Fine Country Food Cakes

By Stacey, Alex, Chris, Simon and Warren

 What are the business implications of making
ten varieties of cakes, each in two sizes?
 Time – Would be a major implication for the Fulbright's. It would be difficult
and time consuming for them if they were to expand. They would struggle to
find spare time for their two sons especially if the business is in high demand.

 Finances – Firstly, the outflows of the business would increase due to

expansion. Also there could be a loss in profits if confectionary doesn’t sell
and has to be disposed of. Some of the cakes may have to be sold at
discounted prices if they do not sell within six months as it will not give the
best flavour and texture. They would need to think about purchasing new
equipment. They would also need to think about cash flow forecasting to
predict sales levels.

 Employment – If they wanted to expand their business it’s likely that they
would need to employ more staff as they wouldn’t be able to cope with the
rising demand from customers and make time for their family.
 Recruit, select and train new staff
 Employee motivation - moving from job production to more automated batches – less labour
intensive, perhaps a lower level of skill required to produce batches.
Continued…

 Marketing – They are going to need to consider how to market their

product, this is going to take time, money and a lot of preparation. The
marketing that would need to be considered would be advertising,
promotion, target marketing, marketing strategies and marketing budgets.

 Space /Location– If the business is looking to expand they are going to

need more space to allow for a larger stock rotation. They only have space
for 3000kg in the cool room. They may even need to think about
relocation. This in itself would have implications, it would need to be close
to their market or they would need to locate nearer suppliers. It may be
cheaper for them to move to the outskirts of town due to expansion of
products.

 Decision making – This can cause conflict amongst the business because
they would need to decide what ten varieties of cake to make. This can
also cause stress amongst the business which may hinder the quality and
quantity of production.
- as the company grows, the business will need to employ people who
specialise in each function of the business e.g. sales people, production
employees, finance people. The firm getting larger has staffing implications
and it will be up to the Fulbrights to decide on all of these aspects. This is
going to add stress as they stated that they did not want to employ more
people but it is inevitable.
 What would be the implications of
running their own shop for other
aspects of the business?
 Finance: In order to run their own shop they will need additional finance
for both the shop and additional facilities.
 Risk is increased due to increased loans from investors thus budget for
other areas of the business may be decreased leading to lesser quality
customer service or product quality.
 Most start up businesses make a loss in the first year therefore they will
need to have enough funds to be prepared for this.

 Employment: More staff will need to be employed, this has both a cost
issue and goes against their initial ethos of not wanting to be an employer.
 Business will become more complex due to wages, rotas, insurance &
human resources for the staff aswell as transport will be needed to take
the cakes from the bakery to the shop.

 Longer working hours: Initially they will need to work longer hours
aswell as weekends as a shops predominant turnover is generated on
weekends.
 A larger range of cakes will need to be available thus increased time is
needed leading to longer hours which they do not feel they are able to
cope with.
Continued…

 Profit concerns: Due to increased productivity if sales are not doing

aswell as predicted then a lot of stock may be left over and have to be
thrown away thus loosing the company money.

 Quality control: Quality of both product and service could decrease as

they concentrate more on the shop and less on their existing customers
and the quality of the cakes.
 Due to increased product production oven 1 will initially need to be used
with its inaccurate temperature control which Dave says is a particular
problem for larger sized cakes. Therefore the quality of these cakes may
vary/decrease.

 Positive Implications: Profit margin would increase as whole sale to

delicatessens require large discounts. Whereas selling directly to the
customer increases their profit margins.
 After initial start up costs have been replenished opportunity for greater
revenue is available.