Industry Business Description
The confectionery industry of Singapore had recorded total revenues of around 230.2 Million Dollars in the year 2017. The annual growth rate of the organization was around 2.5% between the year 2013 and 2017. The market consumption in the industry had also increased by 1.5% from 2013. The confectionery based market operates with the help of retail sale of products like, gum, chocolate and sugar. The trend which is rising in the confectionery industry of the country is based on the demand for health and wellness (Doz 2017).
Porter’s Five Forces Framework will be useful in analysing the situation of the industry in which Twelve Cupcakes is operating.
According to Engert, Rauter and Baumgartner (2016), the different suppliers in the confectionery industry of South Korea do not have high levels of negotiating power as the markets are developed in an effective manner. Furthermore, this has been seen and analysed that the price changes in raw inputs can affect the products of bakery.
The confectionery market consists of many different substitutes for the products which are offered to the consumers. The baked foods can thereby be replaced by other food items which already exist in the market (Engert, Rauter and Baumgartner 2016).
The buyers or consumers of the confectionery industry including the supermarket, hotel based chains and grocery stores are able to affect the levels of profitability and revenues due to the presence of huge number of small bakeries.
According to Engert, Rauter and Baumgartner (2016), it has been analysed and identified that there are different kinds of barriers which exist in the confectionery based industry are quite low. The small business based organizations are able to enter within the industry quite easily. The two major determinants for the success of a new organization are ability of the leaders and ability to build the brand recognition (Frynas and Mellahi 2015).
According to Engert, Rauter and Baumgartner (2016), the levels of rivalry in the industry are high as many players exist in the confectionery market of Singapore. The small bakeries are also able to provide high levels of competition to the different organizations in the industry. There are different kinds of supermarkets along with other major competitors which can be a huge threat for the Twelve Cupcakes which will be ineffective in nature in managing the overall efficiency.
From the Porter’s Five Forces Model Analysis, this can be analysed that there are different kinds of threats along with opportunities for the Twelve Bakery in the market of Singapore. This can be seen that the suppliers in the South Korean market is less and the price of the raw materials are huge which can become a huge threat for the respective bakery shop along with the business of the bakery.
From the above analysis of the Porter’s Five Forces Analysis, this can be analysed that this will be helpful for the Twelve Cupcakes while moving from Singapore to South Korea. With the help of the same, this has helped the company in understanding the nature of the different competitors who are present in the South Korean market and this will help them in identifying the different strategies which will be beneficial for the overall success of the firm in the respective kind of environment in South Korea. Furthermore, rivalry among the existing competitors have been analysed which can help Twelve Cupcakes in managing the overall efficiency of the organization in an appropriate manner which will help them in becoming aware of the political and other legal risks which can affect their sales and profitability in the South Korean market. There can be availability of the different substitutes in the South Korean market which will be beneficial for the Twelve Cupcakes which will be helpful for them in analysing the relative performance of the different substitutes in an efficient manner.
Porter’s Five Forces
Moreover, the presence of the different substitutes can be effective in nature which will be beneficial which will be helpful in analysing the threat of the forward integration by the different suppliers in the South Korean market along with backward threat of integration of the firms can be analysed by the Twelve cupcakes company as well. Lastly, the volume of the buyers has been analysed in an effective manner which will be beneficial for analysis of the leverage of the bargaining of the company or the buyers in the market of South Korea.
Moreover, this can be analysed and identified that the rivalry is high in the market of bakery business which can be of huge threat for the business in a negative aspect and this will be creating negative impact on the bakery shop as well. Since, there is no such new entrants in the firm, this can be seen that there is a smaller number of competitors in the market which will be beneficial for the overall growth of the Twelve bakery shop as well.
From the viewpoint of the threat of the different substitutes in the market, this can be analysed and seen that there are different other kinds of bakery shops which can be a huge threat for the respective bakery named Twelve Bakery and this will be helpful in gaining competitive advantage. The Porter’s Five Forces Analysis has therefore helped in managing the overall effectiveness of the firm in an efficient manner.
Therefore, the entire Porter’s Five Forces Model has helped in managing the different kinds of aspects such as threat of the substitutes and the new entrants wherein this will help in managing the overall effectiveness of the firm and managing the different aspects.
As per Hanson et al. (2016), the Twelve Cupcakes is a cupcakes chain which has its operations in Singapore. The organization was established by Jaime Teo and Daniel Ong in the year 2011. The food items which were developed by the organization were mainly based on the food palate and choices of Asian people. First outlet of Twelve Cupcakes was started in the United Square Shopping Mall (Twelvecupcakes.com. 2018).
Twelve Cupcakes is owned by an organization named Dhunseri Group which started its operations in the year 2011. A dine-in café was thereby established by the organization in the year 2014 and operates 29 stores in 4 countries among which 16 stores are situated in Singapore (Twelvecupcakes.com. 2018).
Figure 1: Company Logo
(Source: Twelvecupcakes.com. 2018)
The operations of Twelve Cupcakes had started in the year 2011 and the growth rate of the organization has been quiet high since its inception. The major reason behind the huge following of the organization is based on the brand promise related to the delivery of freshly baked products to the consumers. The cupcakes which are provided which are offered by the organization have proved to be fluffy in nature and highly pleasing to the palate as well (Twelvecupcakes.com. 2018).
Figure 2: Twelve Cupcakes
(Source: Hanson et al. 2016)
Bargaining power of suppliers
The mission of Twelve Cupcakes is to provide the best cupcakes to the consumers and to maintain the levels of freshness as well.
The major goal which has been set by Twelve Cupcakes is based on the developing unique recipes for the cupcakes in order to differentiate the products from others in the industry. The company also aims at reaching the consumers with the help of its physical stores and the online stores as well (Hanson et al. 2016).
The stores of Twelve Cupcakes had been operating under the administration of the two founders namely, Jaime Teo and Daniel Ong. However, in the year 2016 the chain was acquired by the Dhunseri Group after the divorce of the owners (Twelvecupcakes.com. 2018).
The levels of competition which are being faced by Twelve Cupcakes in the confectionery based industry of Singapore can be countered by the organization with the help of proper management of the following factors,
- Development of effective regulations
- Adaptability to the changing needs of consumers in the industry (Hill, Jones and Schilling 2014)
- Management of the talent which is a part of the organizational operations already
Hanson et al. (2016), has commented that the overall hierarchical organizational approach is currently used by Twelve Cupcakes which can be replaced by flat structure. The issues related communication can be solved with the help of implementation of the flat organizational structure in South Korea. The managers will be able to communicate with the followers in an effective manner with the help of this structure (Lasserre 2017).
The primary business adviser of Twelve Cupcakes is Dhunseri Group which has acquired the organization in the year 2016. The group will be able to continue the profitable operations of the organization with the help of its resources and products (Wheelen et al. 2017).
The secondary business advisers of Twelve Cupcakes are the local bakeries in South Korea which are operating in the industry for a longer period of time and are able to provide the company with effective advice in order to improve the products which are offered to the management (Meyer, Heidi and Meeks 2017).
Contingency plan is important for the purpose of maintaining the operations of Twelve Cupcakes in South Korea. The complex and massive market of South Korea can affect the organization in many different ways. Twelve Cupcakes can start its operations in South Korea by using low numbers of employees in different areas. The company needs to develop a strategy of exit from the market if the operations and the products are not successful. The selection of an organization with which Twelve Cupcakes can merge its operations also needs to be decided beforehand in order reduce the levels of risks (Morschett, Schramm-Klein and Zentes 2015).
References
Doz, Yves L. “Strategic management in multinational companies.” In International Business, pp. 229-248. Routledge, 2017.
Engert, Sabrina, Romana Rauter, and Rupert J. Baumgartner. “Exploring the integration of corporate sustainability into strategic management: a literature review.” Journal of cleaner production 112 (2016): 2833-2850.
Frynas, Jedrzej George, and Kamel Mellahi. Global strategic management. Oxford University Press, USA, 2015.
Hanson, Dallas, Michael A. Hitt, R. Duane Ireland, and Robert E. Hoskisson. Strategic management: Competitiveness and globalisation. Cengage AU, 2016.
Hill, Charles WL, Gareth R. Jones, and Melissa A. Schilling. Strategic management: theory: an integrated approach. Cengage Learning, 2014.
Lasserre, Philippe. Global strategic management. Macmillan International Higher Education, 2017.
Meyer, G. Dale, Heidi M. Neck, and Michael D. Meeks. “The entrepreneurship?strategic management interface.” Strategic entrepreneurship: Creating a new mindset (2017): 17-44.
Morschett, Dirk, Hanna Schramm-Klein, and Joachim Zentes. Strategic international management. Springer, 2015.
Twelvecupcakes.com. 2018. “Welcome To Twelve Cupcakes”. Twelvecupcakes.Com. https://www.twelvecupcakes.com/about.htm.
Wheelen, Thomas L., J. David Hunger, Alan N. Hoffman, and Charles E. Bamford. Strategic management and business policy. pearson, 2017.
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