Sift Bakery

1. What are the dominant economic characteristics of the specialty baking market? Does it appear that the industry’s prospects for growth and attractive profits are good? Justify your position. The Baking industry was declining in 2009. It was estimated that the industry would rise 8.1 percent per year on average through 2014. The industry does look like it is growing and it’s looking attractive to many people. For example, the television show “sex and the city” put specialty cup cakes on the market and introduced many people to the art of specialty cupcakes. And on page C-33 it says “the cupcakery business is expected to grow 20% between the years 2009 and 2014. This trend influenced the hit TV show Cupcake Wars. Which many people watch and helps bring free advertisement to the art of cupcakes.

2. How strong are the competitive forces confronting Sift and other specialty bakers? Which one of the five competitive forces is the strongest? Prepare a five-forces analysis to support your answer. In 2010 there were 106 known cupcakeries in the bay area. But a majority of the businesses are single store establishments and not a huge threat to Sift’s. But an establishment by the name of Kara’s Cupcakes is the biggest competition Sift will have to deal with. Being Kara has six stores located in the Bay Area alone. This company can drive Sift right out of the area. The competitive force that is the strongest is the Broad Differentiation Strategy. Sift is expanding locations, it opened the first shop in 2008, the second shop opened in 2009, and the third largest shop they opened is their largest yet at 2,260 square feet building.

3. What key factors will determine a company’s success in the specialty baking market in the next 3-5 years? High quality and tasty baked goods would be the first key to success. Choosing a convenient location for consumers to consider specific consumers with higher incomes would also contribute to success. Lastly, having exceeded consumer expectations to compete and/or compare with other cupcakeries.

4. What is Sift Cupcake and Dessert Bar’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fits the competitive approach that Sift is taking? Explain. Sift’s Cupcake and Dessert Bar’s strategy is to increase the number of stores and keep the family oriented atmosphere internally and externally. They use the broad differentiation strategy because they are for all different age ranges including kids, teenagers and adults. They have a decorate your own cupcake for the kids, the “OMG” environment for teenagers to hang out with their friends and have a space to themselves, and adults buy from them for their families, parties, their companies they work at and school events that their kids have. The key factors that will determine a company’s success in the specialty baking market is the creativity of designing the baked goods, having a broad customer market and not just for a certain age group, and getting brand loyalty from customers.

5. Which of the company’s resources and capabilities have the greatest competitive power? Are Sift’s resources and capabilities (1) competitively valuable, (2) rare, (3) difficult to copy, and (4) not easily be trumped by the substitute resources of rival firms. How well do Sift’s resources and capabilities match up with the industry’s key success factors? Sift’s core values hold the greatest competitive power for their company. Their core values hold great value and are difficult to follow.