2013 business environment assignment no:1 assignment title : understandin g and developing a...

Assignment Title :Understanding and

developing a business casefor a venture

Assessor’s Name :Mr.Ali AghaLearner’s

Name : MutaharraIjaz

2013 Business environment Assignment no:1

1 Business environment

Table of Content

ContentsACKNOWLEDGEMENT......................................................3Introduction to Bakery stop..........................................4

Vision...............................................................4Mission statement....................................................4

Company’s objectives.................................................4Goals................................................................4

Business environment in which Bakery stop operates...................5Stakeholders.........................................................7

Internal stakeholders include:.......................................7External stakeholders include:.......................................7

Managers.............................................................8Employees............................................................8

Suppliers............................................................8Government...........................................................8

Banks................................................................9Customers............................................................9

Competitors..........................................................9Bakery stop’s new business venture...................................9

Objectves of new venture.............................................9Diversification strategy............................................10

Worldwide luxury goods..............................................11Choco industry Analysis.............................................11

Chocolate leads the way.............................................11Chocolate industry opportunities....................................12

Market share of chocolates..........................................13


Global chocolate industry...........................................13Chocolate industry expected growth rate.............................14

Financial prospectus of new venture.................................15Pricing strategy....................................................19

Breakeven analysis for Chocolicious.................................20Detailed documentation of new venture of Bakery stop................21

Marketing of Chocolicious...........................................21Ethical responsibilities............................................22

Social responsibilities.............................................22Health and safety responsibilities..................................22

Bibliography........................................................23


ACKNOWLEDGEMENTI want to thank Mr.Ali Agha who supported me in my work and always guided me in any problem. Without his support I would not have been able to do my assignment.


The company which I have selected is

Introduction to Bakery stopBakery stop started its operations as a bakery and confectioner shop in 1990 in Lahore. The products include bakery items, mithai, dairy products, beverages, traditional halwas and premiumbakery items/beverages etc. This chain of bakers has around 60 outlets nearly all in Lahore selling bakery/confectionary items.

Vision“We are a bakery company with one goal in mind to meet the needs of our customers we focus on our customers because customers are our assets.”

BAKERY STOP


Mission statement“To provide delicious, wholesome baked foods without compromising health and well-being.”

Company’s objectives1. To build profitable customer relationship by delivering superior value.

2. To provide such products those can increase targeted markets.

3. To become a leader in the bakery and confectionary industry.

4. To provide the quality products to the target market.

GoalsReducing raw material loss by reworking dough and reusing trim

Reducing packaging impact by 5% by 2013

Reducing packaging utilization and waste generation

Utilizing reusable and recyclable packaging for shipment

Offer sustainable packaging alternatives to the customers Conversion to PET from PS plastic packaging

Developing sustainable manufacturing practices for each site Conducting energy efficiency audits in our facilities in order toreduce energy consumption

Retrofitting lighting to more energy efficient and effective fixtures and bulbs

Installing variable drive motors on areas where we can to improveenergy efficiency


Monitoring product inventory levels to reduce energy within frozen product storage Load consolidation and the use of carriersthat are enrolled in the Smart way Carrier program to lower emission during product distribution Recovery of our food waste for animal feeding

Replace a dough CO2 cooling system to reduce our direct CO2

emission

Business environment in which Bakery stop operates

Business environment can be easily explained through the SWOT analysis.

Strengths :

Bakery stop is one of the strongest brand names in Lahore.


Strength of Bakery stop is a quality product with reasonable price

They follow their strategies in accordance with customers mind.

Bakery stop is an absolute market leader.

It is easily accessible almost everywhere in the city.

Bakery stop follows concentration on customer’s needs and mind along with suitable price.

Bakery stop does not give franchise or partnership to anyone. They are operating all the branches by themselves.

Strong distribution channel

High market share

Customer Retention

Weaknesses:

Bakery stop is not focusing properly on promotion tools such as advertisements.

Proper Parking is not available on each and every branch

Bakery stop does not carry a differentiated strategy

Opportunities:

Brand Worth:

Bakery stop is the well recognized brand nation wide which meansthe worth of the brand is good in the mind of the customers.


Because of the brand worth Bakery stop can come up with the different market of bakery products.

New market to explore nation wide and internationally:

It is the great opportunity for Bakery stop to expand their business and market by exploring the new markets nation wide and internationally.

Home Delivery

E-shopping

Threats

New entrants in market e.gDoce

Change in the consumer preference

Rapid changes in consumer behavior

StakeholdersThese are the people or groups who have an interest in the business. Stake holders are normally from within that company.

Stakeholders are further classified into:

Internal stakeholders and

External stakeholders


Internal stakeholders include:Managers

Employees

Suppliers

External stakeholders include:Government

Banks

Customers

Competitors

ManagersThese are the people who have right to make the decision in the business. They have several interests in the business e.g, job security, promotion and job satisfaction.

EmployeesEmployees are the people who work in the business, can be also known as labors. Their basic interest in the business is regarding the following factors;

Getting salaries on time

Training development

Job enlargement

Job rotation


Job enrichment

SuppliersSuppliers are those entities who supply raw, semi-final products to the business. Suppliers have direct interests in the business.

GovernmentGovernment is interest in tax receiving, quality check and subsides. Without having the legal registration of business, it is not possible for the business to run. The business in Pakistangets registered at SECP.

BanksBanks get interest on the loan given to the business. Banks are also involved in the financial transactions.

CustomersCustomers expect that the business makes the product according totheir requirements. Customers also want businesses to provide them after sale facilities. Customer are the direct stakeholders of the business.

CompetitorsCompetitors want to know that which business activity is requiredto create competitive edge in order to have competitive advantage. Hence, competitors are one of the most important stakeholder of the business.


Bakery stop’s new business ventureChocolicious

Objectves of new ventureTo sale online by using e-commerce and e-business

Make chocolicious an internationally recognized brand

Increase sales

Reduce costs e.g, rental cost and management cost at the physicalpresence of outlet

To build profitable customer relationship by delivering superior value.

To provide the quality products to the target market.

Ansoff’s matrix linked with Bakery stop


Diversification strategyAccording to Bakery stop’s diversified strategy because, it wantsto enter new markets and by producing new products. The new market s the web and new product is Luxury chocolates.

New markets mean new opportunities. The growing affluent class has created an expanding market for “luxury” food items. High-endchocolates are bypassing the kiddie market and targeting affluentadults with bite-sized delicacies like chocolate pearls, gold-laced chocolates, Easter eggs draped in diamonds and precious-jewel coated chocolates. It’s important to note that the association of sweet treats and children is no longer applicable -- these are the kinds of treats least likely to appear on your child's hands and face.

Diversification

Chocolicious


Worldwide luxury goods

Choco industry AnalysisChocolate industry in 2013 at a glance

The chocolate industry offers a wide variety of opportunities forthe business owner, weathers economic recession well and is growing despite increased health-consciousness and calorie counting. Growth will be driven by population growth as well as expansion into new markets, product innovation and rising disposable income levels leading to greater purchasing of premiumofferings. Chocolate is wildly popular for individual consumption, giving gift and cooking. Due to the dominance of large-scale production dynasties, franchises and small businessestend to focus on unique or specialty items or services. Unique chocolates are coming from a region famous for a particular technique, baked on-site or offer a different take on tradition,


while specialty services tend to focus on gift-packaging or delivery.

Chocolate leads the wayOne of the primary demand drivers for chocolate and other sweets is consumer taste, consumers continue to love chocolate! Long a beloved treat in the western world, a recent study in Great Britain showed that 91% of females and 87% of males consume chocolate products. But the taste for chocolate is now expanding into highly populated nations with a growing middle class, such as China, India and Pakistan. Rising disposable incomes and changing tastes will continue to drive growth in the industry overseas, just as improving domestic economic conditions increasesales at home.

Chocolate industry opportunitiesGift giving

The changing trends of gifts have shown a considerable growth in buying behavior of chocolates. People choose chocolates as theirfor gifting.

Bulk candy

Offering a wide assortment of candies of all types..

Premium or unique

Increase in the sales of high quality chocolates named as luxury chocolates

On-line purchase

Due to the increase in ebusiness it is getting accessible to purchase different


foreign choco brands.

Ethical Free trade or other, quality products produced, process and delivered in a certifiably ethical and/or environmental manner

The chocolate industry has proven resilient during the recession and innovative to meet changing consumer tastes and criteria. Growth will remain strong as chocolate gains in popularity in newmarkets and the global economy powers ahead. Healthier varieties are gaining market share and discerning consumers are willing to pay a premium for ethical production, but through it all, chocolate demand continues to grow.


Market share of chocolates

Global chocolate industryThe global chocolate industry has been in a moderate growth trajectory since the last five years. This growth is largely fueled by the increased global demand for premium chocolate. The major developing countries such as China and India are expected to offer great opportunities to the global chocolate industry; thanks to the use of chocolate as a functional food. Organic and fair trade chocolate is a rapidly growing segment of the industry. With consumers developing more awareness regarding environment-friendly products, this segment is expected to rise rapidly in the next five years. One of the major concerns for thechocolate industry is the rising number of counterfeit products.


This is a great threat for the overall confectionery market and chocolate is no exception.

The global chocolate market is highly consumer driven and companies need to focus on their development and marketing strategies towards capturing a larger consumer base, and acquiring new markets. The major strategies used are consolidation of processes, and enhancement of brand image through corporate social responsibility.

Cocoa is the main raw material for chocolate production and has no other substitute. however, it can only be grown within 10 degrees (latitudes) of the equator. Due to this constraint, global production of cocoa is highly concentrated in West Africancountries such as Ghana, Cote d'Ivoire, Cameroon, and Nigeria. The cocoa fruit is harvested twice a year in the form of a main crop and an intermediary crop (also termed as mid-crop). The maincrop is larger than the mid-crop though the relative size varies according to the country where it is produced. Emulsifiers are basically used in food and pharmaceutical applications. The global emulsifier market was valued at around $1 billion in 2010.Lecithin has the highest share of around 30% of the global emulsifiers market.

Vanilla is the most preferred flavor in the chocolate industry. Anumber of other important flavors such as mint, coffee, strawberry, and orange are being increasingly used these days as the consumer is more open to experimenting; however, the traditional chocolate flavor is still the most sought-after. Almost 90% of the total vanilla used as a flavor is synthetic.


Chocolate industry expected growth rate

The market in Asia is driving sales and is expected to hold a 20%share of the global market in 2016. The market in Asia is expected to have a high CAGR of 4.7% due to lower penetration, and sales in the Asian region are expected to boost their share from $15 billion in 2010 to $19.7 billion in 2016. The U.S. leadsthe chocolate market in North America with a market share of around 86.3%, while Japan leads the Asian market with a 39.7% market share. In Europe, the UK has the largest demand with a market share of 16.4%, followed by Germany with 15.9%.

Financial prospectus of new ventureDescription of the offering

Price

Discount


Description of the offering( product line)

The following product line is designed according to the tastes ofPakistani customers and outside Pakistan customers.

Aphrodisiac for Her Caramel apple pie

Aphrodisiac for Him Caribbean Fire

65% Venezuelandark chocolateinfused with

supplestrawberry,

Patron SilverTequila, hintsof lime and astimulatingblend of

guajillo and

Local applecider is foldedinto a sweet

caramel, layeredatop a pecan

70% Ecuadorianchocolate

surrounds aslowly erupting,fiery center of

ancho andchipotle peppers,


Bananas Flambé Cashew Caramel

Chai Ganache Expreso Fusion

Ripe bananascaramelized andflambéed with

dark rum,blended into a

A delicatebalance of

house-roastedcashews andluscious

caramel, enrobed

Organic masalachai tea and

earthy buckwheathoney infusedinto a blend of38% and 49% milk

chocolates,

Locally roastedespresso, darkMuscavado sugarand a hint ofvanilla infused


Cinnamon Cappuccino Exotic Caramel

Cocoa Nib Frambosie

Ceyloncinnamon crèmefrosted over65% espressoganache,

Pure, smooth65% Venezuelandark chocolate

ganachestudded with

Our trademarkpiece – tropicalpassion fruit

and mango pureesblended into

Fresh raspberrynotes andFramboise

liqueur combinewith 65% dark


Coconut-Rum Fromage de Bleu

Hazelnut Praline Honey Lavender

Freshly gratedcoconut andMalibu rum

folded into a36% whitechocolate

Hook’s bluecheese, hints of

pear and figbalsamic vinegarare infused into

a 49% milk

Caramelizedhazelnuts andhouse-made

gianduja formthis light andairy praline,

Wildflower honeyand French

lavender flavora 64% darkchocolatecenter,

65% darkchocolate

ganache minglesin harmony withthe tropicaltartness of

Fresh lemongrass root,

refreshing Thai lime

leaves and sweet curry

infused into a 65% dark


Key Lime Lemongrass-citron

Maker's Mark Orange Rosemary

Passion Fruit-Vanilla Pepper Mint

49% Amber milkchocolate

infused withthe

distinctively

Bergamot,fresh rosemaryand orangezest awakenthe citrus

38% and 49% milkchocolates blendseamlessly withfresh passionfruit puree,Madagascar

Herbalpeppermint isinfused into

dark chocolatefrom Madagascarthen wrapped ina 36% white


Pistachio Ganache Pomegranate-Malbec

Raspberry-Chipotle Potter’s hazelnut

Silky pistachioa crème and

DumanteVerdenocepistachio

liqueur add pureluxury to thismilk chocolate

Anti-oxidantrich pomegranate

molasses andMalbec wine arecomplimented by

65% darkchocolate in a

House-maderaspberry jam

infused with thegentle heat of

chipotle pepper,layered over a

65% dark

Potter'sHazelnut Graham

bits areimmersed increamy milkchocolate,

Nueske'sapplewood smoked baconand KickapooGold organicmaple syrup

combine with 49%amber milk


Smoked Bacon Szechuan Peppercorn

Thai Peanut Butter Vanilla Crème Brûlée

Yin + Yang

Pricing strategyChocolicious will set it prices low from the competitors in the market. This is called competitive pricing.

Floral andslightly numbing

Szechuanpeppercorns

infused into a

House-made peanut butter blended with sweet and savoryThai spices of curry, chilies

MadagascarBourbon vanillabeans infusedinto crème

ganache, layeredwith a classic

White and darkchocolatesbalanced

harmoniously –floral jasmine

tea infused into


Market penetration pricing- We will set the low initial price in order to penetrate the market. Quickly and deeply and win a largemarket share. The high sales volume results in falling cost, allowing the company to cut its prices further several conditionsmust be for this low price strategy to work, First the market must be highly price sensitive so that the low price produces more market growth. Second production and distribution cost must fall as sales volume increases Third the low price must help keepout the competition and the penetration price must maintain its low price position otherwise the price advantage may be only temporary

On special occasions e.g, Eid, Christmas, Valentinesday, Chocolicious will give special discounts on the online sale eg, 10% discount to customers from Pakistan.

Chocolicious will set its price low from the competitors in the luxury chocolate in order to compete the competitors through pricing strategy.

Breakeven analysis for ChocoliciousSales

0 50 100 150 200 2500

500

1000

1500

2000

2500

3000

1The red point shows the break-even level(This is the point which shows the number of goods to be sold in order to achieve break-even goal which is 122,300 )

The green point shows the fixed-costs


No of chocolatesThe break even graph shows the level where chocolicious earns no profit and faces no loss.

Pay back period for chocolicious

Pay back period is the in which the initial cash outflow of an investment is expected to be recovered from the cash inflows generated by the investment. It is one of the simplest investmentappraisal techniques. As chocolicious is a new venture, hence itsquiet important to calculate the payback period.

(cash flows in 000)

CumulativeCash FlowYear Cash Flow

0 (500) (500)

1 100 (400)

2 130 (270)


3 160 (110)

4 190 80

5 220 300

Payback period is 3.58 years.

How will Bakery stop finance its new venture Chocolicious?

Bakery stop has a good retained profit. Hence gourmet will use its retained profit in order to finance this project.

Detailed documentation of new venture of Bakery stopLegal Documentations are required to run the business. It has to be done according to the International standards.

Marketing of ChocoliciousMarketing can be done through the following media;

Integration with social medias, e.g, facebook, twitter

Advertisements e.g, on tv, radio

Give brochures to the customers who come and shop at the exiting branches of gourmet.


Ethical responsibilitiesFairness and honesty are at the heart of business ethics and relate to the general values of decision makers. At a minimum, employees and owners are expected to follow all applicable laws and regulations. But beyond obeying the law, they are expected not to harm customers, employees, clients, or competitors knowingly through deception, misrepresentation, coercion, or discrimination. Honesty and fairness can relate to how the employees uses the resources of the gourmet.

Social responsibilitiesGourmet business obligation is to maximize its positive impact and minimize its negative impact on society. Social responsibility is a broader concept that concerns the impact of the entire business’s activities on society.

CSR

The Commission defines corporate social responsibility as “the responsibility of enterprises for their impacts on society”. To fully meet their social responsibility, enterprises “should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders”.

Health and safety responsibilitiesEmployer’s duty of care includes:


make the workplace safe prevent risks to health ensure that plantand machinery is safe

to use ensure safe working practices are set up and followed makesure that all materials are handled, stored and used safely provide adequate first aid facilities

avoid potentially dangerous work involving manual handling provide health supervision as needed

Bibliographyhttp://www.franchisehelp.com/industry-reports/chocolate-industry-report

http://www.gourmetbaker.com/about-us/sustainability/

http://education.lokoi.com/gourmet-bakers-launching-new-product-as-gourmet-chocolate

http://www.marketsandmarkets.com/PressReleases/global-chocolate-market.asp

http://www.investinganswers.com/financial-dictionary/mutual-fundsetfs/prospectus-929

http://www.nidirect.gov.uk/employers-health-and-safety-responsibilities

http://www.infusionchocolates.com/chocolats.php

http:// www.infusionchocolates.com/chocolats.php

http://www.slideshare.net/JamieMaraj/csr-ecommerce-11858464

http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/index_en.htm












http://www.gourmetbaker.com/about-us/sustainability/

http://www.franchisehelp.com/industry-reports/chocolate-industry-report

http://www.franchisehelp.com/industry-reports/chocolate-industry-report

2013 business environment assignment no:1 assignment title : understandin g and developing a...

Documents