Analysis of Existing Production and Operation Strategies

Productivity. Sugar City Cakes & Pastries’ operations management practices ensure

Product Design.

Location Strategy. Sugar City Cakes & Pastries has only one establishment which is located at 11
Inigo St. Poblacion District, Davao City, Davao del Sur. Their location is a bit hidden and unknown
from potential retailers of their products which show that there were only few retailers that would
make them as supplier. However, they use social media as a tool to promote the products of their
company. In fact, they can be found in the Google map today. As to the proximity of their present
retailers from their company is not a problem since their retailers were the one that picks up their
products from them. Furthermore, they were open for relocation and expansion which only shows
that they were ready to supply more products and cater more rertailers.

Layout Strategy.

Human Resource.

Industry

Porter’s Five Forces Analysis

Porter’s Five Forces analysis is useful when trying to understand the competitive
environment facing a given industry. It involves looking at internal competition, barriers to entry,
the bargaining power of both buyers and suppliers, as well as substitutes to the goods produced.

Threat of New Entrants

Threat of new entrants in the Cakes and Pastries industry is moderate since the
capital requirements for individual stores are low, however new entrants wishing to
compete on a like basis with national store networks, distribution channels, brand equity
development and advertising, face large capital requirements to gain market share.
Although Sugar City produce expensive products these does not threaten them because they
are a supplier as well as a seller and their retailers come to them for their products as well
as their class A customers. Meaning, they don’t make a great effort to gain and the new
entrants does not have the power to steal their valued customers since they produce cakes
and pastries without preservatives and these makes their retailers and customers stay.

Bargaining Power of Suppliers

Locally, the bargaining power of supplier is low. Basic raw materials such as flour,
baking mixtures, yeast, salt, oil, sugar and improvers are all defined as consumer goods.
Therefore, they significantly contribute to an increase in price transparency and customer
awareness.
 Bargaining Power of Buyers

The bargaining power of buyers is high since the buyers are many and the switching
cost is low. Also customers know the product and its price to pay. Furthermore, buyers can
manufacture the products and the supplier’s product is not unique.

Threat of Substitutes

The level of threat of substitute is moderate since there are many substitutes like
desserts, pancakes, donuts, brownies, cream roll, fruits and other sweet items; however, there are
no substitutes for birthday and anniversary cakes.

Competitive Rivalry

The intensity of rivalry among competitors is high since the Cakes and Pastries
industry is increasingly growing and that the business is very attractive in this area because the
number of competitors is large. There are many cakes and pastries that can provide similar services
as Sugar City, and there are also cakes and pastries near them like the Osvaldos and Sweet
Temptation.