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 Country Division: Canton,

Massachusetts, USA

Marketing: Target the masses by expanding the menu to fit the customer

needs and provide quality coffee and food for on the

go customers.

Finance: 2010; rasie $625 million through

offering of senior notes along with $1.35 billion senior credit faculty and available cash to repay in full outstanding debt and cash dividends to

stockholders.

Engineering: Store redesign to make a

higher quality image. More subdued color

scheme, espresso colored walls with hints of

orange and pink, granite tables and sleek chairs.

Human Resources: The mission, "to be the

premiere quick service franchisor, with a leading position in coffee, bakery, and ice cream segments of

the QSR category.

Region A Division: Dunkin' Donuts, North and South

America

Region B Division: Dunkin' Donuts, Asia

Our Business Unit: Dunkin Donuts, Europe (Galway

Ireland)

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

Sold the 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 world

Finances 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 2050

Changes 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 followed

Parent 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 managers

International 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

1998

Understanding 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 drinking

International 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 - 45

Ireland‟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 policies

Foreign 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 differences

Financial 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 Ireland

Business Unit Organizational Chart

Corporate

Headquarters

President

Finance Manager

Engineering

Manager

Marketing Manager Store Manager

Floor Manager

Custodial Staff

Cashiers

Servers

Kitchen Manager

Kitchen Staff

Evening Manager

Assistant Manager

Sales Manager Human Resource Manager

Recruitment

Training and Development

Procurement Manager

Purchasing

Receiving and Inspection

Vice President Operating Officer

Headquarters Staff

Oversee operations of

stores in Galway

Analyze financial

performance

Employ researchers to

explore new entry

options for DD

Both American and

Irish citizens

Managers, 50

Store Employees, 500

Researchers, 350

Financial Analysts, 25

Marketing, 50

Trainers, 30

Designers, 10

Approximately 1,000 employees

in Ireland division

Store 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 culture

International 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 Ireland

Metrics

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 well

Looking 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 Sullivan

1. 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 the

Northeast, 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 expansion

efforts: ―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 they

will 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 to

promote 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‘ prides

themselves 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. By

centralizing 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‖ (PowerPoint

Ch3) 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 to

the parent company headquarters located in Canton, MA. The researchers employed at the

headquarters will be in charge of analyzing if our restaurants in Galway are as successful as

predicted. If they are, we hope to open more units throughout Ireland. In this case, considering

the economic and political risks associated with very large investments into foreign nations, we

would consider external funding from Irish banks.

In terms of foreign exchange for our company‘s plan to enter Ireland, we will need to use

the European Union‘s euro which is Ireland‘s national currency. The exchange rate between the

US dollar and the Euro is a floating exchange rate meaning that the exchange rate is determined

by market forces and rise and fall against each other from day to day (Hill, 2009). Favorably,

foreign exchange in Ireland is easy to obtain at market rates. There are no restricted or reported

long delays in the conversion of investment capital, earnings or interest and there are no

limitations on the import of capital into Ireland (Doing Business in Ireland, 2011).

Management positions and employees of each Dunkin‘ Donuts store in Galway will

eventually be entirely held by Irish citizens. Therefore we are using a polycentric staffing

approach at each store because host country nationals will be managing the division even though

the restaurant is still corporately owned by Dunkin Brands. Upon the opening of our store we

will send successful Dunkins‘ executives to Ireland in order to properly hire and train an Irish

workforce to operate the restaurants. Training will be a four month period where the newly hired

managers work closely with those who know the Dunkin Donuts policies and procedures that are

displayed worldwide. The training session works to embed the company‘s inherent norms and

values into the Galway stores staff so that Dunkin Donuts can keep a common reputable image

worldwide, despite the location and ownership type. However, after training is complete, the

stores will be entirely managed and run by an Irish workforce. This is to ensure that the

restaurants are run in order to comply with the unique cultural characteristics apparent in Ireland.

An Irish workforce will help Dunkin Donuts make the appropriate changes to match the Irish

market needs while still complying with the standardized company practices. Also according to

the Industrial Development Authority of Ireland, the country offers the youngest workforce in

Europe and is also ranked higher than the US in terms of their educational system meeting the

needs of the competitive environment and flexibility of the workforce when faced with new

challenges. By implementing a polycentric approach, we are reducing cultural myopia because

the managers will already have a good understanding of Ireland‘s culture. This approach is also

less expensive than paying to move an entire US workforce to Galway.

Even though each store will solely be operated by an Irish workforce there will still be

American citizens working at the Galway Headquarters. The American citizens will fill the

positions of the senior management, trainer, and some of the researcher positions. However a

majority of the workers at the Galway headquarters will be foreign citizens to ensure that we are

making appropriate changes to match cultural differences. Overall our new Dunkin Donuts

division in Ireland will employ about 1,000 workers. We feel this is an appropriate amount of

employees to fulfill our division goals. (See Appendix C for the Division Employee Chart)

10. QUALITATIVE DESCRIPTION OF PARENT COMPANY OVERVIEW

The success of Dunkin‘ Brands cannot only be measured by if they achieve their personal

goals, but if the company itself can realistically obtain these goals and how well the standards are

met. Dunkin‘ Donuts is a well known, credible store starting from its humble beginnings in

Quincy Massachusetts. Today it is an international company owned by a powerful corporation.

Not only does Dunkin‘ Donuts operate in 35 United States, they are owned and run in 30

countries. By the year 2050 Dunkin‘ Brands wishes to open between 5,000 and 15,000 new

stores worldwide meaning that the process of expansion must begin as soon as possible

(Manning-Schaffel). Already between the years of 2009 and 2010, there is about a 6% increase

in store locations. The areas that are lacking Dunkin‘ Donuts stores are in Europe; currently,

there are only stores in Bulgaria, Germany, and Spain. Europeans tend to be most similar to

Americans, yet there are more stores located in the Middle East and Asia. By expanding stores

into European countries, Dunkin‘ Donuts cannot only penetrate a new market, but increase brand

awareness in more locations.

The clever saying ―America runs on Dunkin‘‖ was an approach to get customers excited

about the company and to emphasize that they provided goods for everyday life. Here in

America, the phrase has not only succeeded, but is now considered to be the tagline of the

company. This will not work on an international scale, which is why the future success of

Dunkin‘ Brands must be the main focus. Customer loyalty has already been established in

America so the company must look overseas for its new customers. Between the years 2009 and

2010 sales increased nearly 7% and the reported revenues were $577 million. The sales and

revenues will continue to increase as long as there are more store locations opening up around

the world. We will be able to measure the success of the company partly based on the generation

of brand awareness. Penetrating the Irish market will allow for us to key in on a select group of

people and cater to their wants and needs. It is important that the brand image of Dunkin‘

Donuts is consistent throughout the world, with slight variations depending on cultural

differences. Dunkin‘ Donuts may be what the Irish need, with their economy the way it is

everyone is feeling the pressure. It is assuring to know that there will be a quality cup of coffee

available to start the day for a reasonable price. Brand awareness and acceptance is the most

important starting point to gauge the success of Dunkin‘ Donuts in the foreign market.

To go along with brand awareness it is important to keep in mind how the company

actually came into being. The transnational strategy for Dunkin‘ Donuts is what will solidify the

success of the company. The Irish culture is different from that of the origin of Dunkin‘ Donuts

in the Northeast region of the United States; there are different foods and drinks that are special

to the Irish. In order to be accepted into the Irish culture, and not seen as an intrusion, Dunkin‘

Donuts needs to alter the menu to provide for Ireland. This means everything from the

marketing strategy of the company to the store layout and menu. We have proposed an Irish

Soda Bread muffin as a specialty treat and the availability of Irish coffee (during specified times

for those who are of age). We also added a new store design that fits more into the European

café style, still keeping our distance from the atmosphere of Starbucks, but still giving the

customers the choice to sit and enjoy their purchase if they desire. The main purpose of the

transnational strategy is to help the company thrive across borders through differentiation. After

we implement the changes to the store in Galway, Ireland, and begin to see not only an

improvement in sales but in the frequency of customer visits, we will know that our plan is

working.

A new technique the company is taking on is not franchising the stores overseas but

actually owning them directly. This will increase the revenue for the company because it does

not need to pay a percentage to the franchisee; it will also allow the company to make sure that

the standards of Dunkin‘ Donuts are being upheld even in different countries. The creation of a

headquarters office in Galway will be advantageous to help make these stores successful. If this

strategy works, the company will be able to create more jobs because they will need people to

help manage the international stores and train new employees. The goal is not to bring

Americans into foreign areas to tell the locals how the store should be run; it is to teach them the

values of Dunkin‘ Brands and allow them to apply this into their culture. It is also important for

Dunkin‘ Brands to keep a close eye on this Galway branch, as well as all international store sites,

and make sure they the employees are operating in a fair, safe and healthy environment. These

requirements are not only based on American standards but the country in which it is located.

This may be more difficult for our expanding country, but in the long run we will have a uniform

brand that is both ethically aware and legally correct.

The quantitative success of the store will be its ability to generate a profit to keep the

company in business. The cash flows of the company that we receive must breakeven within 5

years of the original investment of the store in order for us to fund the original cost. If we are

going to succeed and prosper in Galway and eventually all over Ireland, we need to gain the

money that we lost when we originally opened the store.

11. SUCCESS FOR INTERNATIONAL BUSINESS PLAN

We have three key measurements of success:

1. To have sales of the alcoholic coffee exceed 25% of total coffee sales

2. To have the Soda Bread Muffin be our top selling muffin

3. To enter 3 new foreign markets within the first 2 years using data gathered at our Irish

Headquarters concerning countries in the European Union.

Each quarter we will collect the following data from each of our Dunkin Donuts

locations: Gross sales, Net sales, Sales by product line. We will collect data that will help us

determine what days sell the most of our products, and further what times of day most purchases

occur. These statistics will be compared to each other as we attempt to determine which store is

―better‖ and why it seems to generate more cash flow (traffic, staff, product availability). We

will also be monitoring when sales occur (in the morning, afternoon, evening, night, early

morning) in an attempt to get a better grasp on who are foreign target market is.

All of this data will be collected by logging the registers. Inside of every Dunkin Donuts

registers there will be a computer chip that keeps track of each transaction (items, time, and

server). At the end of each shift (when a worker signs out of their drawer) the computer will

automatically compile and upload all the data to the Irish Headquarters where it will be collected

and sorted by store.

In addition, we will want to know what percentages of our total sales were represented by

which products. We will have monthly breakdowns of the money spent on coffee [hot, iced,

alcoholic], tea [hot, iced], baked goods [doughnuts, muffins, other]. This data will be collected

from both locations and will be complied at our Irish Head Quarters before it is sent back to the

Unites States for product line assessment. When the US receives this data, we will be looking at

not only what products are the most successful, but what items within the lines are selling well.

We are particularly interested on the sales of the alcoholic coffee, and will be closely monitoring

them over the next 18 months as we tailor an Irish advertising campaign to ensure popularity.

Since we are launching a new soda bread muffin, we will collect additional data into whether or

not this product is selling. This will be on a bi weekly basis for the first 8 weeks to judge its

initial success, and then monthly until researchers say otherwise or there is a new strategy seems

more effective.

Aside from collecting data from both our Galway stores, the Dunkin Headquarters will be

gathering data from all over Europe. Currently there are less than 5 countries in the EU that have

Dunkin Donuts. Dunkins will be sending employees to foreign markets for them to collect data

on the cultures and looking for new business ventures. The long term goal is to identify 5

countries in the first year that would be good potential foreign ventures. The top three will be

opened, each with one or two product tailored to the culture [Irish soda bread muffin, alcoholic

coffee]. Judging by the success of these new products, Dunkin Brands may decide to cross these

bands with American culture, extending our existing product line.

The business results we expect to see are being given a tentative deadline of 18 months.

At this point we have 3 requirements for overseas:

1. The alcoholic coffee should be contributing 25% of coffee sales

2. Soda bread muffins should be selling less than 15% less then lowest selling muffin

3. 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, Dunkin

Brand will send 50 expatriates to Ireland to ensure the company does not suffer a significant loss

over this research venture.

Costs of doing business will be closely monitored. It is the goal to keep cost no higher

than 15% of what they are in the United States. We will be reviewing shipping records and

testing routs to discover the most cost effecting method of importing our products, initially by

freighter from Boston Harbor. Currently there is only one other U.S. coffee shop in Ireland.

With one store in Dublin, our goal is to surpass Starbucks market share within the first 18

months, moving into a market leader within the next 3 years. Following is a basic balance sheet

for our stores their first year in business:

Pro Forma Balance Sheet

Assets year one

Current Assets

Cash $ 188,658.00

Inventory $ 21,175.00

Other Current Assets $ -

Total Current Assets $ 209,833.00

Long Term Assets

Long Term Assets $ 59,170.00

Accumulated Deprecation $ 5,400.00

Total Long Term Assets $ 53,770.00

Total Assets $ 263,603.00

Liabilities and Capital

Current Liabilities

Accounts Payable $ 31,974.00

Current Borrowing $ -

Other Current Liabilities $ -

Long Term Liabilities $ 20,000.00

Total Liabilities $ 51,974.00

Paid in Capital $ 140,000.00

Retained earnings $ (27,680.00)

Earnings $ 99,308.00

Total Capital $ 211,628.00

Total Liabilities and Capital $ 263,602.00

Net Worth $ 211,628.00

Appendix C

Managers, 50

Store Employees, 500

Researchers, 350

Financial Analysts, 25

Marketing, 50

Trainers, 30

Designers, 10

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Appendix A

Dunkin' Brands CEO/President Nigel Travis

Headquarters and Home Country Division: Canton,

Massachusetts, USA

Marketing: Target the masses by expanding the menu to fit the customer needs and provide quality coffee and food for on the

go customers.

Finance: 2010; rasie $625 million through offering of

senior notes along with $1.35 billion senior credit faculty and available cash

to repay in full outstanding debt and cash dividends to stockholders.

Engineering: Store redesign to make a higher

quality image. More subdued color scheme, espresso colored walls

with hints of orange and pink, granite tables and

sleek chairs.

Human Resources: The mission, "to be the premiere

quick service franchisor, with a leading position in

coffee, bakery, and ice cream segments of the QSR

category.

Region A Division: Dunkin' Donuts, North and South

America

Region B Division: Dunkin' Donuts, Asia

Our Business Unit: Dunkin Donuts, Europe (Galway

Ireland)

Appendix B

Corporate

Headquarters

President

Finance ManagerEngineering

Manager

Marketing Manager Store Manager

Floor Manager

Custodial Staff

Cashiers

Servers

Kitchen Manager

Kitchen Staff

Evening Manager

Assistant Manager

Sales Manager Human Resource Manager

Recruitment

Training and Development

Procurement Manager

Purchasing

Receiving and Inspection

Vice President Operating Officer