment and to come up with recommendations independently to discuss with one another. You decide to write down a discussion of the major concerns that you have. First, evaluate Mexico as an opportunity for opening a Krispy Kreme successfully. You should include a discussion on the social, economic, and cultural factors that may help in making a sound business decision. In addition, determine if a joint venture would be the best route for developing franchises in Mexico. Finally, write your recommendation and justify it.

1 page required

Answer 1

In order to start any business first of all one need to have a detailed business plan ready to undertake any activity.

If we talk about starting up any food joint we need to have a detailed discussion with all the partrner as mentioned below:

1. Mexico as an opportunity for opening Krispy Kreme

First of all we need to evaluate Mexico in terms of economic front in the recent years Mexico Government has opned its doors to foreign companies to under the FDI (Foerign Direct Investment) policy. Govt. is not only showing high consumer confidence within an economy but also making its norms easier for foreign companies to enter the market.

In Mexico Joint Venture wherein the partner would be form Mexico only its provide Govt. not only economy boost but also employmnet to local peoples. Considering the unemploymnet rate in Mexico labour is available at cheaper cost as compared to other neighbouring countries.

2. Points of discussion:

A) Research on Food/Restaurant Industry: A detailed research need to be conducted in order to identify the category of food joint/restaurants operating in the area we plan to open our outlet, eating habbits of local people, standard of living, per capita food consumption & spending.

B) Study of Goverment Rules, Regulation & Norms: Study of govt. policy regarding the food industry their is must in order to understand the taxes, fee, duties, documentation formalities an dother obligations.

C) Financial Plan & Projection: Need to consider how does it cost to open a restaurant in the various areas of the city you plan to start your joint, financial planning should map out a realistic cash flowf for the first year of business.

D) Marketing Strategy: Need to have a team of marketing professional at initial stage in order to determine how you will reach your consumer.

E) Social, Ecomomic & Cultural Study: As the business we staring is the targeting all walks of life we need to have a sound undrerstanding of the social trend i.e. their like and dislikes, their eating habbits and the economic condition of the public also need to understand the local culture to make sure food reflect their local taste and match as per their culture.

Joint Venture would be best route for developing a franchises: As there will be equal libality of both the partners it would be best to start a business.

A) Low Cost Production: When there is two partners comes together the main aim is to provide th eproduct as the most effective price and this cab be done when the cost of production can be reduced. A genuine joint venture aims at this only to provide the best product and services.

B) Brand Name: When two estabilished names comes together is always easier for their marketing team to make an impact. This helps the venture to encahs the goodwill of the company which is already established.

C) Innovation & New Ideas: Joint ventures always give an added advantage to upgrading the products & services with respect of technology sharing and exchnage of ideas. As companies come up with new technology to reduce the cost & provide better quality.

D) Shared Risk, Cost & Benifits: Irrespective of how strong your research risk factor is always there, joint venture has a pre defined risk sharing agreement. As at times market is unpredictable hence in joint venture is always a benift of sharing or risk. cost and other benifits.

E) Knowledge of Local Market: When you join hands with the local partner it not only help you with the social, cultural & econoic information but it alos help you to understand the local market well and as a result the expenses of marketing can be reduced.