Case study â Unit two: Large business (answering using PINCC)
The case study
Mateâs Bakery is a large bakery business located in Manchester, England. Mateâs Bakery has been growing at a steady rate since 2015 and the business has now achieved a sales turnover of ÂŁ85 million per year, with a net profit of ÂŁ6.5 million. Mateâs Bakery has recently been under threat from a new competitor, Cheap Bakes, which is selling very similar products at lower prices.
Mateâs Bakery has decided to spend more money promoting the business and increasing awareness of the brand in order to remain competitive. It is also currently deciding whether to increase its product range and release a product line of specialist donuts in a range of flavours to help grow the business.
Mateâs Bakery has also recently started using organic, ethically-sourced ingredients and has introduced a range of gluten-free and vegan products. The owners are hoping that this will boost sales and provide the business with a competitive advantage. However, developing a new range of products has increased costs for the business. The cash flow forecast for the next 12 months is showing that there are several months of the year where cash inflows are going to be lower than cash outflows.
Example answers
One way of analysing a case study is PINCC: product, industry, customers and competitors.
In the above case study, we can see that:
- the product is baked goods, including organic, gluten free and vegan
- the industry is the food, baked goods and health industry
- the customers are most people and particularly those with specific dietary requirements, such as gluten free
- the competitors are other bakeries, in particular Cheap Bakes
Question
Analyse how expanding the product range could benefit Mateâs Bakery.
A (low mark - 3): Expanding the product range could benefit Mateâs Bakery because it would mean it had more customers. This would lead to the business selling more products to its customers, therefore earning more profit for the business.
Another benefit of expanding the product range would be that the business could rely on more products. This is because if one or two products failed to sell very well, Mateâs Bakery could focus on other products. This would lead to Mateâs Bakery having less risk and therefore a better chance of being successful.
A (high mark - 6): Expanding the product range to include organic, ethically-sourced ingredients could benefit Mateâs Bakery by improving its brand image in the food industry. This is because customers are increasingly conscious of where raw materials, such as cooking oils, eggs and sugar, are sourced. This would lead to an increase in customers who are conscious of purchasing ethically-produced baked goods, and therefore the business would remain competitive against cheaper suppliers.
Another benefit of expanding the product range to include dietary requirements such as gluten-free and vegan is that Mateâs Bakery would gain access to a larger pool of potential consumers. This is because these requirements are becoming more common and suppliers of baked goods that cater for vegan and gluten-free diets are limited. This would lead to an increased market share in the health foods and dietary requirements sector, and therefore the business would be more likely to increase its growth and its ÂŁ85 million sales turnover.