The ultimate success of a company depends on the people chosen to lead the company. That fact means that it is the organization’s goal to select the best quality managers and employees possible that will push the organization to its goal. The work environment is what will ultimately reflect the employee’s view of the organization. Dunkin Donuts’ team-oriented design has helped them climb the ranks as one of the leaders in the coffeehouse industry. Although the company is widely successful now, it has had several organizational redesigns that have made it into the power house it is today. The Functional structure of Dunkin’ Donuts is made up of their Organization, job design, their competitive advantage, risk they face, and the working relationship of the organization.
Organizing To Become Dunkin Donuts
Once the difficult part of determining exactly what one wants to accomplish as an organization is complete, the next step is the structural setup of the organization. The organization hierarchy is crucial to the overall success of the organization. Kator states one of the key philosophies of the Dunkin Donuts organization is to keep people and products moving efficiently (Kator ). The company was founded in 1950 as an American global doughnut company and coffeehouse chain based in Canton, Massachusetts by William Rosenberg. The name changed from Kettle Donuts in 1949 to the corporate name Dunkin’ Donuts’ adopted in 1950.
Rosenberg conceived of the idea for the chain after his experiences selling food in factories and at construction sites, where doughnuts and coffee were the two most popular items (Wikipedia). Since 2009 the Dunkin Brands group has been under the leadership of Nigel Travis and his management team; Dunkin Brands, nearly a 100 percent franchised system, has delivered a compound annual growth rate of 6.2 percent in system wide sales (Quick Facts). Travis has really spearheaded the revitalization of the Dunkin Brand.
Job Designing At Dunkin Donuts
The key cogs of this organization are their franchises. The reason is that the franchise owners act like middle managers overseeing the “foot soldiers”, their employees, which makes them vital to the success of the organization at large. This is the main reason that the process of becoming a franchise is so strict because it’s basically an interview to see if a person has what it takes to be a leader in the organization. The company believes its franchised business model provides several advantages. Dunkin’ Donuts thinks the main advantage is the lower the main advantage is the lower capital requirement, because franchisees fund the vast majority of the cost of the new restaurant development (Dunkin Brand). This photo is an example of the multidivisional management structure at Dunkin’ Donuts. This is multi-divisional form which simply means that there is one parent company, and that parent company owns smaller companies that use and work under its brand and name.
The Dunkin’ Donuts’ organization has a great competitive advantage in the quick service restaurant market. Not only is the organization doing well with their coffee sales but they have also branched out the selection of products they offer. These other products include providing consumers with coffee, baked goods, sandwiches, and ice cream, to name a few. A key to the competitiveness of the organization is their service and convenience. The way they treat their customers is a huge boost to them because they truly value their customers and want a visit to one of their establishments to be an experience. Another one of the things that helps is the value perception of Dunkin’ Donuts’ products.
People view their products as a more premium product compared to some of their competitor’s stores like McDonalds, Panera Bread, and Quick Trip. And it is this value that people have set in their minds about the product, and when one looks at how competitively priced Dunkin’ Donuts products are, it really gives them a competitive advantage. Dunkin’ Donuts’ also uses technology to keep them ultra-competitive. They use a mobile app as well as the “DD card” to present their customers with deals (Dunkin’ Donuts). This approach keeps customers engaged and provides a way to offer them savings while continually marketing products. This competitive attitude makes Dunkin’ Donuts more than just a breakfast option, but also an all-day eatery.
Risks to Dunkin Donuts
There are a lot of things that could be harmful to the progress of the Dunkin Brand. One of the major risks to the organization is the fact that their financial results are affected by the operating results of their franchisees. That is shown in their main source of revenue “We receive a substantial majority of our revenues in the form of royalties, which are generally based on a percentage of gross sales at franchised restaurants, rent, and other fees from franchisees” (Travis). This is a huge risk for the organization because if their franchised restaurants don’t do well, or there is a down tic in the profitability of the restaurants it affects the organization negatively. Another risk for Dunkin’ Donuts’ is their franchisees and what they might do to the brand in the eyes of the customers. Dunkin’ Donuts is just the executive entity over the franchisee but it is the franchisee that actually runs a brick and mortar store. By this fact they have direct influence on the customers view on the Dunkin’ brand.
The way that a particular store may be run causes problems especially with today’s technology and customers outlets to vent their displeasure with a company can be detrimental. A third risk that the company could face would be from the competitiveness of the quick service restaurant market or “QSR”. They stated this by saying “The QSR segment of the restaurant industry is intensely competitive. The beverage and food products sold by our franchisees compete directly against products sold at other QSRs…” (Travis). This is one of the biggest risks they have because this takes away from the uniqueness of the company and in affect some of their revenue. In the QSR market everyone is fighting for the same dollar but unique items that are only available at one particular business is what draws customers, and helps create customer loyalty.
Fourthly a risk for Dunkin’ Donuts would be the substantial indebtedness of the organization. They are facing very large amounts of debt as stated in their annual report “We have a significant amount of indebtedness. As of December 28, 2013, we had total indebtedness of approximately $1.8billion, excluding $3.0 million of undrawn letters of credit and $97.0 million of unused commitments under our senior credit facility.” (Travis). This could cause a lot of problems for Dunkin Donuts in the future because this could affect the willingness of lending institution to lend them money. This also reduces the amount of capital that they have to fund new endeavors themselves because that money has to be put toward debt service payments.
Working Relationships at Dunkin Donuts
Dunkin’ Donuts’ mission statement is “to make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores” (Dunkin Donuts). This mission statement is reflected in their organization. They have an open organization so that even lower level people with good ideas can send them in, and those ideas are used if they are of any benefit to the organization.
This paper has discussed the organization of Dunkin’ Donuts and the history of how the company came to be. The paper also discussed job design at Dunkin’ Donuts and how the organizational structure is set up. The competitiveness of this company is something that is going to make them very sustainable in the future. But also the risks that they face if not carefully dealt with could be their down fall. And lastly the working relationship at Dunkin’ Donuts is one that breeds confidence and makes everyone in the organization feel like their opinion matters. These things show the organizational structure of the company and why their successful now and will be for years to come.
Dunkin Donuts. (2014, July 8). . Retrieved July 10, 2014, from http://en.wikipedia.org/wiki/Dunkin’_Donuts “Dunkin’ Brands Extends Contract For Chairman & CEO Travis – Quick Facts.” RTT News 5 Mar. 2014. Business Insights: Essentials. Web. 14 July 2014. “.” . N.p., 8 Jul. 2014. Web. 14 Jul. 2014. . Kator, Corine . “Voice keeps Dunkin’ Donuts rolling.” . N.p., 1 Jul. 2008. Web. 14 Jul. 2014. . Travis, Nigel. “Dunkin’ Donuts Annual Report.” . N.p., 1 Feb. 2014. Web. 26 Jul. 2014. . “.” . N.p., 8 Jul. 2014. Web. 14 Jul. 2014.