Analyse stratégique, entreprise Cake Masters, the bakery industry, competitive rivalry, retail channel, hospitality channel, new competitors, financial analysis, strategies, industry analysis
David Kuchen began to work in an investment banking division in a Canadian bank. As he likes challenges and wants to build his own business, he created and ran his business in investment banking. But the company did not have the size that Kuchen wished. So he studied marketing, strategy and operations, and he made a team of potential investors and advisors in order to purchase and operate a small business.
After hesitation between some companies of different sectors, he chose Cake Masters, a small business in growth in the bakery industry that was also in growth. With the help of its advisors, he did research about the bakery sector and about Cake Masters. Throughout these researches, Kuchen saw that this market and especially this company presented very interesting advantages and that the sale of this company is a real opportunity to take.
The Porter's five forces analysis permits to identify the main factors of a market influencing a business sector, an industry. The Porter's five forces are: the intensity of competitive rivalry, the bargaining power of the supplier, those of the customers, the threat of the entry of new competitors and the threat of substitute products or services. Also, after this analysis we will understand why it is easy or difficult to set a company in the bakery industry, what are the main threats met in the market and what are the different actors of this industry.
[...] With the help of its advisors, he did research about the bakery sector and about Cake Masters. Throughout these researches, Kuchen saw that this market and especially this company presented very interesting advantages and that the sale of this company is a real opportunity to take. In a first part, we are going to analyze the bakery industry throughout the Porter's five forces analysis. Then, we will see in a second part the strengths and weaknesses of David Kuchen in the case of the acquisition of Cake Masters and also the opportunities and threats that presents this company. [...]
[...] The strategies What are the key success factors of the marketing mix (product, price, communication, distribution) in order to establish the strategies of David Kuchen in his purchase of Cake Masters? What are the elements to take into account? - Franco's is a very good customer for Cake Masters, the proof is the numerous and constant orders of the company to Cake Masters. Franco's is also a privileged and precious customer for Cake Masters and Cake Masters is a precious supplier for Franco's. [...]
[...] The threat of the entry of new competitors As said in the text, there are low barriers to entry in the bakery industry. And as we have saw, the competition is rather strong. So new competitors can easily enter on the market and take market shares to the older companies. However, according to the limited territory of action of the bakeries (mainly the GTA and more widely North America) it seems difficult for a new bakery to erase the others and become leader. E. [...]
[...] But the gross margin of the firm is more interesting: it has more than doubled in five years. So this is a real success for the firm: Cake Masters can practice higher prices policy reflecting the quality of its high-end products in order to realize better margins. Then, a more important factor is the EBITDA. And it follows the growth of the sales because it has practically doubled in these five years. If this growth was less important than those of the gross margin, it is because of the additional expenses. [...]
[...] Key success factor: product - Cake Masters has an image of specialist making high-end baked products. Key success factors: communication and product - Cake Masters makes different and innovative products in order to adapt its offer to the meal (for dessert for example) and use different techniques to keep fresh products to send to its customers. Key success factor: product and distribution - The activity is concentrated on a local market where there are numerous bakeries increasing the competition. Key success factor: distribution - The strong competition pushes bakeries to offer products with good value for money for their customers. [...]
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