Text: Better Business



Video Title: Sugar Bakery: Building a Business Plan

Length: 6:10

Classroom Application: Instructors will find this video helpful in helping students to understand the importance of developing a business plan. Specifically, students should gain increased understanding of business model innovation and core competencies.

Synopsis

Sugar Bakery is located in East Haven, Connecticut. The company was started and is managed by a mother-daughter team. Sugar Bakery participated in and won a cupcake bakeoff contest on the Food Network. Since the television exposure, the business has been growing exponentially. Founder and owner Brenda discusses many different aspects of the business model.

Discussion Questions

1. In what ways is the business model for Sugar Bakery innovative? What is their basis for differentiation?

The business model for Sugar Bakery is innovative based on their production processes. Brenda discusses in the video that it took them years to perfect their production processes to ensure that they were producing quality cupcakes.

The basis for their differentiation is the differentiation strategy. They are creating products that are unique and different from those of their competition. The recipes used have been handed down through generations. Additionally, co-founder/owner Brenda discusses in the video how the organization strives to stay ahead of the curve by developing new cupcake recipes. She also talks about every aspect of product presentation including packaging. Everything Sugar Bakery does is designed around the concept of differentiation, setting them apart from the competition.

2. Discuss the strategic resources of Sugar Bakery. How do these contribute to their success?

Sugar Bakery has several strategic resources which contribute to their success. First, the company has important core competencies that are not going to be easily matched or duplicated. Many of the recipes used in the cupcakes have been passed down through the family. Also, Carol possesses core competencies as a baker since she has been doing it for so long. In addition, the passion for baking shared by Carol and Brenda could be considered a strategic advantage. They are both committed to this business in a way that most managers might not be.

Sugar Bakery also has several strategic assets. Although the firm has grown to 12 employees including both family and non-family members, many of the staff is still related. This creates a unique dynamic and also a commitment among staff members that goes beyond the business itself. Also, the victory on Cupcake Wars helped to create a strong brand identity for Sugar Bakery that again will not be easily copied by competitors. So, their recipes, employee base, passion, and brand combine to help give this organization a sustainable competitive advantage.

3. Describe Sugar Bakery’s approach to customer interface.

Sugar Bakery is located in East Haven, Connecticut. Based on the business size, we can assume that their target market does not extend far beyond this geographic area. The organization fulfills its product interface by interacting directly with customers. Brenda and Carol discuss how they did everything they could to get the word out about their business including attending local weekly arts and crafts shows. It is clear from the interviews that this business is dedicated to their customers and wants to make sure that they are providing a quality product. This extends from production processes, ingredients, to training of the staff. We have no information from the video regarding pricing structure.

Quiz

1. What was Brenda’s original career choice?

a. Fashion Industry

b. Baking Industry

c. Advertising

d. None of the above

Answer: a

Explanation: Brenda majored in marketing and merchandising and her original career choice was the fashion industry.

2. What was the source of initial funding for Sugar Bakery?

a. Small business loan

b. Brenda’s parents refinanced their home

c. Winnings from Cupcake Wars

d. Investors

Answer: b

Explanation: Due to the high fail rate of small businesses, Brenda and Carol did not want to take a traditional loan so Carol and her husband (Brenda’s parents) took out a second mortgage on their home for $15,000 to start the business.

3. Sugar Bakery currently has ______ employees.

a. 5

b. 20

c. 12

d. None of the above

Answer: c

Explanation: Sugar Bakery began with only family members but has grown to 12 current employees including both family and non-family members.

4. Sugar Bakery rented a retail store front

a. immediately upon opening.

b. as their first commercial space.

c. once they were sure the income would cover the cost.

d. None of the above

Answer: c

Explanation: Sugar Bakery is actually in its third location. They did not take a retail front until they were sure there was enough revenue to cover the cost.

5. Brenda and Carol possess a ____________which is one of the common characteristics of entrepreneurs.

a. passion for their business

b. business knowledge

c. management background

d. financial independence

Answer: a

Explanation: Both Brenda and Carol have a passion for baking. This type of passion is a common characteristic among entrepreneurs.

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