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

Page | 29

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

Page | 31

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.

Page | 32

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

Page | 34

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

Page | 35

Page | 36

Page | 37

Page | 38