DUNKIN DONUTS GALWAY, IRELAND - "THE COFFEE YOU WANT, WITH THE "CRAIC YOU NEED."
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DUNKIN‟ DONUTS
GALWAY, IRELAND
“THE COFFEE YOU WANT, WITH THE „CRAIC‟ YOU NEED.”
Erica Insel, Kelly McCann, Abi Brown, Haley McNeel,
Keely Sullivan
Overview/Executive Summary
Introducing Dunkin‟ Donuts, brand of Dunkin‟ Brands,
to Galway, Ireland
Testing a new ownership approach corporately
owned stores
Opening of Corporate Headquarters in Galway
Galway is a fast growing city
Keep the cultural changes in mind
Newly designed café style stores
Menu alterations
Parent Company Organizational Chart
Dunkin' Brands
CEO/President Nigel
Travis
Headquarters and Home Region A Division: Dunkin' Region B Division: Dunkin' Our Business Unit: Dunkin
Country Division: Canton, Donuts, North and South Donuts, Asia Donuts, Europe (Galway
Massachusetts, USA America Ireland)
Finance: 2010; rasie Engineering: Store
$625 million through Human Resources: The
Marketing: Target the redesign to make a mission, "to be the
masses by expanding the offering of senior notes higher quality image.
along with $1.35 billion premiere quick service
menu to fit the customer More subdued color franchisor, with a leading
needs and provide quality senior credit faculty and scheme, espresso colored
available cash to repay position in coffee, bakery,
coffee and food for on the walls with hints of and ice cream segments of
go customers. in full outstanding debt orange and pink, granite
and cash dividends to the QSR category.
tables and sleek chairs.
stockholders.
Parent Company Overview
Privately held entity of Dunkin‟ Brands
“Quick Quality” segment of food and beverage
industry
Opened in 1950 by Bill Rosenberg
Quincy, MA- The Open Kettle
Soldthe chain in 1990
Major expansion push by past CEO Jon Luther in 2003
International Presence 9,760 Dunkin‟ Donuts stores in over 30 countries worldwide
Products
Fresh coffee and baked goods
52 varieties of donuts
Over a dozen coffee beverages
Specialty items around the worldFinances and Long Term Goals
2010 Revenues: $577,100,000
7% increase from 2009
*Predominantly due to Dunkin‟ Donuts domestic sales
Account for 71% of revenues
International Sales Rise
15% sales growth
Long term: 5,000-15,000 new stores by 2050Changes from Parent Company
Change the Slogan
“The coffee you want, with the „craic‟ you need”
Store redesign for a café feel
Keep the lifestyles of Europeans in mind
Menu additions:
Irish soda bread muffin and varieties
of croissants
Irish and Baileys coffee
Specific rules and regulations
will be followedParent Company: International Business
Strategy
Transnational strategy
Value and cost
International organizational consistency
In Ireland, product differentiation
Management training
Want to maintain consistency throughout DD‟s brands
internationally
Irish managersInternational Issues
Current economic distress
Establishing a US branch in Ireland
DD in Galway is required to file basic information with the
Registrar of Companies
Increase regulation of labor laws
Terms of Employment Act 1973, Organization of Working
Time Act 1997, Payment of Wages Act 1991, Protection of
Young Persons (Employment) Act 1996, Parental Leave Act
1998Understanding the Culture
Ireland became independent in 1922
In 2008 the government “announced the launch of a
revised and simplified Research and Development
Grant Scheme, which will make EUR500m available
to companies across all sectors.”(The Irish Times)
The decline in the economy had increased
unemployment to 13.7% in 2010
In Galway there are over 23 thousand
Irish culture is notorious for drinkingInternational Business Issues
(Taken from ITIM International)
Cultural Aspect The U.S.A Ireland World Adv
Power Distance 40 32 55
Individualism 91 63 43
Masculinity 62 61 40
Uncertainty Avoidance 46 40 64
Long Term Orientation 29 - 45Ireland‟s Pro FDI Environment
7th best place to do
business in the world
620 US firms doing
business in Ireland
Flexibility of English
speaking workforce
Favorable corporate
tax rate
Pro-business
government policiesForeign Direct Investment
New Approach Wholly owned subsidiary
Tight control over operations
Dunkin‟ Brands Inc. withholds 100% of profits
Institute desired organizational culture and operating
routines
Transfer skills and know-how apparent in successful
Dunkin Donuts company
Aware that adjustments must be made to fit Ireland‟s
cultural differencesFinancial Plan Entry Strategy
2 stores & 1 corporate headquarters office in
Galway
Become incorporated in Ireland
Treated as Ireland‟s domestic corporations
Lowest corporate tax rate in Europe (12.5%)
Funded by internal corporate capital investment
Foreign exchange in Ireland is easy to obtain at market
rates (US Dollars Euro)
No limitations on the import of capital into IrelandBusiness Unit Organizational Chart
Corporate
Headquarters
President
Vice President Operating
Officer
Finance Engineering Marketing Human Resource Procurement
Store Manager Sales Manager
Manager Manager Manager Manager Manager
Recruitment Purchasing
Evening Assistant
Manager Manager Training and Receiving and
Development Inspection
Kitchen Floor
Manager Manager
Cashiers
Kitchen Staff
Servers
Custodial StaffHeadquarters Staff
Oversee operations of
stores in Galway Trainers, 30
Analyze financial Financial Marketing, 50
Designers, 10
Managers, 50
performance Analysts, 25
Employ researchers to
Researchers, Store Employees,
explore new entry 350 500
options for DD
Both American and
Irish citizens Approximately 1,000 employees
in Ireland divisionStore Staff
Polycentric staffing approach
Dunkin‟s executives used to hire and train Galway stores
staff to embed company norms and values
Keep consistent company image worldwide
Eventually be managed and run by entire Irish
workforce
Young workforce, highly educated
Reduce cultural myopia
Understanding of Irish cultureInternational Business Activity Metrics
We have three key measurements of success:
To have sales of the alcoholic coffee exceed 25% of
total coffee sales
To have the Soda Bread Muffin be our top selling
muffin
To enter 3 new foreign markets within the first 2 years
using data gathered at our Irish Headquarters
concerning countries in the European Union.Goals
The business results we expect to see within 18 months:
The alcoholic coffee should be contributing 25% of coffee
sales
Soda bread muffins should be selling less than 15% less
then lowest selling muffin
The corporate headquarters should be collecting data in at
least 10 foreign markets.
If goals 1 and 2 are not met the product lines will
be revised or cut.
If goal 3 is not met send 50 expatriates to IrelandMetrics
Gross sales, Net sales, Sales by product line
Data will be collected from both locations and will
be complied at our Irish Head Quarters
Computers
Sent to US to be analyzed
what products are the most successful
what items within the lines are selling wellLooking into the Future
Dunkin‟ Donuts
Galway, Ireland
“The coffee you want, with the „craic‟ you need”
Established By:
Abigail Brown, Erica Insel, Kelly McCann,
Haley McNeel, Keely Sullivan1. EXECUTIVE SUMMARY
As Dunkin‘ Brands, Inc. we are introducing one of our successful brands, Dunkin Donuts, to
the country of Ireland. Dunkin Donuts has been extremely profitable on an international level
and we feel the next step for continued growth is to target the Irish market. Our decision to
expand into Ireland is based on the many favorable factors in their political, economic, social,
and business environment that will be discussed throughout the paper. In addition to testing a
new market we are also testing a new ownership approach. Dunkin Donuts restaurants are
owned by franchisees all over the globe. However, with our entrance into Ireland, we plan to
open corporately owned stores. We will be opening a corporate headquarters office in the city of
Galway to oversee our operations within Ireland. Since we are implementing a new ownership
strategy we will begin by opening only two stores in the city of Galway. Galway is one of
Ireland‘s fastest growing cities and also attracts many tourists. So we feel that this is a perfect
location to not only attract our new Irish consumers but also the many tourists who have enjoyed
Dunkin Donuts in their home nation. We will be opening one store within the main center of
Galway city and another store on the outskirts of the center. By comparing the performance of
each store we will be able to see which environment offers more success and use this information
as we continue to grow throughout the country.
In order to keep a reputable and consistent brand image, we will ensure that our division
in Ireland operates under the standardized Dunkin Donuts values, culture, and policies. However
we do recognize that there are apparent cultural differences in Ireland and we are making several
changes to match their unique characteristics. Our stores in Galway will have a newly designed
and more comfortable seating area to attract those customers who prefer a relaxed atmosphere
while enjoying their coffee and food items. We will also be serving a new line of coffees that
include Irish Coffee and Baileys Coffee. These coffees will be served only to the customers that
choose to utilize our comfortable seating area so that the coffee can be enjoyed correctly in a
glass mug. This also eliminates any controversy with serving consumers who will be drinking
alcoholic beverages in public. Our Ireland stores will also serve Irish soda bread muffins to
match the preferences of our target market. Despite these changes, we will continue to operate
according to Dunkin Donuts overall culture by serving quality, affordable coffee to on the go
consumers.
With the opening of our new stores, we hope to create brand awareness and create value
for Irish consumers in order to build more long term costumer relationships. We are confident
that the opening of our Dunkin Donuts stores in Galway will be profitable. Once we have proof
of our success we plan to open many additional corporately owned stores throughout Ireland.
Opening new stores will be less challenging since we will already have a corporate headquarters
operating in the country. For now, considering our new ownership approach and new target
market we will test the waters and aim to meet our specific store goals.2. PARENT COMPANY OVERVIEW
Dunkin‘ Donuts is a privately held entity that is a subsidiary of Dunkin‘ Brands. It has
been around for 27 years and operates thousands of Dunkin‘ Donuts stores worldwide. Dunkin‘
Donuts was first opened by Bill Rosenberg in 1950. The first shop was located in Quincy,
Massachusetts. When it first opened, it was called ―The Open Kettle.‖ However, Rosenberg
changed it to Dunkin‘ Donuts two years later. Since then, they have expanded, and by the end of
2010, according to the company website: ―there were 9,760 Dunkin‘ Donuts stores worldwide,
including 6,772 franchised restaurants in 35 United States and 2, 988 international shops in 30
countries.‖
Dunkin‘ Brands, Inc. prides itself in ―leading the ‗Quick Quality‘ segment of the food
and beverage industry. They are home to the two brands: Dunkin‘ Donuts and Baskin-Robbins,
an ice cream specialty store. It is owned by private equity companies including: Bain Capital,
The Carlyle Group, and Thomas H. Lee Partners. Dunkin‘ Donuts did not always start as an
international franchise powerhouse. After opening in 1950, by 1963, Rosenberg has 100 stores‖
(Boyle 3) and later sold the chain in 1990. Most of Dunkin‘ Donuts United States expansion was
pushed forward by past CEO Jon Luther beginning in 2003. It was also Luther who decided to
amp the coffee focus more so than donuts, since they are more profitable. He once admitted that
he ―considered removing ‗Donuts‘ from its name since sugary confections represent a mere 15%
or so of its sales‖ (Boyle 2). This was stated in 2006, however it is ―even more striking that
Dunkin‘s transformed from a musty doughnut house that sells coffee into a blue-collar-chic
coffee retailer that happens to sell doughnuts‖ (Boyle 2).
Locations:
The Dunkin‘ Donuts chains are located in over 30 countries around the world. These
countries include: Aruba, Bahamas, Bulgaria, Canada, Chile, China, Colombia, Ecuador,
Germany, Grand Cayman, Honduras, Indonesia, Japan, Korea, Kuwait, Lebanon, Malaysia, New
Zealand, Oman, Panama, Pakistan, Peru, Philippines, Puerto Rico, Qatar, Russia, Saudi Arabia,
Singapore, Shanghai, Spain, Thailand, Taiwan, United Arab Emirates, and of course, the United
States of America.
Products:
Dunkin‘ Donuts prides itself on the guarantee of fresh coffee and baked goods.
According to the Dunkin‘ Donuts company website, they offer over ―52 varieties of donuts and
more than a dozen coffee beverages as well as an array of bagels, breakfast sandwiches and other
baked goods.‖ Dunkin‘ Donuts is very well known for its specialty items such as munchkins,
donut hole treats as well as classics such as muffins and bagels. Other major products include
breakfast sandwiches, cookies, flatbread sandwiches, flavored coffee, frozen cappuccino, iced
tea, latte lite, hot chocolate and white hot chocolate. They offer customers freshly brewed hot
coffee in up to nine flavors. Also offered are iced coffees and coolatta beverages, exclusively
available at Dunkin‘ Donuts locations. They have many of the same products worldwide.
However, there are specialties of the cultures that can be found exclusively at certain locations.
For example, Dunkin‘ Donuts in Korea offers a Grapefruit Coolatta while Dunkin‘ Donuts in
Thailand offers a Choco Nut Donut.
Top Leadership:
The Chief Executive Officer of Dunkin‘ Brands is Nigel Travis. Travis is also the
President of Dunkin‘ Donuts. Paul Twohig is the Chief Operating Officer in the United States
while Tony Pavese is the Chief Operating Officer internationally. In the United States, there is a
vice president for each of the areas of the country. William Bode is the Vice President of theNortheast, Bob Wiggins is the Vice President of the Central Atlantic, Weldon Spangler is the
Vice President of the South Central and Jean Grossman is the Vice President of the Mid-West.
Revenues:
Full year 2010 financial highlights included:
($ in millions except in PODs) Fiscal Year Increase (Decrease)
2010 2009 $ %
System Wide Sales $ 7,656.5 $ 7,178.0 $ 478.5 6.7%
Consolidated US Comparable Store Sales 1.6%
DD US Comparable Store Sales 2.3%
BR US Comparable Store Sales -5.2%
DD Global Points of Distribution (POD) 9,760 9,186 574 6.2%
BR Global Points of Distribution 6,433 6,207 226 3.6%
Revenues $ 577.1 $ 538.1 $ 39.0 7.2%
Operating Income 175.7 170.2 5.5 3.2%
Net Income 26.9 35.0 (8.1) -23.1%
Adjusted EBITDA* 282.0 279.2 2.8 1.0%
Dunkin‘ Brands saw a 7% rise in revenues last year, 2010. During a public earnings call
on March 23, 2011, Dunkin‘ Brands reported $577 million in revenues for 2010. The company
reported that domestic sales of Baskin Robbins struggled. However, ―the domestic Dunkin‘
Donuts operation is not surprisingly the largest source of sales, accounting for 71 percent of the
company‘s revenues‖ (Chesto). The Dunkin Brands Fiscal Year 2010 Report explained the
―improvement was due to product and marketing innovation, increased operational focus on the
guest experience and an improved economic environment.‖ Meanwhile, both Baskin Robbins
and Dunkin‘ Donuts saw successful sale rates internationally. Gatehouse News Services
reported that ―Dunkin‘ Donuts international business enjoyed sales growth of 15 percent,
primarily due to successes in south Korea and Southeast Asia‖ (Chesto). They also explained
that ―the company generates the bulk of its revenue from fees paid by its Dunkin‘ Donuts and
Baskin-Robbins franchisees‖ (Chesto). Also important to note is the decrease in net income
from 2009. It dropped from $35 million in 2009 to $26.9 million in 2010.
Strategic Plan and Goals:
After such a successful 2010 financial year, Dunkin‘ Brands is aiming to continue its
success by utilizing a similar strategy. In the Dunkin‘ Brands Fiscal Year 2010 Report, CEO
Nigel Travis explained: ―our strategy has been to drive comparable store sales growth in our core
U.S. markets, expand contiguously in the U.S. with a replicable business model, and drive
accelerated international growth across both brands. This strategy will continue to guide us for
the next several years.‖ Dunkin‘ Donuts also has long term goals in mind concerning expansionefforts: ―aggressive expansion is the name of Dunkin‘ Donuts game. Its goal is to open between
5,000 and 15,000 new stores by 2050‖ (Manning-Schaffel).
In regards in Dunkin‘ Donuts competition, they launched a rebranding marketing
campaign in 2008. The predominant competition of Dunkin‘ Donuts is Starbucks, with
McDonald‘s Corporation, Caribou Coffee Company, and Saxbys Coffee Worldwide closely
behind. However, most of their rebranding has been focused on countering Starbucks. One
major aspect of the rebranding process was the efforts ―to make the product experience more of a
ritual than a treat, focused on coffee instead of donuts‖ (Manning-Schaffel). It was also around
this time that the tagline ―America Runs on Dunkins‖ was established. While comparing
Starbucks and Dunkin‘ Donuts, Frances Allen, brand marketing officer of Dunkin‘ Donuts,
explained: ―what makes our tribe, our tribe, is they are unpretentious, hardworking busy people,
living busy lives. They don‘t have an over-inflated sense of self and don‘t need their coffee to
have Italian names. They like their coffee called ‗small,‘ ‗medium,‘ and ‗large‘‖ (Manning-
Schaffel). This ―average Joe‖ customer mentality is, and will continue to be, a driving force in
the Dunkin‘ Donuts future marketing strategy.
Dunkin‘ Donuts executives also have faith in the constant demand their franchisees
target. Lynette McKee, Vice President of Franchising for Dunkin‘ Brands Inc., ―says that the
ultimate goal of Dunkin‘ Donuts is to provide the most high quality food and beverages when
and where the customers want them‖ (Anderson). While this goal hints at the company‘s
expansion goals, she also explains: ―we look at the needs of the customer base-very busy people
on the go, up early in the morning, needing an afternoon lift or a snack at the end of the day…
We are fulfilling a growing demand in the marketplace: great coffee and delicious food and
beverages that you can enjoy any time of day—fresh, fast, and affordably‖ (Anderson).
3. STRUCTURE OF PARENT COMPANY OPERATIONS
(See Appendix A for Parent Company Organizational Chart)
After expanding Dunkin‘ Donuts into Ireland there are some things that must be kept similar
to ensure brand image continuity. It is important to look towards the parent company structure
for guidelines on how the business should be run. Dunkin‘ Donuts is part of an even bigger
corporation known as Dunkin‘s Brands which also owns Baskin-Robbins. The CEO and
president, Nigel Travis, is in charge of a renowned company with a specific structure to enable
the company to continue to prosper. The headquarters of Dunkin‘ Brands is located in Canton,
Massachusetts. Dunkin‘ Donuts is a very successful franchise and continues to grow every day.
More stores are being opened all over America as well as internationally. It is up to the
franchisee not only to come up with the funding but to be able to run the franchise as the
franchisor has intended. There must be continuity within the branches, which is why there are
four main areas of business that Dunkin‘ Brands focuses on. These areas of business include
marketing, finance, engineering, and human resources. Each of these is needed in order to run a
successful corporation.
Marketing is important in any company to make consumers aware of the product or
service and promote business. Dunkin‘ Donuts has a unique marketing strategy which targets
the masses. They have positioned themselves as ―low-brow and everyman‖ and wish to provide
services to help target on-the-go customers. They are constantly changing their menus to give
the consumers what they want and because stores are located not only throughout the country but
throughout the world, this means that the company has high demands to fulfill. The most
important message that Dunkin‘ Brands is conveying for Dunkin‘ Donuts customers is that theywill be provided with a quality cup of coffee even when they‘re on the run. They must maintain
a certain edge to compete with the competition and their easy going, simple positioning has
helped keep them on top (Kotler).
The next area of business is finance and without this there would be no marketing. The
finance plan for 2010 that was proposed by Dunkin‘ Brands is straight forward and beneficial to
both the companies that this corporation oversees. They intended to raise $625 million through
an offering of senior notes. These proceeds would be used along with other borrowings under an
approximately $1.35 billion senior facility and would be available in cash. This could then be
made available to repay in full the outstanding securitization debt of Dunkin‘ Brands and to pay
a cash dividend to the stockholders. This plan was created in the best interest for the 9,186
Dunkin‘ Donuts franchises and 6,207 Baskin-Robbins franchises. In total the sales of both
franchises raise nearly $7.2 billion and operate in a total of 49 countries (King). There is no
reason that Dunkin‘ Donuts does not have the capacity to enter into another business venture by
opening a division in Ireland.
As the competition between Starbucks and Dunkin‘ Donuts heats up, it is important for
Dunkins‘ to decipher the advantages their brand has over Starbucks. There are distinct
customers that are loyal to each. The upper scale consumers who wish to sit and enjoy their
coffees and specialty drinks prefer Starbucks, while on the other hand, Dunkin‘ Donuts
customers are everyday people who are always on-the-go. There have been several complaints
on the overall style of how the Dunkin‘ stores are decorated and this is where the engineering
aspect of business becomes a key for the future image of the company. Right now many people
believe that Dunkin‘ Donuts tends to look a little cheap with minimal resources. These people do
not mind the simple, no frills of the company but would prefer a slightly higher class look.
Designers are faced with the challenge of making Dunkin‘ Donuts slightly more upscale while
keeping a far distance from the elegance of Starbucks. A remodel has been proposed in which
the cheap looking laminate tables will be replaced with imitation granite tables and sleek chairs
as well as espresso colored walls with hints of pink and orange. The overwhelming color
scheme that currently defines the brand seems to be slightly overwhelming for customers. There
was also debate over whether wireless internet should be added but this was decided against
because they would like to stay true to their positioning strategy and continue to cater to
consumers on-the-go. Creating a quick service, café style image may also help Dunkin‘ Donuts
expand internationally. In America the majority of customers are always on the run and have
little time to sit and enjoy their coffees. European countries, like Ireland where we intend to
expand, will most likely respond well to this change because the average person makes sure they
take time out of their day to enjoy their meals. By acknowledging this aspect of their daily lives,
they will be more willing to entertain the idea of our brand expanding into their country. This all
ties together within the bigger scheme of the company; which provides for the masses and makes
sure they get what they desire (Kotler).
The final aspect of business that helps set the tone of the company is the human resource
team. The Dunkin‘ Brands‘ mission statement gives a great summary of what they are striving
for and allows customers to understand the thought behind their actions. The statement shows
their goal, ―to be the premier quick service franchisor, with a leading position in coffee, bakery,
and ice cream segments of the QSR category.‖ This shows their commitment to both Dunkin‘
Donuts and Baskin-Robbins while creating similar standards for two different types of
companies.The goal of Dunkin‘ Brands, to position them in the best possible way to satisfy the
customers, all relies on their marketing strategy, financing, engineering, and human resource
team. These factors combined with their uniform brand image of both Dunkin‘ Donuts and
Baskin-Robbins will allow future loyalty and success. Expanding this company into Ireland will
take some time to catch on because it is a new start for their country, but because this brand is
located all over the world there will be no reason to doubt their success. As long as the standards
are upheld and the customers are provided with what they want and need, there will no question
of success.
4. DUNKIN DONUTS INTERNATIONAL BUSINESS STRATEGY
―The Dunkin' Brands Inc. scope encompasses 30 countries and territories, with franchises
spawning seemingly every second. This is serious business for a mom and pop chain founded by
Massachusetts businessman William Rosenberg back in 1950.‖ (International brand for Average
Joe‘s) But from the very beginning, Rosenberg conceived of Dunkin' Donuts as a brand for the
masses. As early as 1962, Dunkin‘ Donuts crossed the border into Canada. It reached Japan by
1970. This makes sense, considering Rosenberg started the International Franchise Association.
According to recent reports the café segment is currently growing in leaps and bounds.
―Though the primary component from which a café earns its revenue is the coffee they brew,
foods like sandwiches, donuts etc. are slowly becoming money spinners too‖ (Dunkin‘ Donuts).
However, because the Irish culture is so similar to the American culture, we have the advantage
of understanding the Irish consumers‘ tastes and preferences.
The international business strategy of a company is defined as ―the action‘s that managers
take to attain the goals of a firm...for most firms, the preeminent goal is to maximize the value of
the firm for its owners and shareholders.‖ (Hill, 2009, p. 420) An important part of international
business strategy is value creation, which is simply ―the way to increase the profitability of a
firm to create more value‖ (Hill, 2009, p. 421). The more value Dunkin‘ Donuts customers place
on the products, the more or higher price the firm can charge for those products.
As a Dunkin‘ Donuts brand, establishing our self in Galway, Ireland is going to be highly
dependent on our transnational strategy. Because we are originally a small firm that started in
the Northeast, we have established and executed our localization strategy. However, because we
face global competition from Starbucks, we are faced with the pressures of reducing our cost
structure. Ireland is a foreign land and a foreign market not yet tapped into by our company. It
is our goal and duty to ―differentiate our product offering across geographic markets to account
for local differences and foster a multidirectional flow of skills between different subsidiaries in
our firm‘s global network of operations.‖ (Hill, 2009, p.440) For example, in our Galway store
we will differentiate our food and beverages according to the Irish culture. While we are aiming
to maintain consistency with our Dunkin‘ Donuts brand on an international scope, there will be
certain differentiations. We will offer different seating, and promote a more comfortable,
sophisticated, relaxing café atmosphere. There will be no drive-thru, which cuts costs of
electronic headsets, and setting up that type of technology. We will sell Irish soda bread
muffins, and add a selection of specialty coffees.
As stated before, because we are normally a Northeast-operated franchise, establishing a
Dunkin‘ Donuts branch in Galway is going to be the ultimate international test for our
organization. Our key goals and what we ultimately want to accomplish are all within the scope
of breaking down international barriers. Our first main goal is brand awareness. We hope topromote our name within the Irish culture, and measure consumer behavior so we can meet their
needs. We want to continue our idea of low cost, affordable, and quality coffee. Although the
Irish economy and disposable income has seen better days, according to a recent article on the
Irish times, ―while growth is set to re-emerge, the bank warned that employment and disposable
income will remain under downward pressure in the short term. For many people there is likely
to be little sense of improvement in their economic situation.‖ (Irish Times) Lastly, our goal for
our entrance into Ireland is to remain a consistent brand, further our brand equity, and simply
raise brand awareness in the Irish culture.
The key elements of our international business strategy will mainly focus on the areas of
economy, leadership and interpersonal skill. Due to the current economic downturn, the main
question is, will Dunkin‘s be able to compete in the Irish market? We feel that the answer is, of
course, yes. We strongly believe, and have seen in the past that ―even in these down economic
times, the gourmet coffee industry is heading upward. While many are cutting back in other
areas, some are discovering the limitations of their morning coffee and are moving into more
specialty coffee, driving the growth of this burgeoning industry of farmers, importers, roasters,
retailers, coffee shops, and coffee equipment manufacturers.‖ (Gourmet Coffee Industry
Flourishes) Due to consumer‘s interest in more gourmet coffee, we have decided to introduce
new types of coffee into our Ireland stores. As stated above, our additions include both Irish
coffee (made with Irish whiskey) and Baileys coffee. We feel that the addition of these drinks
will be a good way to adapt to the specific characteristics of the Irish culture.
The second key element of the international business strategy of our parent company, is that
it excels in leadership and interpersonal skills. We will have American managers in Galway for
a four-month period to properly train the soon to be Irish store managers. In the beginning, we
want an American manager to establish the groundwork in order to maintain one of our key
goals, consistency. Dunkin‘ Donuts plans to establish a solid and unified management
development strategy. ―International businesses are increasingly using management
development strategies as a strategic tool…this is particularly true in firms pursuing a
transnational strategy.‖ (p. 637, Global HRM)
5. CHANGES MADE IN OUR IRELAND STORES
When expanding a company across borders the cultures and views of the new country are
those that need to be followed. Dunkin‘ Donuts is opening in Galway, Ireland and therefore
there are certain changes that must be made to satisfy the Irish customers, not Americans. The
first and most important aspect of Dunkin‘ Donuts that needs to be changed is the well known
slogan of ―America Runs on Dunkin‖ because we are no longer dealing with North America.
We propose to add a new saying to generate buzz in Ireland by using the local dialect of Gaelic
to add familiarity. After much deliberation, the new saying that we hope will catch on will be,
―The coffee you need, with the ‗craic‘ you want.‖ It is simple and targeted to the quality coffee
that Dunkin‘ Donuts provides. This not only draws attention to the company but successfully
helps the company start shedding its image as a donut shop, but more of a coffee store.
Creating a strong brand image will be imperative to the success of Dunkin‘ Donuts in Ireland
because it will put a vision of what the company has to offer in the minds of the consumer. The
design team is working hard to incorporate a new design for Dunkin‘ Donuts to portray a more
café style feel. There will no longer be cheap laminated covered tables but instead imitation
granite to keep the costs low but the look sleek. There will also be new comfortable chairs so the
customers have the option to sit if they would like. We realize that in America, Dunkin‘ pridesthemselves off of quality coffee and food for on-the-go customers, but we must keep in mind that
the lifestyles of Europeans are different. This also includes the elimination of a drive-through.
One of the two stores will be opened in the center of Galway and therefore, no drive-through is
necessary because everyone will be on foot. The other Dunkin‘ Donuts store will be located
outside of the city center and will have a café feel with more luxury. A drive-through will take
away from the point we are trying to make in the European culture as far as valuing their
lifestyles. Allowing them time to enjoy their purchase will show that they are important to us
and that we have the time to cater to their needs.
When it comes to the menu there are several things that we are going to alter in order to best
suit our Irish customers. We are going to continue our line of donuts because this is what our
company is best known for; we will also keep making muffins, munchkins and bagels. To show
that we are differentiating between the countries we will incorporate a new Irish Soda Bread
muffin and more varieties of croissants which is a popular Irish food. These are slight alterations
that will hopefully show how the company is expanding across countries while still holding true
to its original business strategies. Perhaps the biggest change on the menu will be the
introduction of Irish and Bailey‘s coffees. Because these are alcoholic beverages there are
certain guidelines that must be met as well as regulations within the store that must be followed.
An alcoholic beverage has never been sold in a Dunkin‘ Donuts so this will be an experimental
item specifically for Ireland because drinking has been a long tradition within their culture. All
the rules regarding carding each person who orders an alcoholic beverage will be implemented
and if it is purchased it must be drank in the store. There will be a specified area where one can
order the coffee and consume it. It will be served in a mug to the customer to make sure the
person that is of age will be the one to receive it. Keeping them in the store until they are done
will also eliminate the problem of drinking openly in public. It will also only be served within
certain hours. The store is open from 7AM to midnight, Monday-Sunday, and the drinks will be
served Thursday, Friday, and Saturday from 7PM to midnight. If it is a success there may be
other days added, but to start out we feel the weekend nights will be sufficient
6. ORGANIZATION OF BUSINESS UNIT
(See Appendix B for business unit organizational chart)
We will be opening a headquarters division in Galway, Ireland to oversee our operations
within the country and also to research and analyze different entry options throughout Europe.
Our headquarters will be in charge of the managers and employees that will be working at both
of our new Galway stores. The top management positions working in the headquarters will be
expatriates, who are ―citizens of one country who are working in another country‖ (Hill, 2009,
pg. 631). Since these senior managers are from the United States they will have a strong
understanding of the Dunkin Donuts culture and be able to transfer the Dunkin Donuts values
and policies to our new division. The headquarters office in Galway will also be responsible for
employing analysts that are in charge of analyzing the performance and profitability of our two
Galway stores. In addition, there will also be a large number of researchers working at the
headquarters office to explore different options for growth within Ireland and throughout the rest
of Europe.
The organizational structure of the Dunkin Donuts Headquarters in Galway will be a
hybrid of both centralized and decentralized vertical differentiation. The headquarters president,
vice president and operating officer will have a majority of the decision making power. Bycentralizing the power for major decision we ensure coordination throughout the division and
consistency with the company objectives. However, even though there are a few management
positions that possess a large amount of authority, there are also many additional managers who
share control throughout the division. By not implementing a complete centralized structure, top
management is not faced with an overwhelming amount of decisions and work so that they can
focus on making good decisions for more critical aspects of running the division. Implementing
a partial decentralized strategy makes other workers perform better because they have more
responsibilities and are more accountable for their work (Hill, 2009). Our organization structure
divides the overall business activities into subunits allowing for greater control within each
smaller division. Each subunit is able to focus on their specific tasks that contribute to the
success of the overall business. However each subunit is still obligated to operate under the
supervision of the top management positions and under the Dunkin Donuts culture. As you can
see from the chart, there is a manager for each of the four areas of business that Dunkins‘ Brand
focuses on, as talked about above. Since the areas of marketing, engineering, finance, and human
resources are all important aspects of the parent company, it is essential that each division has
qualified managers to focus primarily on those aspects.
The organization at each individual store in Galway will also be a mixture of both
centralized and decentralized structure. As you can see from the chart, the store manager,
assistant store manager, and evening manager are responsible for making major decisions
pertaining to that specific Dunkin Donuts restaurant. However there will also be lower level
managers who are responsible for overseeing employees in their specific area. Overall, our
structure enables discussion and collaboration between both stores and the headquarters office in
order to make consistent and valuable decisions.
7. PARTICULAR INTERNATIONAL BUSINESS ISSUES FOR DUNKIN DONUTS
IN THE REPUBLIC OF IRELAND
In launching an international venture, the parent company‘s knowledge and understanding of
the culture and society which they want to enter is imperative to their success. A huge
advantage in our decision in launching our first corporately run Dunkin Donuts in Ireland is that
we will be operating in a business environment similar to our own. Ireland became an
independent, sovereign and democratic state in 1922 when they published their Constitutions
with citizens‘ rights. There are two national languages, Irish and English. Galway, where our
store will be, is dominated by English speakers (LowTax). Irish culture is notorious for drinking.
To appeal to this cultural difference, we will be creating a line extension of Irish Coffee and
Baileys Coffee. If this product line is successful in Ireland, we will consider trying it in other
cultures as well.
According to Geert Hofstede, a leader in the past 30 years in culture comparisons, there
are five aspects of a culture to examine before considering doing business in a particular country
(ITIM International). These variables are the power distance index, individualism, masculinity,
uncertainty avoidance index, and long-term orientation of a culture. Since we are going from the
state of Massachusetts, United States to Galway, Ireland, these are the two cultures to compare.
In going thought each of the five criteria, the company must look for conflicts that may interfere
with a successful business.
The power distance index measures the amount of power given to the head of an
organization. An assumption made here is that power is not equal and further that this power is
given to the leader meaning the power ―is defined from below, not from above‖ (PowerPointCh3) Individualism measures whether individuals place themselves or the group ahead. The
opposite of individualism is collectivism, which is similar to the concept of doing something for
the greater good, as opposed to working solely for personal gain. Masculinity refers to the
distribution of gender to the roles of power. What this section of the study largely revealed is
that females‘ values (both in and out of the work place) were mostly consistent throughout
different cultures, while the masculine roles tended to vary more depending on the social norms.
Uncertainty avoidance index ―ultimately refers to man‘s search for Truth‖ (ITIM International),
and is a measurement of societies tolerance for uncertainty about what is to come. People who
inhabit less certain societies tend to be more emotional are more motivated by these emotions.
The fifth aspect is long-term orientation. Unlike the other aspects, this dynamic was discovered
during a study with just over 20 countries with the aid of the Chinese with roots in their 500 B.C.
philosopher Confucius. It aims to measure virtue and a society‘s value of truth (PowerPoint
Ch3).
The United States has a fairly low power distance of 40, compared to a world average of
55. Ireland comes in below both of these with a score of 32. This 8 point difference translates to
the people of Ireland giving less unjustified power to those who are in charge. In the work place
this could translate to a lack of immediate respect for those who are in charge, but it not a reason
to change business plans at this time (although it may be an area to keep an eye on once the shop
is open). The United States has a very high individualism rating of 91, in fact it is the highest
one on record. With the world average at 43, Ireland comes in at 63, within the top ten
individuality countries. Since this is The United States strongest aspect, it is good that Ireland
has a high rating as well. In the work place this means that individuals like to work on their own,
as they have loose ties with others. The masculinity ratings for both countries are both above the
world average with ratings of 62 and 61. With only a one point difference, this aspect should
mean our staffing will not have to adjust any jobs according to the applicant‘s gender.
Uncertainty avoidance has a world average of 64. The United States comes in below average
with a 46, while Ireland comes in even lower with a 40. These low ratings show that both of
these counties have few rules and the governments do not attempt to control all outcomes and
results (ITIM International). All of these statistics are displayed in the table, as well as in the
two graphs, below.
Cultural Aspect The U.S.A Ireland World Adv
Power Distance 40 32 55
Individualism 91 63 43
Masculinity 62 61 40
Uncertainty Avoidance 46 40 64
Long Term Orientation 29 - 45(Taken from ITIM International)
Ireland is currently recovering from a state of economic downfall. Starting in 1996,
Ireland had a progressively increasing GDP rising at 10.4% in 2000. Along with the rest of the
world, Ireland took an economic downfall in 2008, and although their GPD decreased .07%,
7.06% and 1.6% over the next 2 years, economy is estimated to be ―significantly recovered‖ as
early as 2010, but more realistically in 2011 or shortly thereafter (LowTax). By entering this
foreign market while the nation is economically depressed, but predicted to recover soon,
Dunkin Donets can enter at a lower price in a market that should gain equity (LowTax, The Irish
Times).
The decline in the economy had increased unemployment to 13.7% in 2010, but this
number has been decreasing. In the city of Galway, which happens to be the fasting growing
city in the country, there are over 23 thousand people estimated to be out of work (Fhlatharta,
Bernie Ní). However we can view this statistic positively in a sense that there will be many
qualified people in Galway searching for jobs. The majority of these people have the education
level we require to staff our establishments. After the initial start up, our Dunkin Donuts will be
fully staffed by Irish, promoting from within those who show potential to management positions
over the first year.
In 2008 the government ―announced the launch of a revised and simplified Research and
Development Grant Scheme, which will make EUR500m available to companies across all
sectors.‖(The Irish Times). The revisions demonstrate that the government wants to make things
easy for foreign investors "…the new grant scheme will also be streamlined to make the
application process as straight-forward as possible for companies.‖ (ITIM International)
Ireland is the world‘s 10th largest island, and could serve as a good potential spring board
into the United Kingdom‘s market. It is a country that incurs a lot of rain. The city of Galway is
the fifth largest city in Ireland and it currently has the fastest growth rate. The temperature in the
city typically is wide enough to create a market for hot and cold beverages (32 f – 84 / 0 – 30c).
Irish labor laws have been modeled after evolving British laws. In the 1980‘s however,
the country began to address labor laws more strictly, both on individual and corporate bases.
The revisions were a result of long term presser from both unions and employers. As a result the
laws really began to change in the 1990‘s. New labor laws to Ireland include: Payment of Wages
Act (1991), Maternity Protection Act (1991), Redundancy Payment Acts (1967-1991), Protection
of Young Persons Act (1996), Employment Equality Act (1998), and Unfair Dismissals Act
(1977-1993) (International Labour Organization). The majority of these acts are very similar to
laws that are in place in the United States. Like in America, employment law is based on‗master, servant‘ relationship, meaning that all work relationships must be entered into voluntary
and that the worker must be compensated for their efforts. In 2001, Ireland instated a national
minimum wedge of $5.45 (USD). Children under 16 are not permitted to work, although there
are some exceptions for some part time work for eligible 14 and 15 year olds. Although the
typical work week is 39 hours long, workers can work up to 48 a week. Ireland‘s labor laws
guarantee workers 9 days of paid vacation: January 1, St Stephen's Day, St Patrick's Day, Easter
Monday, Christmas Day, and a combinations‘ of Mondays May – October.(International Labour
Organization)
Ireland currently has 64 unions represented and it is the right of all working citizens to
join one. Approximately 31% of the workforces are members of a union. For any legal matters
that Dunkin Donuts may find themselves needing guidance on, we will rely on the services of
William Fry Solicitors, a leading law firm in Ireland. In 1998 the Employment Equality Act
made it illegal to discriminate by gender, marital status, family status, sexual orientation, age,
religion, race, or disability (International Labour Organization). As the majority of Ireland‘s
labor laws are very similar to those of the US, few if any changes need to be made in the
employment / hiring process.
According to BootsnAll, the one stop indie travel guide (BootsnAll Travel Network),
there are eight existing coffee shops in the city of Galway. These shops open around 8am and
close at times between 8pm and 4am depending on the venue. Some of these stores have very
high profile faces, while others are low key. Our Dunkin Donuts would be a shop that had the
speed, good customer service, and optional luxury seating, creating a unique appeal that will
encourage relaxation and efficiency.
8. INTERNATIONAL ISSUES FOR DUNKIN‟ DONUTS
Irish labor law has developed according to a British-style model. The traditional view
accepted by lawyers, industrial relations practitioners and actors was that the law should adopt an
abstentionist role in relation to collective bargaining and industrial action, while supporting the
individual employment relationship with a safety net of rights and obligations. ―In general, the
law was not used to impose employment conditions, other than the basic minima in such areas as
protection from unfair dismissal, organization of working time, employment equality and
occupational safety and health.
However, the changed economic and political conditions in the 1980s shattered this
voluntary consensus. Growing pressure from both employers and unions, political concern at
addressing the perceived inflationary result of free collective bargaining, and the increased
intervention of the EC in regulating the individual employment relationship all contributed to
this change. As a result, labor law has become increasingly regulated, both at collective and
individual level (Labor Law Profile: Ireland).
Legislation on individual labor relations include a whole range of Acts, most deriving
from EU Directives, and now provide different forms of employment protection to individual
employees. The most important of these are: Minimum Notice and Terms of Employment Act
1973, Organization of Working Time Act 1997, Payment of Wages Act 1991, Maternity
Protection Act 1994, Redundancy Payments Acts1967-1991, Protection of Young Persons
(Employment) Act 1996, Parental Leave Act 1998, Worker Protection (Regular Part-Time
Employees) Act 1991, Unfair Dismissals Acts 1977-93, and Employment Equality Act 1998.
(Labor Law Profile: Ireland)Ireland‘s low rate of corporation tax, i.e. 12.5%, holding company regime, research and
development tax credit combined with many other tax incentives, makes it a very popular choice
for inward investment. ―These factors, together with a highly skilled and motivated workforce,
have resulted in almost 1,000 overseas companies choosing to invest in Ireland as their European
base. Companies involved in a wide range of activities in sectors as diverse as engineering,
information communications technologies, pharmaceutical and research and development view
Ireland as a uniquely attractive location in which to do business.‖ (Doing Business in Ireland)
Ireland remains committed to its tax rate of 12.5% applicable to Irish trading profits.
Recent statements from cabinet ministers have confirmed that the government is absolutely
committed to the 12.5% tax rate. Ireland‘s right to maintain this rate, notwithstanding the
requirement to introduce painful measures elsewhere, has been accepted by various senior
figures in Europe. In our view, this certainty is a critical development and will help secure our
future as a leading destination for FDI (foreign direct investment) in Europe (Doing Business in
Ireland).
Under the scope of business entities the Irish law states that for ―Irish company law
purposes, a branch is a division of a foreign company trading in Ireland that has the appearance
of permanency, has a separate management structure, has the ability to negotiate contracts with
third parties and has a reasonable degree of financial independence. EU regulations have been
implemented that impose a similar registration regime on branches to that imposed on local
companies.‖
A foreign company setting up a branch in Ireland is required to file basic information
with the Registrar of Companies. This includes the date of incorporation of the company, the
country of incorporation, the address of the company's registered office, details regarding the
directors of the company and the name and address of the person responsible for the branch's
operation within the State. The foreign company's constitution, certificate of incorporation and
audited accounts must also be filed with the Registrar of Companies (Grant Thornton).
9. FOREIGN DIRECT INVESTMENT OF OUR BUSINESS UNIT
Foreign direct investment occurs when a firm directly invests in facilities to produce a
product in a foreign country making that firm a multinational enterprise. The form of foreign
direct investment that our company is pursuing is creating a wholly owned subsidiary in Galway,
Ireland in the form of a greenfield venture. Although almost all Dunkin Donuts restaurants,
within the United States and in foreign markets, are franchised, we are taking a different
approach for our entry into Ireland. By setting up a greenfield venture, we are establishing a new
operation in a foreign country and the company owns 100 percent of the stock. We are hopeful
that running corporately owned Dunkin‘ Donuts restaurants will prove to be successful so that
this approach can be executed in other countries in order to overcome the disadvantages of
franchising. The main disadvantage of franchising is the inability to control the quality of
products produced in the foreign country. This lack of control can have a negative impact on the
company‘s worldwide reputation. However, by creating a wholly owned subsidiary our
company is able to have tight control over the operations of our units in Ireland. This approach
also enables Dunkin‘ Brands, Inc to withhold 100 percent of the profits generated. The control
and profits will be helpful to engage in strategic coordination whereby a firm is able to use the
profits from one country to support competitive attacks in another (Hill, 2009).Our decision to enter the market on a significant scale requires a strategic commitment
meaning that our entry is associated with a large investment and high risks that can have a long
term impact on to the firm. However, by entering a market on a large scale, it is easier to attract
customers and creates the impression that we plan to be in market for a long time and therefore
might cause competitors to rethink entry into the same market.
Establishing a greenfield venture is advantageous to the firm in many ways. With this
approach, Dunkin‘ Brands Inc. has the ability to build units in Galway specifically how it
desires. The firm is able to institute the organizational culture and operating routines that it
wants to run as opposed to adapting or changing the structure of an acquired unit (Hill, 2009). In
addition, Dunkin Brands‘ is able to transfer their skills and know-how apparent within the
successful company to the specific division in Ireland. Dunkin‘ Donuts has seen success all
around the globe and therefore the firm has certain skills and significant knowledge regarding
how to do business which gives the firm a competitive advantage. Therefore, we think this is the
best approach so we can transfer and embed the company‘s competencies into stores in Galway.
However, the firm is still aware that adaptations will need to be made to the standardized
Dunkin‘ Donuts practices in order to fulfill the cultural differences in Ireland. Even though this
strategy takes more time to establish and is also more risky, we feel a greenfield venture in
Ireland will prove to be successful for Dunkin Brands‘ Inc.
The Irish Government actively promotes foreign direct investment. In the year 2005,
foreign direct investment into Ireland was 141 billion euro. According to Doing Business 2010
Report, Ireland is ranked the seventh best place to do business in the world. The main reasons
why Ireland encourages foreign investment is because it creates employment options for Irish
citizens and also increases Ireland‘s international competitiveness by enhancing researching and
development and delivering higher value goods and services. The Irish Government has been
especially successful at attracting investment from US firms. Currently, there are approximately
620 US firms doing business in Ireland who directly employ about 100,000 workers and support
work for an additional 250,000 individuals (Doing Business in Ireland, 2011). All foreign direct
investment into Ireland is facilitated by the Industrial Development Authority of Ireland. There
are several factors that make Ireland an attractive nation for US foreign direct investment.
These reasons include: the flexibility of the English speaking work force, political stability, pro-
business government policies, and positive corporate tax rate for domestic and foreign firms.
The most common form of business organization in Ireland is the incorporated company.
As a foreign corporation with a branch in Ireland we will be treated on an equal basis as all other
firms incorporated in Ireland which are regulated by the Companies Act of 1963. Ireland offers
one of the lowest corporate tax rates in the entire European Union, at a rate of 12.5%. This low
corporate tax rate applies to foreign firms as well, making it a very attractive location for Dunkin
Brands‘, Inc to establish a branch. In terms of funding, we need to consider the political and
economic risk associated with our investment into Ireland. Dunkin Brands‘ Inc will internally
fund its new division in Galway with a corporate capital investment. Since Dunkin Brands‘ Inc.
is a large successful company worldwide, we feel we have enough money and capital to invest
into the start up of our headquarters and two Dunkin Donuts restaurants in Ireland. We feel that
our operation will be successful and our estimated cash flows for the length of our project show a
positive net present value. Therefore Dunkin Brands‘ will earn back more money than our initial
investment. Our headquarters office will be in charge of overseeing the operations of both the
newly opened stores. Therefore both stores will report to the headquarters in Galway. The
senior management positions at the Galway headquarters are responsible for reporting back toYou can also read
