Bake Me a Cake Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Bake Me a Cake Case Solution

Industry Background

The industry comprises of several small business and companies. The U.S is big market for baking cakes although Canada’s market was not developed that much as compared other parts of the Globe. The industry includes three sectors which add up the earning in overall industry.

The Commercial Segment

The commercial bakery segment comprises of 2800 companies and has 30 billion revenues annually. It includes the large corporation, other supplied grocery stores and retailers. The baked goods and snakes are supplied with extended shelf life.

The Retail Businesses

The retail bakeries in the U.S comprise of 6000 different companies and have 3 billion turn over annually. They target small customers.Basically,in this sector they use the push strategy in which they try to cater the needs in order to boost the sale of company. Therefore, these businesses have a small share of the market. The U. Sretails bakeries are labor-intensive while commercial side are capital intensive.

BMAC Competition

BMAC is facing fierce competition, having 7 independent bakeries and numerous stores in the market that provide baked items. All competitors are providing identical products with little exceptions to attract customers. The core competitor of BMAC in regional market is Junior Bakers as it also provides unique design but its designs are not attractive to customers as compared to BMAC’s cakes’ design. Therefore, custom cake orders were preferably given to BMAC. In addition,BMAC’s prices for cakes were relatively lower than Junior Bakers

SWOT Analysis

Strengths

• Customization facility has become the key factor in generating the revenue as BMAC focuses to give value to customers and preferred choice for customers.
• It started as a small venture and developed a customer base and created a strong brand name in the minds of customers and maintains the loyalty factor of the company.

Weaknesses

• Due to low capital structure and unorganized production, the company is not able to cater the elite class of the society.
• It is a labor intensive business. Most of the production is done by the company’s employees thus,it will become more difficult to maintain the standardized quality of the products.

Opportunities

• It only sells cakes but Mrs. Amy has the tendency to make new products andhas the ability to expand the product line so that risk can be diversified.
• Expanding the infrastructure with minimal cost because it is providing the quality products. Hence,this will increase the revenue and ensure the long-term survival of the company.

Threats

• Big companies in the market have become a threat for the company because they have access to large capitals whereas, BMAC is a small retail with targeting the upper middle and middle class with a limited capital therefore liquidity risk is very high.
• Cakes are based on customer preferences, hence they are not sold on immediate basis as a result, the company may lose the revenue on pre-made products.

Ratio Analysis

The company shows a good performance as compared to the past year and the overall market as it earned a net profit margin of 21.8% as compared to 14.7% last year and 5.2% from the market.This shows that the company has grown as compared to the market. It shows that the business has greater potential for earning if properly financed.
The liquidity position of the company in long term seems adequate as it has fewer liabilities to the net worth ratio of 70.2% as compared to 89.6% for the market.This shows that the company can pay its debt in the long term.
The short term liquidity position of the market seems to be a matter of concern as the company has a current ratio of only 0.5 as compared to 1.4 for the market.The main reason for such a difference is the inventory as the company does not usually maintain an inventory level; therefore it has a lower current ratio. Moreover, the company has been able to increase its interest coverage ratio significantly from the market, hence showing signs of a good liquidity position.................

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Bake Me a Cake Harvard Case Solution & Analysis