Tuesday, March 29, 2011

Blog 2 Reinventing Your Business Model

Reinventing Your Business Model (EMiceli Blog 2)

Reference article: Reborn’ Dunkin’ Donuts in big daypart push: chain seeks to rival Starbucks, McD with post-a.m. focus on drinks, snacks: http://findarticles.com/p/articles/mi_m3190/is_17_40/ai_n26696519/?tag=content;col1

This past fall a Dunkin’ Donuts recently opened on the University of Pittsburgh campus on Fifth Avenue. I thought that the company had gone under and was selling only three pound bags of their coffee beans at my neighborhood Costco. Was the company back in business selling donuts? Had the company reinvented their business model? I wondered if Dunkin’ Donuts used the three simple steps of a new business model that Johnson, Christensen and Kagermann suggested in their article, “Reinventing Your Business Model?” The three steps are:

*Did they think about a real customer who needs a job done?

*Did they construct a blueprint laying out how the company will fulfill that need at a profit?

*Did they compare their existing model to see how much they would have to change it to capture opportunity?

The answer is yes, Dunkin’ Donuts did.

Dunkin’ Donuts (part of Dunkin Brands) was purchased for $2.4 billion by a consortium of private-equity firms consisting of Bain Capital Partners LLC, the Carlyle Group and Thomas H. Lee Partners LP in 2005. The new owner’s believe that the company’s real customer is still in line with their old model. The real customer is the everyday folk who work hard during the day and need a pick up snack. However, the new owner’s no longer viewed the donut as the main purchase item, but that beverages and a larger food menu would attract customers. The company’s blueprint is based on branding their product lines to include iced coffees, espresso-based lattes, smoothies, panini sandwiches, gourmet brownies and cookies. This changed was based on their “strategic platform based on two questions: Who is Dunkin’ Donuts for? What is Dunkin Donuts for?”

Question: Did the new owners believe that the great, old idea of a donut shop could be transformed into something bigger?

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