27th August 2010 Page | 1



Description of the business idea



Feasibility analysis of the business idea Product/service feasibility Industry/target market feasibility Organiational feasibility Financial feasibility



Industry and competitor analysis Industry analysis Competitor analysis











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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 business, 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 applied 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 identified ideas and for our company s idea came from brainstorming technique which is a process of generating several ideas about a specific topic.

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.

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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.

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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 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.

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(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?
20 10 0 Yes No

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?
20 10 0 Yes No

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.

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Question 3: Would you like to design your own cupcake?
40 20 0 Yes No

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?
40 20 0 Yes No

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?
20 0 vanila chocolate

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.

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Question 6: How often do you eat cupcakes?
30 20 10 0

very often sometimes never

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?
15 10 5 0 cupcake muffin cake

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. ii. iii. iv. v. vi. affordable special taste nice design delicious colorful smooth and tender Page | 8


their cute experience

Question 9: Which group do you think prefer cupcake most?
20 10 0 children teenager all

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.

Question 10: Do you think that cupcake market can success in the food industry?
40 20 0 Yes No

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.

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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.
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. Target Market In the first three years of operation, u-design plans to open 3 cupcake shops. They will be located at 1Borneo, Centre Point (CP) and City Mall. The target market is children. Why U-Design? We come up with the idea to produce cupcake because in Malaysia particularly in Sabah, there are limited cupcake shop and limited production of cupcake. Hence, it is quite difficult for cupcake lover to buy cupcake. U-design will offer fresh baked cupcakes at an affordable price which is RM3.50 each and the shops will contain comfortable chairs and tables as it will be an uplifting and fun moments. Special Feature- No other cupcake shops does this The special feature for U-Design is actually involves in customer creating own cupcakes. The company s name itself, U-Design reflect that our company will innovate on customer creating and decorating own cupcakes. A do- it-yourself area will be placed at one side of shop. Therefore, it will encourage fun experience and happiness in the process of decorating the cupcakes. Besides that, we will also offer local door to door delivery services. Management Team 2.1.2 Product / Service Demand U-Design Company is led by its co-founders Wong Hing Wen and Jumatriati Pasaddei with the cooperation of the knowledgeable cupcake specialist.

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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 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.

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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 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.


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

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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. 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.


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 Page | 13

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 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, Page | 14

competition can be informal. So, In terms of monitoring and observation, we found that our company has a few 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 make a

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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 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 Page | 16

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. 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 Page | 17

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 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.

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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:

Key employee Management team Board of director

Founder to founders of a venture Board of adviser Other professional s Lender and investor

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 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.

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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.

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,

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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. ii. iii. iv. v. vi. vii. viii. Management team/founder reputation Availability of affordable office or lab space, Government support, Labor pool quality Proximity to key suppliers, customers, and similar firms (clusters) Strategic partnerships, Attaining IP Intellectual property protection

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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 Capital Purchased Operating Expenses = RM200,000.00 (RM20,000.00 × 10 persons) = RM80,000 = RM50,000

(Consist of labor costs, raw materials, overhead, depreciation and amortization, selling cost, general cost, administrative expenses and advertising)

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.

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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 threeyear 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.  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).

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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.


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.


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.


Are there positions in the industry that will avoid some of the negative attributes of the industry as a whole?

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.

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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 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.

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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 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 Page | 26

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 requirement 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. Page | 27

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 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.

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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 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.

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Source of Competitive Intelligence
Source Description/ Benefit Participants talk about the latest trends in the industry and Attend Conferences and trade shows display their most current products Purchasing and using a competitor s product can provide insight into their benefits and shortcomings. The purchase Purchase competitors product process itself can provide data about how a competitor treats its customers. Many companies put a lot of information on their Web Study Competitors Web Site sites, including product information and the latest new about the company E-mail alerts are updates of the latest Google or Yahoo! Result, including press releases, new articles, and blog Set up Google and yahoo! E-mail alerts 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 Talk to customer about what motivate them to Customers can provide a wealth of information about the buy your product as opposed to you advantages and disadvantages of competing product. competitor's product Many of these sources contain articles or features that contain information about competitors.

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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.

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.

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Bruce R. Barringer & R. Duane Ireland (2010). Entrepreneurship. United stated of America: Prentice Hall.













How to Start A Cupcake Business. Retrieved August 13, 2010 from http://howtown.com/how-to-start-a-cupcake-business











Drucker, Peter Ferdinand. (2007). Innovation and entrepreneurship : practice and principles. Burlington : Butterworth-Heinamann

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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 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?

Competitor B

U- Design

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Sample of Cup Cakes

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