- Explain the challenge Elizabeth faced in meeting her capacity needs. What should she have considered before moving into the larger facility?
Biddy’s Bakers was started as a hobby by Elizabeth and some of her friends. It took Elizabeth some time before she could break even and start garnering revenue from the bakery business. The decision to move into a larger facility was taken suddenly without trying to analyze whether the bakery needed a bigger facility. Also Elizabeth overestimated the capacity of growth and revenue she could collect from the bakery business before taking the decision to purchase a larger facility. This was mainly because she did not take into consideration future expenses and whether Biddy’s Bakery (a comparatively new start up) would be able to afford the extra cost incurred in purchasing a new facility. This was a decision taken in haste and thereby proved extremely risky for her business venture. In this case, strategic management decisions were not considered and an analysis of future growth of the business was not carried out (Stokes & Wilson, 2010). Also she should have consulted management students and business experts before making this decision.
- Determine what is wrong with the proposal made by the team of business students and why.
The vision of Biddy’s Bakery was to make a number of traditionally baked goodies including a range of cakes and pies. The chief aim was to produce and sell these baked products to local restaurants and customers. However, the team of management students from the local university offered a completely different proposal. They asked to do away with all other traditional goodies and concentrate only on making McDoodle pies and selling them to a nearby grocery. The proposal changes the initial aim and mission to concentrate on tasty and traditional baked products which were offered by Biddy’s Bakery and hence it is not correct. Operations management including strategy formulation should be conducted keeping in mind the vision and mission of the firm. Accordingly strategy should be formulated and the structure should be aligned to meet up with the expectations of the formulated plan. In this case, the students gave a wrong suggestion to Elizabeth without considering the original vision and mission plan of the firm.
- Explain how the business would be different if Elizabeth accepts the proposal made by the students.
If Elizabeth accepts the proposal made by the group of business students and starts producing only McDoodle pies then the venture may not successfully augment sales. Although the issues with the capacity would be solved it may lead the business venture to suffer financial losses due to dwindling sales. Selling McDoodle pies to just a single grocery store is a risky proposition as it does not concentrate on other products of Biddy’s Bakery and selling products to only one grocery which means that the business enterprise has limited chances of growth. The bakery may also lose many loyal consumers. Also making the products a part of a restaurant would also take away the homely feel and instead commercialize the product.
On the other hand, it would be wise if Elizabeth utilized the facility for part production of McDoodle pies which would be transported to the local grocery store as well as sell other traditional goodies for her loyal customers. This would be ideal as the space would be utilized and she would also garner revenue.
- Discuss the advice you would give Elizabeth on how to proceed.
Elizabeth had already taken a wrong decision by not consulting anyone prior to purchasing the larger facility. Also one must remember that in business enterprises one can expect both profits and losses and accordingly make arrangements to deal with deficits. It is very essential for Elizabeth to change with time for the business venture to grow and flourish. In fact, Elizabeth is already serious on trying to garner profits and has consulted some management students to help her in this dilemma. Elizabeth should consider making a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis and find out certain issues with the firm. Depending on the outcomes of the SWOT analysis she should strive to device methods in which weaknesses may be eliminated and threats may be lessened. She should also conduct a market survey to find out maximum information about her rival businesses and the products offered by them (Wiklund, Patzelt & Shepherd, 2009).
However, she should take the advice of people who are already conducting small business practices and if possible some experts on business. Students are extremely immature and just depending and following their opinion may not help. Elizabeth, should concentrate on McDoodle pies and at the same time start providing various ranges of traditional and modern baked foods to attract consumers. The unused space may be utilized by making a small coffee shop where people could enjoy baked pies, cakes and pastries and she could also start providing them tea, coffee and milk shakes on a compulsory order of Biddy’s baked pies, cakes or pastries.
Most small business ventures are trying to offer related products and services in order to strategically diversify their product line and thereby garner augmented sales and revenue. Elizabeth should also try this option by increasing their product lines to provide some popular milk shakes, other than tea and coffee which may be provided to the customers visiting the small coffee shop.
She should start contacting people by means of social networks like facebook and twitter and try to export products to nearby towns by tying up with grocery shops and restaurants (Harris & Rae, 2009). In this case, the products may be delivered to a number of facilities every day and also manufacture some products for direct customers.
Harris, L. & Rae, A. (2009). Social networks: the future of marketing for small business. Journal of Business Strategy, 30(5), 24 – 31.
Stokes, D. & Wilson, N. (2010). Small Business Management and Entrepreneurship. Andover: Centage Learning.
Wiklund, J., Patzelt, H. & Shepherd, D.A. (2009). Building an integrative model of small business growth. Small Business Economy, 32, 351 – 374.