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18A comparative analysis between Dunkin’ Donuts and Baskin Robbins .... General information The founding period: 1948 - 2004: Dunkin’ Donuts LLC, also known as Dunkin, is an American mul
FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS INTERNATIONAL BUSINESS REPORT Group 10 Failure of Dunkin Donuts in India: What are the real causes? Instructor: Msc Nguyen Hong Hanh Class: KDOE307(GD2-HK2-2122)CLC.2 Student: Nghiem Le My Hanh Hoang Ngoc Lan Nguyen Hong Nhung Pham Mai Phuong Tran Hong Quan ID: 2013150017 2012150049 2013150042 2012150079 1810140056 Hanoi, 05/2022 TABLE OF CONTENTS: Introduction Overview of Dunkin’ Donuts 1.1 General information 1.2 SWOT analysis Dunkin’s in India 2.1 Founding and development of Dunkin’ Donuts in India 2.2 Products: India’s business environment Macro environment 1.1 Political factor Micro environment 11 2.1 Competitors 11 2.2 Consumers 13 2.3 Suppliers 14 Drivers behind Dunkin’ Donuts’s Failure 16 Dramatic changes in menu 16 Irrational pricing strategy 17 Hasty market penetration 17 Wrong choice of anchor product 18 A comparative analysis between Dunkin’ Donuts and Baskin Robbins 19 Recommendations 22 Conclusion 24 REFERENCES 25 Introduction Overview of Dunkin’ Donuts 1.1 General information The founding period: (1948 - 2004): Dunkin’ Donuts LLC, also known as Dunkin, is an American multinational coffee and donut company, as well as a quick service restaurant By 1950, Dunkin was founded by Bill Rosenberg in Quincy, Massachusetts, United States The business was so successful that Rosenberg sold franchises to others in 1955 The chain was acquired by Baskin-Robbins's holding company Allied Lyons in 1990 Dunkin expanded by the 1990s by buying out two rival chains that are Mister Donut and Dawn Donuts Success years in management (2004 - now): In 2004, the company headquartered in Canton, Massachusetts Since 2018, other than in-store serving, Dunkin began to develop more take-out options, pick-up lines for mobiles ordering inside and in the drive-thru After a few milestones, in October 2020, Dunkin’ Brands was negotiating to sell the business to Inspire Brands for $11.3 billion The acquisition process was done by December 2020, marking that Dunkin' Brands ceased to exist as a separate company, with Dunkin', Baskin-Robbins, and the trademark management of Mister Donut, becoming part of Inspire Brands So far, Dunkin has made its appearance to 43 countries over the world 1.2 SWOT analysis Strengths Weaknesses Environmental friendly Over-reliance on US market Effective supply chain management Poor targeting outside of US Smart planned branding Insufficient variety Socially conscious Financial resources Big franchising model Market position Great market value Opportunities Weaknesses Larger market share Over-reliance on US market Reach the healthy F&B sector Poor targeting outside of US Diversified menu Insufficient variety Financial resources Dunkin’s in India 2.1 Founding and development of Dunkin’ Donuts in India Founded in 1950, Dunkin' Donut is America's favorite all-day, everyday stop for coffee and baked goods Dunkin' has earned a No ranking for customer loyalty in the coffee category by Brand Keys for 14 years operating The company has approximately 12,900 locations in 42 countries worldwide Dunkin' is part of the Inspire Brands family of restaurants Dunkin’ Donut entered the Indian market in 2012 with a comparative thought which they followed in the USA They were about to launch its brand in India, corporating with fast-food operator Jubilant Foodworks Ltd, an Indian food service company According to Nigel Travis, expansion to India is an integral part of Dunkin' Donuts' international growth plan "As one of the world's fastest-growing economies and the second most populous country, India presents a tremendous growth opportunity for Dunkin' Donuts” The Indian fast-food sector is growing at roughly 25 to 30 percent a year as an economy expanding at nearly percent boosts purchasing power of the middle class Dunkin’ Donuts, known primarily as a breakfast chain in the United States, will offer an all-day dining experience to Indians, said the president of the company The brand was about to set up to 10 stores this financial year — all in Delhi In their development, Dunkin had 36 stores across the country within years, and 77 stores in total in 2017 2.2 Products: For more than 20 years, Dunkin’ Donuts has focused on continuous improvement of menu offerings, striving to deliver the best experience Dunkin' is the world's leading baked goods and coffee chain Their offerings have more than 50 varieties of donuts, but you can also enjoy premium beverages, breakfast sandwiches, bagels, and other baked goods They have a signature series of high-quality coffee Dunkin’ coffee can be enjoyed with a variety of delicious flavors, including classic flavors like caramel and seasonal favorites like the ever-popular pumpkin Specially, to cater to the Indian taste, Dunkin’s localized their menu due to customer insight and India’s culture Their offerings include non-vegetarian and vegetarian options In addition, for the first time, they decided to put burgers with Indian spices on the menu in order to adapt to the new market Dunkin’ Donuts also provided a wide range of localized flavors such as mango, litchy, saffron, etc India’s business environment Macro environment 1.1 Political factor India is a democratic republic The general public and the political parties accept the nomination and respect the political election process Because of the fair election process, it enjoys a stable political environment The country's stability has helped it attract a large amount of FDI (foreign direct investment) India’s government is loosely modeled on the British Westminster system It consists of a president as head of state; an executive headed by the prime minister; a legislature consisting of a parliament with an upper and lower house (the Rajya Sabha and Lok Sabha); and a judiciary with a supreme court at its head “With a robust and working democratic system, India is a federal republic where the bulk of executive power rests with the prime minister and his or her cabinets As a nation state, India presents a vast mosaic of hundreds of different ethnic groups, religious sects, and social castes About one third of population lives in urban areas; an overwhelming majority of the remainder is engaged in the agricultural sector.” (Michael F Martin and K Alan Kronstadt, August 31, 2007) An Indian is so politically aware or connected that it is not unreasonable to assume that every Indian views himself or herself as a politician in some way As a result, every political event in India has a significant impact on the Indian consumer markets Applied to the Dunkin Donuts case: Dunkin Donuts is accused of giving a large sum of money to Democrats in recent elections It's a dangerous approach because customers who support republicans and share their views and values may disapprove of the company's support for the Democratic Party and altogether boycott Dunkin Donuts 1.1.1 Economic factor GDP growth: India is among the fastest growing economies in the world India’s GDP growth is forecasted to expand from 7-9%, as a result, it is definitely an important market to many businesses Document continues below Discover more from:doanh quốc tế Kinh KDO307 Trường Đại học Ngoại… 839 documents Go to course ÔN TẬP KINH Doanh 27 QUỐC TẾ 081548 Kinh doanh quốc tế 100% (8) QUAN HỆ KINH TẾ QUỐC 43 39 TẾ - QHKTQT Kinh doanh quốc tế 100% (7) Finalllll VĂN HOÁ - Văn hoá Kinh doanh… Kinh doanh quốc tế 100% (7) Tiểu-luận-KTQT- đề tài 19 AFTA Kinh doanh quốc tế 100% (4) Van-hoa-kinh-doanh cau-hoi-trac-nghiem-… Kinh doanh quốc tế 100% (4) CHIẾN LƯỢC KINH Doanh 29 QUỐC TẾ CỦA TẬP ĐOÀ… Kinh doanh quốc tế 100% (3) Income per capita: The sales forecast for the American market is not optimistic, as people are becoming more health concerned At a time when domestic sales are stagnant, the rising prosperity of people in Asian countries has generated a lot of opportunities for Dunkin Donuts Particularly, India provides a wonderful chance for the corporation to build its business because this country has the world's fastest economies, and as people's incomes increase, their eating preferences change, which will benefit the country There is currently a relaxed political situation for FDIs However, companies are frequently disrupted by unwanted political demonstrations and events On any hot subject, opposing national political parties usually call for nationwide strikes (called bandh in Indian dialect) The entire economic process is disrupted, resulting in massive losses for corporations and other enterprises For example, “on July 5, India went on strike The country closed down at several places after opposition parties protested an increase in the price of petrol or gasoline (In India, the government controls petrol prices) The Associated Chamber of Commerce and Industry estimated that nationwide strikes caused a production loss of US $ 2.8 billion” (Human Resources, July 29, 2010) The Indian economy is also badly bitten by the inflationary bug Even basic basics have gotten more expensive for the general populace Ordinary people find it difficult to set aside money for luxury Still, luxuries such as vehicles and international holidays are sold at prices that equal those of other countries' economies However, this is a phenomenon unique to urban India, where black marketing and corruption are commonplace Corrupt politicians and businesspeople increase their wealth in an ugly manner Economic growth in India has brought up its middle class to the forefront; and at the same time rural poor are largely isolated from the achievements of growth There is no doubt that the Indian economy is growing, but this growth is lopsided Infrastructure growth is lagging behind in terms of what is required This has created a significant bottleneck for long-term economic growth and expansion This information is crucial for Dunkin Donuts to determine its target industry as well as the sort of market in India for their goods and services Because India is a free economy, many Western multinational corporations, including Dunkin Donuts are raising a portion of their capital investment from India 1.1.2 Socio-cultural factor Caste system: India is a high powered distant society India’s caste system, a hierarchical social structure, divides the Hindu majority into groups, with ‘Brahmins’ at the top and ‘Dalits’ at the bottom of society A person's last name generally indicates the caste they belong to Although many larger towns in India have moved away from such a severe caste impact, the system is still quite popular in villages throughout the country, defining who can live where, what employment they can have, who they can speak to, and even what human rights they have It's a system so firmly ingrained in the country's culture that its principles and consequences will be felt for many years to come Large consumer market: With 1.4 billion people, India is the world's second largest consumer market Foreign multinational enterprises might take advantage of the enormous consumer market to sell their products and services That is why the Indian market has piqued the curiosity of many investors and businesses Most significantly, it offers foreign corporations a large number of inexpensive labor Naturally, Dunkin Donuts can take advantage of the availability of an educated labor force at reduced prices to boost their total profitability Demography: India is a multilingual, multiethnic, and multi religious country with over 447 different spoken languages There have been some disputes between different groups of society on occasion The Indian Bollywood film business, on the other hand, has an international reputation Hockey and cricket are popular among her people, and the Indian Premier League (IPL) has attracted a lot of talent over the years The young people of India have proven to be more welcoming and courteous than their Western counterparts Because educated young people have a strong command of the English language, it is simple and inexpensive to persuade customers to buy the goods sold by Dunkin Donuts Lifestyle: For the past few years, India's economy has been expanding, and the middle class has expanded as well As a result, people's standard of living is improving Moreover, in reality, traditional food is still Indian people’s first choice as they are much healthier and richer in flavor, and eating habits of the Indian culture are still based on culinary traditions Most dishes feature meat or vegetables mixed with sauce and rice Many Indians are vegetarian, so eating habits are often based on a diet that excludes all meat When meat is incorporated in dishes, it is most commonly in the form of chicken, beef or lamb, and sometimes seafood, such as prawns The majority of the Indian population is Hindu, so beef and pork are often excluded from Indian dishes due to religious requirements Applied to Dunkin Donuts case: Dunkin Donuts thrives through connecting with societies and people who want to commemorate a special occasion Customers' eating As a result, Dunkin’ India is able to reach low-cost and diversified and rich ingredients sources Using local inputs could help Dunkin’ to supervise the quality and, in turn, to serve customers with good quality-and-conditioned food Emerging agricultural corporational competition and advanced technologies in India might be a positive signal to Indian agricultural potential Hence, Dunkin’ India would be experiencing a great deal of food ingredients in the near future 15 Drivers behind Dunkin’ Donuts’s Failure Dramatic changes in menu In the penetration to India, Dunkin’ Donuts had realized that many Indians just don’t like doughnuts, and even the ones that like them are unlikely to buy them by the dozen They have had to seriously rework its menu in India and rebrand itself through an advertising campaign, which provided all-day dining to customers instead of breakfast served as in America, to show India’s consumers that it offers more than a sweetened bake and coffee Dunkin donuts presented to India with a diversified menu, although the donuts were the same, they ‘Indianised’ their flavors by introducing mango, litchi, grated coconut, And to celebrate Diwali, the Hindu festival of lights, Dunkin' Donuts just launched some new flavors, to name a few, a Kesar Badam (saffron-inflected almond milk) doughnut, topped with saffron cream, blanched almonds, and crushed pistachios; a Soan Papdi (flaky pastry) doughnut coated with chickpea flour;a milk cake doughnut filled with rice pudding; and a white chocolate doughnut topped with guava and chili Although their long-term strategy was to promote a donut eating culture in India, they initially launched new localized products In India, the chain brands itself as "Dunkin' Donuts and More." It included spicy chicken sandwiches which was a drastic difference from their primary core and it was a risk they took only in the Indian market Another Dunkin’s decision is to put burgers on the menu for the first time with an aim to adapt to cultural differences Dunkin’ Donut now has almost as many burgers on the menu as McDonald’s All Dunkin’ burgers in India are beef-free Moreover, with these changes, Dunkin’ Donuts concentrated more on selling burgers instead of doughnuts as the result of their sales increased rapidly Dunkin’ donuts was planning on renaming the brand as Dunkin This was because they sold more coffee than donuts However true it is, their brand differentiation was famous for offering both of these products Rejecting that differentiation would have affected the brand Providing the combination of good quality donuts, baked goods and coffee at affordable prices have been a differentiating factor for Dunkin donuts, this is their lead attribute Denying this and focusing on a diversified menu would be a bad 16 decision Though they can increase sales after changing the menu, Dunkin’ had lost their signature essence, their brand name faded as instead of highlighting their differentiation, they focused on satisfying customers by culturally localizing products Irrational pricing strategy Dunkin’ Donut’s price of product is quite an issue to Indian people This is one of the reasons why Dunkin’ might not become popular in India The average salary in India is about RS31.000 (Indian Rupees) per month, which is equivalent to $420 in the United States In addition, according to Zomato, the average cost for two in Dunkin’ Donuts in India can be around Rs.600 — which is quite overpriced when compared to the budgeted price of an average salary individual While, if we take a look at doughnuts of Mad Over Donuts, fresh, gourmet donuts founded in Singapore, the cost for two ranges from Rs.300 to Rs.450, which is less expensive than that of Dunkin ’ Donuts In any case, the idea of both the brands is extraordinary and the way of life of having doughnuts in India is unique as considering it to be a sweet dish not a morning meal feast Along these lines, in the wake of choosing between the cost of both the brands, the ordinary worker will go with the less expensive one Hasty market penetration Another Dunkin’ Donuts mistake was the speed of market approach The company entered the market with an ambitious desire of opening up as many stores as possible As from Business Standard article in 2012: “The company… plans to set up eight to 10 stores this financial year — all in Delhi That, it says, would earmark its journey to slowly turn out to be a pan-India player with about 100 stores in the country in the next five years.” Eventually, the brand expanded too quickly, having 36 stores across the country within years, and 77 stores in total in 2017 The overwhelming store coverage had led to an adverse effect in a market with not a high demand for the product To make the situation worse, the store locations were too big and those huge retail spaces translated into high operational cost, putting a lot of burden on the sales of 17 Dunkin’ in India Dunkin’ Donuts strategy of extensively expanding instead of intensively and desire to penetrate and dominate the market at a breakneck pace had left it with no space for in-depth research of consumer’s actual needs, habits and attitude such as the day-by-day gratitude towards healthy lifestyle or rising health consciousness of the Indians Wrong choice of anchor product First entering the Indian market, Dunkin’ Donuts had aimed to access the market with the donut and totally overlooked the coffee line – a wrong move by skipping the beverage Dunkin’ Donuts’ initial two anchor products were coffee and donuts, however, the coffee line was intentionally gotten rid of because of the fear that it cannot compete with traditional beverages of Indians such as Chai tea or green tea However, this has indeliberately made up a notion for the Indians of Dunkin’ Donuts as a luxurious dessert store to the local people where they rarely make a purchase on special occasions instead of a fast, convenient breakfast store Despite the tense competition with traditional, familiar teas, coffee from Dunkin’ Donuts will have a more comparative advantage in terms of price, as Starbucks – its biggest, foremost rival in India in the field of coffee Starbucks has a higher COGS, which is passed on to the consumer through higher prices Another thing is that, it would have been easier to localize and diversify the beverage line by adding to the menu tea or other drinks similar to the traditional ones with more diverse flavors in order to fit the taste of the people and provide them with substitutes as the traditional drinks only have a fixed flavor and recipe 18 A comparative analysis between Dunkin’ Donuts and Baskin Robbins From Dunkin’ Donuts success in America with the 2016 revenue of 608 million USD and still growing steadily every year, we can clearly see that the reason behind its failure in India didn’t come from the essence of the brand Taking a comparative look into the operation in India of Baskin Robbins – “a branch from the same tree” with Dunkin’, has claimed itself as the largest ice cream chain in India, with a significant number of 725 in terms of store count within the country, and has been operating successfully in India now for the last 25 years Proper market research The ice cream industry has been and will be heating up in India (According to Mintel reports, the ice cream market in India exhibited a CAGR of 16.9% during 2011-2018 and the market is further expected to reach a value of Rs 375.8 Billion by 2024) Making its way into the right market with the right demand, Baskin Robbins had done a great job in its way of just putting emphasis on the brand's signature product line - ice cream Its own identity along with a potential market with too many opportunities had created a launching pad, helping Baskin-Robbins to hold almost the entire ice cream industry here Right market segment and adaptation Besides the favorable market needs, Baskin Robbins also penetrated the market with innovations rooted in Indian taste, localizing the ice cream flavors and sticking to the insights of different customer segmentation rather than trying to expand to other product lines Vegetarians: Knowing India is the country with the most vegetarians (this demographic segment accounts for 20% – 39% of the whole population), Baskin Robbins has 19