Sugarcoating the News at Krispy Kreme According to Krispy Kreme’s “Code of Ethics for Chief Executive and Senior Financial Officers,” the company’s top executives are expected to practice and promote

Sugarcoating the News at Krispy Kreme

According to Krispy Kreme’s “Code of Ethics for Chief Executive and Senior Financial Officers,” the company’s

top executives are expected to practice and promote honest, ethical conduct. They’re also responsible for the

health and overall performance of the company. Recently, however, things have gone wrong in the top echelons

of the doughnut-shop chain.

First, a little background. Founded as one small doughnut shop in Winston-Salem, North Carolina, in 1937, the

brand became increasingly popular over the next six decades, taking off in the 1980s and 1990s. By 2003,

Krispy Kreme (which went public in 2000) was selling more than a billion doughnuts a year. That’s when

things started to go stale. (For more details on the company’s ups and downs, go to http://jacksonville.com/

tu-online/apnews/stories/012205/D87OTSIG0.shtml, and read the article “Krispy Kreme: The Rise, Fall, Rise and

Fall of a Southern Icon.”)

When sales first started to decline in the fall of 2003, CEO Scott Livengood offered a variety of creative explanations,

mostly for the benefit of anxious investors: high gas prices discouraged people from driving to doughnut

shops, supermarket sales were down because grocery stores were losing business to Wal-Mart, and

people were cutting back on carbohydrates because of the popular Atkins diet. Unfortunately, other (more

plausible) explanations were beginning to surface. To complete this exercise, you’ll need to find out what they

were. Go to both http://www.marketwatch.com/story/worst-ceo-krispy-kremes-scott-livengood and

http://usatoday30.usatoday.com/money/industries/food/2005-08-10-krispy-kreme_x.htm?csp=34 to read

these articles: “Worst CEO: Krispy Kreme’s Scott Livengood” and “Krispy Kreme Must Restate Earnings by

$25.6M.” Once you have a good grasp of the company’s problems and you’ve read about the people who are

responsible, answer the following questions, being sure to provide explanations for your responses:

1. What factors contributed to the problems at Krispy Kreme? What happened to the company? Who was

hurt?

2. Should the firm’s problems be attributed to poor management, unethical behavior on the part of the

executive team, or both?

3. Judging from the lessons of the Krispy Kreme case, how important do you think it is for a firm to have

strong top-down leadership?

4. If you’d been the CEO of Krispy Kreme, what things would you have done differently?

The purpose of case studies is to bring real world concepts/situations into your course work. Read the assigned case study and complete a case study analysis. It will focus you on the issues covered in the assigned readings. Adhere to the following guidelines: Guidelines: The end result should be four sections: 1. Summary of the existing facts 2. Issues/Problem Identification 3. Analysis/Evaluation 4. Recommendations.

In addition to the case analysis, be sure to answer all of the questions given for the case. Your responses must be complete, using terminology and concepts presented in the primary textbook as well as supplementary resources. Each paragraph should be written in complete sentences with attention paid to good grammar and spelling. Please double-space, use 12 point font, with one inch margins.You may use California Southern University's online library or the internet to complete your case study. Be sure to cite your resources and provide the references using the APA format.APA Guidelines can be found in the resources section of this syllabus.