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BT11103 EntrepreneurshipSCHOOL OF BUSINESS AND ECONOMICSUNIVERSITI MALAYSIA SABAH
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UNIVERSITI MALAYSIA SABAH
SEKOLAH PERNIAGAAN DAN EKONOMI
BT11103 PRINCIPLES OF ENTREPRENEURSHIP
GROUP PROJECT 1
TOPIC: DEVELOPING A SUCCESSFUL BUSINESS IDEA
U-DESIGN
NAME MATRIC
NUMBER
SIGNATURE
JUMATRIATI BINTI PASADDEI BB09160603
WONG HING WEN BB09110344
RICHARD DONNY JEUNI BB09110142
IVY RICHARD ATILANO BB09160517
NUR NATASSHA NADIA BINTI BAKAR BB09110047
SITI ZALEHA BINTI JAWLIN @ MOHD
SUPIAN
BB09160575
ALICE ABAN BB09110046
PHINAH PHILIP BB09160634
CHUNG CHOON YEAN, NOLAR BB09110350
Page | 1
NOR FAIZATULAZIAN BINTI MOHD
AMINUDDIN
BB09110072
DATE OF SUBMISSION: 27th August 2010
Outline
1.0 Description of the business idea
1
2.0 Feasibility analysis of the business idea 3
Product/service feasibility
Industry/target market feasibility
Organiational feasibility
Financial feasibility
3.0 Industry and competitor analysis 22
Industry analysis
Competitor analysis
4.0 Conclusions
29
5.0 Bibliography
30
6.0 Appendices 31
Page | 2
1.0 DESCRIPTION OF THE BUSINESS IDEA
A business idea is a concept which can be used for commercial purposes. Our
company business idea comes from food industry where we choose to set up
an innovation for cup cake market as we can built the cup cake shop itself,
customer’s own design and delivery service.
There are several methods for developing and testing a business idea. The
ability to come up with a business idea can be transformed into a viable busi -
ness, where ideas supported by feasibility and a business plan can then be
sold to interested investors, firms, and interested parties for a lump sum or a
management contract, or as agreed. Business ideas, if introduced at the right
time, when demand for such service or a product introduced by the idea is
expected to surge, can lead to a very profitable business. Business ideas are
always available through different sources; however, it is the application ap-
plied on these ideas, and timing makes all the difference in failure or success.
There are several techniques that can be used to stimulate and facilitate the
generation of new products, services, and businesses. Brainstorming, focus
group, and conduct library and Internet research are common ways to identi-
fied ideas and for our company’s idea came from brainstorming technique
which is a process of generating several ideas about a specific topic.Page | 3
In our formal brainstorming session, our leader group asks all members to
share their ideas. We found many varieties of ideas that come up to the
discussion and we go through the idea one by one to select the best idea that
we can accomplish in the end. One of the ideas is cup cake market. All
members share their own opinion about this market on how and which part of
cup cake market we will make an innovation.
Choosing the idea of trying to make an innovation in cup cake market, we
considered about its uniqueness, benefits from the business and also the
profitability in the future. Talking about it uniqueness, the cup cake actually
unique in term of the small size but customer can choose as much as they
want based on their celebration for example for birthday, the variety of taste
whereby customer decide what flavor they want and also the cute and nice
packaging . It differs from another cake which is quite better and attracting
customers to buy. The benefits from the business as we can manage or
handle any celebration we considered as our additional knowledge or
experience besides getting any opportunity and for that will contribute to our
profitability.
Page | 4
2.0 FEASIBILITY ANALYSIS OF THE BUSINESS IDEA
Feasibility Analysis is the process of determining if a business idea is viable.
In this stage, our company will do primary and secondary research to identify
whether the production of cupcake is viable. The four components of doing
Feasibility Analysis are product/service feasibility, industry/target market
feasibility, organizational feasibility and financial feasibility.
2.1 Product/Service Feasibility
The first component is product/service feasibility which is the assessment of
the overall appeal of the product being proposed. In this component, there
are two components which are product desirability and product demand. Our
company has conducted surveys and also internet research to obtain
information and feedback from the consumer itself.
2.1.1 Product Desirability Analysis
As we all know, the whole idea behind feasibility analysis is to put an idea to
a test. Our company has administered a survey on the demand and
desirability of cupcakes as the proper mind-set at the feasibility analysis is to
get a general sense of the answer to similar questions, rather than try to
reach to final conclusion. Thirty sheets of survey questions have been
distributed and the sample of the survey questions is attached at the Page | 5
appendix. After all the survey questions have been answered, the survey is
analyzed and thus the following about determining the basic appeal of the
product is answered.
(a) Does it make sense? It is reasonable? Is it something consumers will
get excited about?
(b) Does it take advantage of an environmental trend; solve a problem, for
fill a gap in the market?
(c) Is this a good time to introduce the product to the market?
(d) Are there any fatal flaws in the product‘s basic design or concept?
Below are the results of each of the question founded in the survey question.
Question 1: Do you like to eat cupcakes?
Based on the graph, we can analysis that people are more likely to eat
cupcakes. In other words, the demand of cupcakes is very high. Hence, it is a
perfect time for our company to introduce and develop the business idea of
cupcakes.
Question 2: Are there any cupcake shops available in your nearby places?
Page | 6
05
101520
YesNo
Based on the result, we can notice that there not much cupcake shop
available. Hence, it is a perfect time for us to introduce our company to the
market.
Question 3: Would you like to design your own cupcake?
05
1015202530
YesNo
From the graph above, it shows that 27 peoples likes to decorate their own
cupcakes while 3 peoples vice versa. This analysis shows that there should be
no fatal flaws in the product basic design or concept as there are much more
people who wants to design and decorate their own cupcake.
Question 4: Do you think cupcakes suitable for any functions or parties such
as birthday party?
0
10
20
30
YesNo
Page | 7
0
5
10
15
20
YesNo
For this question, all 30 peoples who answered the survey question agree
that cupcakes are very suitable for various functions and parties such as
birthday party. Hence, it is reasonable for our company to produce cupcakes.
Question 5: What kind of tasting cupcakes do you most like?
05
101520
vanilachocolatestrawberryothers
From the graph above, we can see that the highest taste is chocolate.
Through this research, we can identify the specific needs of our company’s
target market.
Question 6: How often do you eat cupcakes?
05
1015202530
very oftensometimesnever
Based on the result, the analysis shows that 28 peoples eat cupcakes
sometimes. This cases show that although they love to eat cupcakes, they do
not have the chance to buy more because of the limited cupcakes shop that
available.
Question 7: Which food do you find most attractive?
Page | 8
02468
101214
cupcakemuffincake
For the data above, we can see that although the highest food is cupcake,
the competition between muffin and cake also exists. Hence, more strategy is
needed so that the demand of cupcake will be increase.
Question 8: List three things that people like to eat cupcake.
For these questions, most people commented that what they like about
cupcake is:
i. affordable
ii. special taste
iii. nice design
iv. delicious
v. colorful
vi. smooth and tender
vii. their cute experience
Question 9: Which group do you think prefer cupcake most?
0
5
10
15
20
childrenteenagerall
Based on the graph, we can see that children prefer most cupcake. Hence,
our company’s target market will are the children. However, 9 peoples agree
that all groups prefer cupcakes.
Page | 9
Question 10: Do you think that cupcake market can success in the food
industry?
05
101520253035
YesNo
Through the research, we can see that all people agree that the cupcake
market can success in the food industry. This indirectly helps our company to
develop the business idea of cupcakes even wider.
As a summary of the survey question, it proves that the desirability of
cupcakes is obvious and it is something that consumers will get excited
about. It is a good time to introduce this product and yet can also fill the gap
in the marketplace and there is also should be no fatal flaws in the product or
services.
Concept Test
Besides conducting survey, in product feasibility component, a concept test
should also been done. In this concept test, a preliminary description of our
company’s product, which is cupcakes, will be stated to the food industry
expert and prospective customers to get their feedback regarding the
business idea that has been done by our company.
Page | 10
New Business Concept
U-Design Company
Product
U-Design Company will sell affordable, colorful, and delicious cupcakes that baked fresh
in batches throughout the day. These cupcakes are created using the highest quality
ingredients by knowledgeable cupcake specialist. We will treat customers to a heavenly
experience filled with freshly baked cupcakes. We will also offer more flavors of
cupcakes everyday as the demand of consumer is increasing.
2.1.2 Product / Service Demand
The second component of product/service feasibility analysis is to determine
if there is demand for the product. For this component, our company uses the
technique of conducting internet research. Evidence is accumulated that
there will be healthy demand for our product, cupcakes. In conducting
internet research, we found several articles and website about the demand
for cupcakes. One of the articles is titled ‘Cupcake Economics’ by Donald
Marron. In this article, Marron stated that the demand of cupcakes is very
high. It is economically viable and that the new cupcake entrepreneurs have Page | 11
New Business Concept
U-Design Company
Product
U-Design Company will sell affordable, colorful, and delicious cupcakes that baked fresh
in batches throughout the day. These cupcakes are created using the highest quality
ingredients by knowledgeable cupcake specialist. We will treat customers to a heavenly
experience filled with freshly baked cupcakes. We will also offer more flavors of
cupcakes everyday as the demand of consumer is increasing.
a tough road ahead of them. In one day, it is estimated that thousands of
cupcake will be sold out to all cupcake lovers.
In another article ‘Nestle Professional Cupcakes’, it also stated that the
demand and rise of cupcakes is a global trend nowadays. There were also
many kind of flavors’ that has been introduced and sold to the customers to
satisfied their needs. Demand for mini cupcakes is also high as it is a new
trend and also allows customers to sample more flavors and to give people
more option. Customers always give comment that cupcakes always offer a
little taste of luxury, and a lot of sugar, for a relatively low price and also give
feeling of celebration.
However, in Malaysia there are not much cupcakes shops or company
specifically in producing cupcakes, yet the demand of cupcakes from
Malaysian is still high. This is why the chance and opportunity to open and
develop the business idea of production of cupcakes is high as the number of
company for cupcake production is lower.
2.2 Industry/ target market feasibility.
2.2.1 Industry attractiveness
Industry/target market is an assessment of the overall appeal of the industry
and the target market for the product or service being proposed. This
feasibility are consists for two which is industry attractiveness and target
market attractiveness. Industry attractiveness is varying in terms of their Page | 12
overall attractive and has a certain characteristic. The industry attractiveness
are including all of this which is industry’s market size and growth potential,
whether industry will be favorably or unfavorably impacted by driving forces,
the potential for entry or exit of major firms, differentiation, the number of
competitions, industry operating margins and the last is importance of
industry’s products or services to customer.
1. Industry’s market size and growth rate and potential
The product that we will produce into the market is cakes which are have
their cup or in another words is cup cakes. Cup cake has their own unique,
profitability and their own benefit and the benefit to customer is cup cakes
very easy for customer to hold it and very easy to carry anywhere. Ours
industry want to produces this product because for ours assessment and
observation, the side or size of market for this product are big because this
product are lack and still rare in the market place. Furthermore, we also
recognize that cup cakes have a high and vast demand because it’s so
convenient and give the customer more comfortable. Besides that, although
our product are in growth rate stage, we believes and confident that this
product can increasing the growth rate and also make a strong growth
potential because these cup cakes are suitable for every occasion. For
example, this product can be use in formal ceremony, recreation, marriage,
wedding, relaxing form and so forth. This is make the industry are more
attractive. So, for firm which is slow growth industry is stronger than among
those in fast growth industry.
2. Whether industry will be favorably or unfavorably impacted by driving
forces. Page | 13
Driving forces are consists of two element force which is internal forces and
the external forces such as the knowledge, culture and diversity, new
technology and techniques, impacts of environmental change on society,
economics and political. For our opinion, our industry will be favorably
although there have the changes in driving forces. Cup cakes can be used or
can be enjoyed by all social groups regardless of whether the change in
economy, political, society and culture. Besides that, changes in economy
such as changes in society income and society lifestyle will make a more
demand for cup cakes and this is a positive position for our industry and
make our product are more interesting. This is make industry are more
attractive because the favorably even impacted by driving force. Changing
economic and societal trends help industry incumbents.
3. The potential for entry or exit of major firms.
It is not only incumbent rivals that pose a threat to firms in an industry; the
possibility that new firms may enter the industry also affects competition. In
theory, any firm should be able to enter and exit a market, and if free entry
and exit exists, then profits always should be nominal. In reality, however,
industries possess characteristics that protect the high profit levels of firms in
the market and inhibit additional rivals from entering the market. These are
barriers to entry. When industry profits increase, we would expect additional
firms to enter the market to take advantage of the high profit levels, over
time driving down profits for all firms in the industry. When profits decrease,
we would expect some firms to exit the market thus restoring market
equilibrium. Falling prices, or the expectation that future prices will fall,
deters rivals from entering a market. Firms also may be reluctant to enter
markets that are extremely uncertain, especially if entering involves Page | 14
expensive start-up costs. Barriers to entry are unique industry characteristics
that define the industry and must use it to accurate our industry. Barriers
reduce the rate of entry of new firms, thus maintaining a level of profits for
those already in the industry. From a strategic perspective, barriers can be
created or exploited to enhance a firm's competitive advantage.
4. Differentiation
It is important to have a differentiation for own industry products between
the competition product because the more different the products, the more
attractive the industry. Besides that, the more similar the products, the more
the only strategic advantages that a company can gain are through reducing
price. First of all, we will ensure that the differences in quality of our cup
cakes are always ahead from our competitors. We also ensure that we
produce this product it can be distinguished clearly by the customer for
uniqueness and choose the high quality ingredients. It is important because
consumers may focus on the specification quality of a product/service, or how
it compares to competitors in the marketplace. Second is a difference in
functional features or design. For the terms of design, our cup cakes are
available in various shapes to meet the customer taste. Besides that, we also
offer affordable prices and make a strong brand to make it difficult to break.
5. The number of competitions
Competition may also exist at different sizes and the level of competition can
also vary. The more competitors there are, the more likely it will try to gain
customer by cutting prices. Price cutting will make a problem throughout the
industry. In some levels, competition can be informal. So, In terms of
monitoring and observation, we found that our company has a few Page | 15
competitions which are direct, indirect and future competitor. Firstly, our
direct competitor is Starbuck and Secret Recipe. Starbuck and Secret Recipe
is our direct competitor because the industries offer products which are
similar and identical to our industry. Besides that, our direct competitor have
a strong brand, awareness large offer and there product are mostly
atmosphere. Besides that, their concept also flexible which is having a
standardized design and many customers are know their place means that,
their industry have a strong position.
For our indirect competitor, there are consists of Big Apple Donuts & Coffee
and Egg & Cheese Tart Prince which is these industry offer a close substitutes
to our product such as donuts and tart. This competitor can affect our
product if this industry produces a unique product and very interesting that
our product. Furthermore, we also have a perception such as Southern Cake
Café and Multi – Bake will be a strong competitor for a future market. This is
will further strengthen our position but we believe that our cup cake can be
comparable with our opponents.
6. Industry operating margins
Operating margin is the proportion of revenues remaining after paying the
costs of operating the business. Operating costs include expenditures on
labor costs (wages), raw materials, overhead, depreciation and amortization,
selling, general, and administrative expenses, advertising. Besides that,
operating margin can be used both as a tool to analyze a single company's
performance against its past performance, and to compare similar
companies' performance against one another. So, because the cup cakes
have their vast of demand, directly it makes a benefit to industry and can Page | 16
make a lot of revenue and also give a high operating margin. In addition, with
the result of the return, it will strengthen our industry and this is making our
industry more attractive.
2.2.2 Target market attractiveness
A target market is a place within a larger market segment that represents a
narrower group of customers with similar needs. First of all, customers are
the main target group in the business. They are consumers of goods or
services produced by entrepreneurs. If no customers then there is no
business even if the goods or services are an invention or innovation that is
very unique. Customers consist of individuals in society such as housewives,
workers, students and others.
Besides that, a customer also consists of the human groups such as
government offices, schools, hospital and other organizations that buy goods
or services business. Furthermore, there are also customers from the
industrial sector such as manufacturers, suppliers, and venture. Seen
customers like kings and entrepreneurs need to prioritize customer
satisfaction to ensure their business are ongoing. Target market are consists
of geographic segments or location, identification of target market for the
proposed new venture, ability to create “barriers to entry” for potential
competitors, purchasing power of customer.
1. Geographic segmentations or location.
Geographic segmentation is an important process because the segments
divided markets into different geographical units include regions, countries,
and population density and so on. Besides that, the strategic choice of Page | 17
location is one important factor that will determine business success or
otherwise. Those company which is looking down to the business location and
also far from customer focus, it can affect business operations. Because of
that, we will choose the business location which is located in an area with
customers. We also find a location which is having a high purchasing power
and less competition because this would be the benefits for our product
business and also make sure our product a duration which is mean it can
accepted by new or exists customer.
In term of regions, our cup cakes are suitable and can be enjoyed by family
sessions because it has no negative elements in their ingredients because we
oversee the healthy and cleanliness. not only that, but we also put limits and
follow the flow of religion which is mean not contrary to religion, including the
question that is illegal is emphasized. In term of country and population
density, we will analyze and interview a few of customer to make sure when
we produces the product will be attract and can be acceptable by customers.
2. Create “barriers to entry” for potential competitors
As we know, the more competitors there are, the more likely it will try to gain
customers by cutting prices and this may invite problems for our business.
Therefore, to enable our industry always strong in the business, we must
build, create and identify barriers such as barriers to entry for those potential
competitors. As the result from our analysis, advertising and inelastic
demand can be barriers to those competitors. Our industry makes advertising
as the barriers because it can make big changes and impact because
advertising can seek and make it difficult for new competitors by spending
heavily on advertising that new firms would find more difficult to afford. Page | 18
Besides that, established firms' use of advertising to creates a consumer
perceived difference in its brand from other brands to a degree that
consumers see its brand as a slightly different product. Since the brand is
seen as a slightly different product, products from existing or potential
competitors cannot be perfectly substituted in place of the established firm's
brand. This makes it hard for new competitors to gain consumer acceptance.
Inelastic demand is a one of our strategy to penetrate a market sell at a
lower price than the incumbents.
3. purchasing power of customer
Consumer purchasing power measures the value in money for which
consumers may purchase goods or services. It is associated with to the
Consumer Price Index or the Cost of Living Index which where the average is
used by all countries. Consumer purchasing power indicates the degree to
which inflation affects consumers' ability to buy. As usually rule, if the
customer’s incomes are rises at the same rate as inflation, consumers can
maintain their present standard of living. However, when the customer’s
incomes are rises faster than the rate of inflation, the standard of living will
improve. By the same way, if inflation rises faster than income, even if wages
and salaries also increase, this is make the standard of living will decline as
consumers. This is because although receiving more money in their
paychecks, their income inadequate to counteract rising prices. Therefore,
our target market to produces this product are when the purchasing power of
customers in high level and this will make our product are be attractiveness.
2.3 Organizational feasibility analysis
Page | 19
This organizational feasibility analysis is conducted to determine if our
business has sufficient skill/resource to bring our product (cupcake) to market
successfully. There are two primary issues that our company has to consider
to launch our business: management prowess and resource sufficiency.
2.3.1 Management Prowess
As a new company, it is important to us to organize a new venture team in
order to help us to reach our goal. A new venture team is important to help
us manage a new business in its start up year. These are the element of our
new venture team:
1. The Founder to founder
Our startup’s founding management is a large team because a team has
advantages like more talent, resources, ideas, and professional contacts. It’s
important to have a manager with an extensive professional and social Page | 20
Founder to founders of a venture
Key employee
Management teamBoard of director
Board of adviser
Lender and investor
Other professionals
network because they were able to reach out to colleagues and friends to
help them plug experience or knowledge gaps. The members of our team are
heterogeneous, meaning that they are diverse in terms of their abilities and
experience. Not at all, each of the members in the organization also have a
good qualification and better skill to forward our business.
2. Key employee
Once the decision to launch new venture has been made, building a
management team and hiring key employee begin. In our company, we are
using our network of contacts to identify candidates for key positions. When
the candidates is identify, we will use a skill profile to know what the most
important skill they have and how it can be used in our production company.
3. Board of Director
In our board of director, we likely to pay a director in company stock and ask
them to serve without direct compensation-at least until we got profit. It is
important to have effective board of director because it has strong
communication with the CEO and also complementary mix of talents. The
board of director has three responsibilities in our company that is appoint the
firms officers, declare dividends and oversee the affairs of our cooperation.
4. Board of Advisor
When start up a firm, we are forming an advisory board to provide us
direction and advice. In our company we have 5 members in boards of
adviser. Our companies pay the member of advisor a small honorarium for
their service annually.
Page | 21
5. Lender and investor
Lender and investor are important to help our companies in startup firm. In
our company, we have lender and investor to help us by providing us a
guidance and lending legitimacy and assume the natural role of providing
financial oversight. They also give us an investment to make our product
successfully in the market. In addition, our company also has an experience
lender and investor to help and assist us in the hiring process of venture
team.
6. Other professional
There also some other professional those also help us in our company like
consultant, accountants, and attorneys. Consultant is needed to help our
company and give advice to undergo our business because we are large firm
and need a help to successfully in the market. They also conduct in-depth
analyses on behalf of a firm, such as preparing a feasibility study.
2.3.2 Resource Sufficiency (non-financial)
To analysis whether our business can be successfully, it is important to us
focus on our nonfinancial resources. The objective is to identify the most
important non financial resource and assess whether they are available. This
is our most critical non financial resources that it will need to move our
business idea forward and determine if these resources are available.
i. Management team/founder reputation
ii. Availability of affordable office or lab space,
iii. Government support,
iv. Labor pool quality
v. Proximity to key suppliers, customers, and similar firms (clusters)Page | 22
vi. Strategic partnerships,
vii. Attaining IP
viii. Intellectual property protection
2.4 Financial feasibility analysis
Financial feasibility analysis is the final component of a comprehensive
feasibility analysis. The most important issues to consider at this stage are
total start-up cash needed, financial performance of similar businesses, and
the overall financial attractiveness of the proposed venture.
2.4.1 Total Start-Up Cash Needed
This issue refers to the total cash needed to prepare the business to make its
first sale. The actual budget should be prepared that lists all the anticipated
capital purchase and operating expenses needed to get the business up and
running. After determining a total figure, an explanation of where the money
came from should be provided. Showing how a new venture’s start-up costs
will be covered and repaid is an important issue. When projecting start-up
expenses, it is better to overestimate rather than underestimate the costs
involves (Murphy’s Law).
Total Start-Up Cash= RM200,000.00 (RM20,000.00 × 10 persons)
Capital Purchased = RM80,000
Operating Expenses = RM50,000
(Consist of labor costs, raw materials, overhead, depreciation and
amortization,
selling cost, general cost, administrative expenses and advertising)
Page | 23
2.4.2 Financial Performance of Similar businesses
This component of financial feasibility analysis is estimating a proposed start-
up potential financial performance by comparing it to similar, already
established businesses. There are several ways of doing this, first, substantial
archival data is available online, which offer detailed financial reports on
thousands of individual firms. Other way to obtain sales data of similar
businesses is through simple observation and legwork. This approach is
suitable in some cases and in others it isn’t.
2.4.3 Overall Financial Attractiveness of the Proposed Venture
When evaluating the financial attractiveness of a proposed venture, there are
a number of other factors needed to be considered. These evaluations are
based primarily on a new venture’s projected sales and rate of
return/profitability. At the feasibility analysis stage, the projected return is
just a judgment call. A more precise estimation can be computed by
preparing pro forma/projected financial statements, including one-to three-
year pro forma statements of cash flow, income statements, and balance
sheets. To gain perspective, a start-up’s projected rate of return should be
weighed against the following factors to assess whether the venture is
financially feasible.
The amount of capital invested.
The risks assumed in launching the business.
The existing alternatives for the money being invested.
The existing alternatives for the entrepreneur’s time and efforts.
Steady and rapid growth in sales during the first five to seven years in
a clearly defined market niche.
Page | 24
High percentage of recurring revenue-meaning that once a firm wins
a client, the client will provide recurring sources of revenue.
Ability to forecast income and expenses with a reasonable degree of
certainty.
Internally generated funds to finance and sustain growth.
Availability of an exit opportunity (such as an acquisition or an initial
public offering for investors to convert equity into cash).
3.0 INDUSTRY AND COMPETITOR ANALYSIS
An industry analysis is a business research that focuses on the potential of an
industry. Before pursuing the idea of starting a firm, our company should
decide an industry that having a high potential to us to access.
i. Is the industry accessible?
For our analysis, an industry’s cupcakes have higher potential to us access
which is only a few emergence of an industry’s cupcakes.
ii. Does the industry contain markets that are ripe for innovation or are
underserved?
An industry’s cupcakes have a ripe for innovation which is customer’s own
design and deliver service that our company provided its or overcome
another existing industry.
iii. Are there positions in the industry that will avoid some of the negative
attributes of the industry as a whole?
Page | 25
Our company has positioned itself as a company that produces cupcakes
product that consist of customer’s design and deliver service that others
industry still have not using this kind of innovation.
So our group has named to U-Design bases on the company to be a leading
provider of cupcake for any event and what is special about our company is
you design your cupcake and we produce the cupcake. Besides that, we also
provide catalog that provide flavor and design to any event such as birthday
party, full moon for a child, wedding and many more.
With the service that we provide to the costumer and the potential the
business in the industry, we will be accepted because it is a new innovation in
these products. Besides that, it will be one of the competitors in the industry
because we provide a delivery service to the costumer. Nowadays, it affects
the business manager because of the strategy that are likely to be used and
the competitive rules that have driven the industry in a new dimension.
3.1 Environmental trends
For our industry we were in a fragmented industry because we will target
customer, this is because base on the research in the market most of the
bakeries only choose to make the same shape with their cake. Our bakery
has made a new innovation where we will provide new shape, customers
choose their own desire flavor and our customers can design the cupcake
with their own design that suitable for their event. This will be the strength
for our company because we know the needs and the trend that the
consumer needs. Besides that, we also provide catalog so that our customers
Page | 26
know some basic knowledge or basic design that will help them in
development of their own design.
3.1.1 Business Trends
The business trends are people one is affordable and look creative with
nobody have done it before and will be follow by friends. Mean that to buy
cake for your birthday is very trendy because look same all the time. By using
cupcake as an alternative for the cake will be a new trend and more
attractive especially for the kids. Our business trends are to provide an
affordable and creativity design by costumer will be their own trademark and
nobody can copycat their design.
3.1.2 Threat of substitutes
In general, industries are more attractive when the threat of substitutes is
low. In our bakery we will provide a product and service with an affordable
price and the product that they can make with their own creativity. Other
than that we will provide consumer the service that never be made in other
bakery that they can design there cupcake so they don’t switch to other
substitutes product as well. The creativity design produce by the costumer
will be a trademark and will not be reproduce by other costumer because we
want the personal sentimental value in the cupcake been design.
3.1.3 Threat of new entrants
In this industry, bakery that provide or giving their customer to design their
cupcakes for their own event don’t exist yet. So if we are the one that open
the bakery shop they must compete with our shop. In general our threats of Page | 27
new entrants are low in this industry and the competitors cannot easily enter
the industry to copying what our industry are doing. There are a number of
ways that firms in an industry can keep the number of new entrants low.
These techniques are referred to as barriers to entry were the competitors
that are willing to be in the industry have to study and understand the
barriers. There were six major sources of barriers to entry in this new industry
where it is not as simple as it looks like:
3.1.4 Economies of scale
The economies scale for this industry are small this is because it is still fresh
in the industry and most probably will be one of the most high risk in the
economies. Besides that, economies scale are small in providing package of
services in this industry. To be the first bakery that provides the cupcake and
service different is an advantage to our business.
3.1.5 Product differentiation
In product differentiation we can see our competitors like Multi bake,
Strawberry, Southern and many more. But to provide a service and product
that we provide to our customer are not the same. Besides that, cause other
bakery do not give the freedom and give the change to show their creativity
in designing the cupcake. The competitors not yet have a product that we
produced, but in a future sure they will make a same product like use. So to
make our product unique we will provide service such as delivery and
customer can design their own cupcakes.
3.1.6 Capital requirementPage | 28
In this business capital requirement are large because not only for the
equipment but also the specials cupcake maker. For a bakery that not only
focus on cupcake will be hard because to maintain the quality of the service
that there will provide. In our bakery we will need to invest large amounts of
money to gain entrance to an industry. Beside large amount of capital there
need to have specials in cupcake design and for other bakery need to
employ.
3.1.7 Bargaining power of supplier
In this industry need bargaining power of supplier that have the raw material
because not only our company that doing business that using this raw
material. There have many competitors in need the same raw material. For
this situation we have to make good relationship with the supplier that will
help us to get a better price as it can help us to budget our cost of production
meanwhile we can gain more profit.
3.1.8 Bargaining power of buyer
In this industry, bargaining power of buyer is the most important to be
sustainable. Without the bargaining power of buyer the business will be a
failure because nobody will buy the product. To make the buyer
concentration we make a special service such as delivery and the most
special that we provide we will give the customer to design their own
cupcake for their event. That was the special things that customer will get
from our bakery they will enjoy with our service.
3.2 Competitors Analysis
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A competitive analysis is a critical part of U- Design company business plan. It
identifying U- Design company competitors and evaluating their strategies to
determine their strengths and weaknesses relative to those of U- Design own
product or service. With this evaluation, U- Design company can establish
what makes the product or service unique- and therefore what attributes U-
Design company play up in order to attract the target market.
3.2.1 Direct Competitors
These competitors are most important because they are going after the same
customers as the new firm that offer a similar product or service.
3.2.2 Indirect Competitors
These competitors offer close substitutes to the product the firm completing
the analysis sells. These firm’s products are also important in that they target
the same basic need that is being met by the new firm’s product.
3.2.3 Future competitors
These are companies that are not yet direct or indirect competitors but could
move into one of these roles at any time.
3.2.4 Competitive intelligence
A competitive intelligence is a way that a firm can ethically obtain
information about its competitors. For U-Design Company, there are using
five ways to get a source of competitive intelligence. The first source is come
from method purchase competitor’s products.
3.2.5 Competitive analysis grid Page | 30
A competitive analysis grid is a tool for organization the information a firm
collects about its competitors. It makes our company see how it stacks up
against its competitors, provide ideas for markets to pursue, and, perhaps
most importantly, identify its primary sources of competitive advantage.
Source of Competitive Intelligence
Source Description/ Benefit
Attend Conferences and trade showsParticipants talk about the latest trends in the
industry and display their most current products
Purchase competitors product
Purchasing and using a competitor’s product can
provide insight into their benefits and shortcomings.
The purchase process itself can provide data about
how a competitor treats its customers.
Study Competitors Web Site
Many companies put a lot of information on their
Web sites, including product information and the
latest new about the company
Set up Google and yahoo! E-mail alerts E-mail alerts are updates of the latest Google or
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Yahoo! Result, including press releases, new
articles, and blog posts, on my keywords of interest.
You can set up e-mail alerts using your company's
name of a competitors
Read industry- related books, magazine,
and Web Site
Many of these sources contain articles or features
that contain information about competitors.
Talk to customer about what motivate
them to buy your product as opposed to
you competitor's product
Customers can provide a wealth of information
about the advantages and disadvantages of
competing product.
4.0 CONCLUSIONS
As a conclusion, there are divide to three chapters which is description of the
business idea, feasibility analysis, and industry/competitor analysis. For the
chapters of description of the business idea, our company one of the
techniques ways to generate a business idea is through brainstorming. In a
formal brainstorming session, the leader of the group’s U-design asks the
participants to share their ideas. As a result, U-design is determining to
innovate the cupcakes product, which from its design and deliver to
customers. In addition, the cupcake’s design is according to own customers
design. This ways to purpose to fulfill our customers need and want.
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After generating a business idea, our company using a feasibility analysis to
evaluate that business idea is viable. Through a feasibility analysis, our
company definitely to seek the business idea whether includes in these four
components, which is product/service feasibility, industry/market feasibility,
organizational feasibility, and financial feasibility. As a result, our business
ideas have a higher potential to launching the business. Even the business
idea has a high potential to launching its, but for first safety, our company is
doing a industry and competitor analysis. Throughout this analysis, we are
ripe to compete with others firm whether it exist or future firms.
5.0 BIBLIOGRAPHY
i. Bruce R. Barringer & R. Duane Ireland (2010). Entrepreneurship.
United stated of America: Prentice Hall.
ii. Industry analisys. Feasibilty Study. Retrieved August 6, 2010 from
http://www.csuchico.edu/mgmt/strategy/module3/tsld057.html
iii. How to Start A Cupcake Business. Retrieved August 13, 2010 from
http://howtown.com/how-to-start-a-cupcake-businessPage | 33
iv. Cupcake Economics. Retrieved August 13, 2010 from
http://dmarron.com/2009/11/28/cupcake-economics
v. Drucker, Peter Ferdinand. (2007). Innovation and entrepreneurship :
practice and principles. Burlington : Butterworth-Heinamann
6.0 APPENDICES
Competitor Analysis Worksheet
This work sheet will help you define your competitors. Competitors are companies that make products or
perform services similar to yours (e.g., you deliver complete dinners, and so do they), make products or
perform services that can be substituted for yours (e.g., delivery of pizza or Chinese food), and make
products or perform services that are analogous to yours (e.g., ready-made deli carryout from
supermarkets). Fill in the following table about your competitors. You may need to create additional tables
to have enough room for all your major competitors.
Competitor
A
Competitor
B U- Design
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Where is your competitor located?
What are your competitor’s annual sales?
Who are the major managers and members of
the board?
Is the company owned or in partnership with any
other corporations?
What are the competitor’s strengths?
What are their weaknesses?
What is the company’s product line?
How do the products compare to yours, in terms
of functionality, appearance and any other
criteria?
What is their price structure?
What is the company’s marketing activities?
What are the company’s supply sources for
products?
What are the strengths and weaknesses of their
sales literature?
Is the company expanding or cutting back?
Sample of Cup Cakes
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