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60 PART 2 • STRATEGY FORMULATION

This chapter examines the tools and concepts needed to conduct an external strategic
management audit (sometimes called environmental scanning or industry analysis). An
external audit focuses on identifying and evaluating trends and events beyond the control of a
single firm, such as increased foreign competition, population shifts to the Sunbelt, an aging
society, consumer fear of traveling, and stock market volatility. An external audit reveals key
opportunities and threats confronting an organization so that managers can formulate strate-
gies to take advantage of the opportunities and avoid or reduce the impact of threats. This
chapter presents a practical framework for gathering, assimilating, and analyzing external
information. The Industrial Organization (I/O) view of strategic management is introduced.
The Chapter 3 boxed insert company pursuing excellent strategies in the midst of a
global recession is Dunkin Brands, Inc.

Doing Great in a Weak Economy

Dunkin' Brands, Inc.

unkin’ Donuts and Baskin-Robbins are under one
Dumbrella company named Dunkin’ Brands, Inc.
Doughnuts and ice cream go hand-in-hand at this com-
pany, which has more than 13,000 locations in more
than 40 countries. With more than 7,900 shops in 30
countries (5,800 of which are in North America),
Dunkin’ Donuts is the world’s leading chain of donut
shops. Baskin-Robbins is a leading seller of ice cream
and frozen snacks with its nearly 6,000 outlets (about
half are located in the United States). About 1,100 loca-
tions offer a combination of the company’s brands.
Dunkin’ Brands is owned by a group of private invest-
ment firms including Bain Capital, The Carlyle Group,
and Thomas H. Lee Partners.
Dunkin’ Donuts in 2009 launched a $100 million
advertising campaign around the theme “You Kin’ Do Dunkin’” Dunkin’ launched fierce, frontal attacks on
It” that highlights everyday challenges, such as work both McDonald’s and Starbucks as those two firms
and traffic. Dunkin’ Donuts president Will Kussell says, battled each other over fancy coffee drinks. Dunkin’
“We’re going to help you get through whatever you Donuts’ brand marketing officer Frances Allen said:
have to deal with every day.” Dunkin’ is also expanding “Starbucks can’t do food and McDonald’s can’t do
its Dunkin’ Deals, which bundles a bagel or sandwich coffee. We view breakfast as a ‘value’ meal as noted in
for 99 cents with purchase of a coffee. Franchisee Jim our ad ‘Breakfast, NOT Brokefast.’” Dunkin’ is presently
Allen, who owns 18 stores, says, “Dunkin’ Deals has test marketing a six-item breakfast value menu, all priced
been huge in this economy.” at 99 cents with any beverage purchase.
In June 2009, Dunkin’ Donuts introduced its first 99
cent breakfast wrap. Called the Wake-Up Wrap and
Source: Based on Theresa Howard, “Dunkin’ Donuts Expects a Solid
supported by the advertising phrase “America Saves at 2009,” USA Today (January 2, 2009): 5B.