Stakeholder Conflicts Publicly Traded Company

Stakeholder Conflicts

Publicly traded company in financial distress: Krispy Kreme

Not so long ago, Krispy Kreme was a dominant regional brand in the doughnut market of the Southern United States. The company has since expanded its outreach to an international clientele. Unfortunately, in recent years, the company has failed to show strong earnings and shareholder returns, particularly compared with its primary rival Dunkin' Doughnuts. Krispy Kreme has not been able to expand its product line in a significant way, such as including specialty coffee beverages, and there has been a declining demand for doughnuts.

Debt holder vs. shareholder conflicts

Shareholders or owners of company stock wish for the company to maximize its revenue and share these profits with its owners. Debt holders wish the company to pay off its debts first. At present, according to the Investor Relations section of its website: "Krispy Kreme does not pay a cash dividend," because of its poor earning performance and debt. ("Investor F & Q," 2006, Investor Relations: Krispy Kreme Official Website)

It is currently trying to channel its existing revenue into new product lines and stores to enhance long-term growth opportunities. Based on the investment opportunities available to Krispy Kreme, the company does not anticipate paying a cash dividend in the foreseeable future to shareholders.

The company is struggling to maintain its multiple international branches and expand its product line to include more than doughnuts. This is relatively recent innovation in the once-regionally-based company's history, which has required it to go into greater debt.

Although the company has a relatively long history (it came into being in 1937) it has a relatively short life as a publicly traded company, only since 1999.

Shareholders vs. suppliers vs. employee conflicts

According to its corporate overview: "Our vertically integrated, automated system is designed to create high quality, consistent doughnuts in an efficient manner." ("Corporate Overview," 2006, Investor Relations: Krispy Kreme Official Website) But all has not gone smoothly in terms of the company's relationship with its employees. To maintain shareholder profits, the company has endured conflict with its employees. "The company was sued for breach of fiduciary duty with regard to the administration and management" of its 401(k) and employee profit sharing plans in March of 2005. Now Krispy Kreme Doughnuts Inc. must pay $4.75 million to its employees. (Bales & Secunda, 2006) In terms of its suppliers, Krispy Kreme has endured difficulties in enabling other areas of its product line, like coffee, to turn a profit, and to manage a fresh supply of pastries and beverages in an effective manner in all of its new stores.

Shareholders vs. management conflicts