UNIVERSITI MALAYSIA SABAH

SEKOLAH PERNIAGAAN DAN EKONOMI

BT11103 PRINCIPLES OF ENTREPRENEURSHIP

GROUP PROJECT 1

TOPIC: DEVELOPING A SUCCESSFUL BUSINESS IDEA

U-DESIGN

NAME MATRIC SIGNATURE

NUMBER
JUMATRIATI BINTI PASADDEI BB09160603
WONG HING WEN BB09110344
RICHARD DONNY JEUNI BB09110142
IVY RICHARD ATILANO BB09160517
NUR NATASSHA NADIA BINTI BAKAR BB09110047
SITI ZALEHA BINTI JAWLIN @ MOHD BB09160575

SUPIAN
ALICE ABAN BB09110046
PHINAH PHILIP BB09160634
CHUNG CHOON YEAN, NOLAR BB09110350
NOR FAIZATULAZIAN BINTI MOHD BB09110072

AMINUDDIN

DATE OF SUBMISSION: 27th August 2010

Outline

Page | 1
1.0 Description of the business idea 1

2.0 Feasibility analysis of the business idea 3

Product/service feasibility

Industry/target market feasibility

Organiational feasibility

Financial feasibility

3.0 Industry and competitor analysis 22

Industry analysis

Competitor analysis

4.0 Conclusions 29

5.0 Bibliography 30

6.0 Appendices 31

1.0 DESCRIPTION OF THE BUSINESS IDEA

Page | 2
A business idea is a concept which can be used for commercial purposes. Our company

business idea comes from food industry where we choose to set up an innovation for

cup cake market as we can built the cup cake shop itself, customer’s own design and

delivery service.

There are several methods for developing and testing a business idea. The ability to

come up with a business idea can be transformed into a viable business, where ideas

supported by feasibility and a business plan can then be sold to interested investors,

firms, and interested parties for a lump sum or a management contract, or as agreed.

Business ideas, if introduced at the right time, when demand for such service or a

product introduced by the idea is expected to surge, can lead to a very profitable

business. Business ideas are always available through different sources; however, it is

the application applied on these ideas, and timing makes all the difference in failure or

success.

There are several techniques that can be used to stimulate and facilitate the generation

of new products, services, and businesses. Brainstorming, focus group, and conduct

library and Internet research are common ways to identified ideas and for our

company’s idea came from brainstorming technique which is a process of generating

several ideas about a specific topic.

In our formal brainstorming session, our leader group asks all members to share their

ideas. We found many varieties of ideas that come up to the discussion and we go

through the idea one by one to select the best idea that we can accomplish in the end.

One of the ideas is cup cake market. All members share their own opinion about this

market on how and which part of cup cake market we will make an innovation.
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Choosing the idea of trying to make an innovation in cup cake market, we considered

about its uniqueness, benefits from the business and also the profitability in the future.

Talking about it uniqueness, the cup cake actually unique in term of the small size but

customer can choose as much as they want based on their celebration for example for

birthday, the variety of taste whereby customer decide what flavor they want and also

the cute and nice packaging . It differs from another cake which is quite better and

attracting customers to buy. The benefits from the business as we can manage or

handle any celebration we considered as our additional knowledge or experience besides

getting any opportunity and for that will contribute to our profitability.

2.0 FEASIBILITY ANALYSIS OF THE BUSINESS IDEA

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Feasibility Analysis is the process of determining if a business idea is viable. In this

stage, our company will do primary and secondary research to identify whether the

production of cupcake is viable. The four components of doing Feasibility Analysis are

product/service feasibility, industry/target market feasibility, organizational feasibility

and financial feasibility.

2.1 Product/Service Feasibility

The first component is product/service feasibility which is the assessment of the overall

appeal of the product being proposed. In this component, there are two components

which are product desirability and product demand. Our company has conducted

surveys and also internet research to obtain information and feedback from the

consumer itself.

2.1.1 Product Desirability Analysis

As we all know, the whole idea behind feasibility analysis is to put an idea to a test. Our

company has administered a survey on the demand and desirability of cupcakes as the

proper mind-set at the feasibility analysis is to get a general sense of the answer to

similar questions, rather than try to reach to final conclusion. Thirty sheets of survey

questions have been distributed and the sample of the survey questions is attached at

the appendix. After all the survey questions have been answered, the survey is analyzed

and thus the following about determining the basic appeal of the product is answered.

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 (a) Does it make sense? It is reasonable? Is it something consumers will get excited

about?

(b) Does it take advantage of an environmental trend; solve a problem, for fill a gap

in the market?

(c) Is this a good time to introduce the product to the market?

(d) Are there any fatal flaws in the product‘s basic design or concept?

Below are the results of each of the question founded in the survey question.

Question 1: Do you like to eat cupcakes?

20
15
10 Yes
No
5 Based on the graph, we can analysis that people
0
are more likely to eat cupcakes. In other words,

the demand of cupcakes is very high. Hence, it is a perfect time for our company to

introduce and develop the business idea of cupcakes.

Question 2: Are there any cupcake shops available in your nearby places?

20
15
Yes
10
No
5
0

Based on the result, we can notice that there not much cupcake shop available. Hence,

it is a perfect time for us to introduce our company to the market.

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Question 3: Would you like to design your own cupcake?

30
25
20 Yes
15
10 No
5
0

From the graph above, it shows that 27 peoples likes to decorate their own cupcakes

while 3 peoples vice versa. This analysis shows that there should be no fatal flaws in the

product basic design or concept as there are much more people who wants to design

and decorate their own cupcake.

Question 4: Do you think cupcakes suitable for any functions or parties such as birthday

party?

30
20 Yes
No
10
0

For this question, all 30 peoples who answered the survey question agree that cupcakes

are very suitable for various functions and parties such as birthday party. Hence, it is

reasonable for our company to produce cupcakes.

Question 5: What kind of tasting cupcakes do you most like?

20
15 vanila
chocolate
10
strawberry
5 others
0

From the graph above, we can see that the highest taste is chocolate. Through this

research, we can identify the specific needs of our company’s target market.

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Question 6: How often do you eat cupcakes?

30
25
20 very often
15 sometimes
10 never
5
0

Based on the result, the analysis shows that 28 peoples eat cupcakes sometimes. This

cases show that although they love to eat cupcakes, they do not have the chance to buy

more because of the limited cupcakes shop that available.

Question 7: Which food do you find most attractive?

14
12
10 cupcake
8
muffin
6
4 cake
2
0

For the data above, we can see that although the highest food is cupcake, the

competition between muffin and cake also exists. Hence, more strategy is needed so

that the demand of cupcake will be increase.

Question 8: List three things that people like to eat cupcake.

For these questions, most people commented that what they like about cupcake is:

i. affordable

ii. special taste

iii. nice design

iv. delicious

v. colorful

vi. smooth and tender

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vii. their cute experience

Question 9: Which group do you think prefer cupcake most?

20
15 children
10 teenager
5 all

Based on the graph, we can see that children prefer most cupcake. Hence, our

company’s target market will are the children. However, 9 peoples agree that all groups

prefer cupcakes.

Question 10: Do you think that cupcake market can success in the food industry?

35
30
25
20 Yes
15 No
10
5
0

Through the research, we can see that all people agree that the cupcake market can

success in the food industry. This indirectly helps our company to develop the business

idea of cupcakes even wider.

As a summary of the survey question, it proves that the desirability of cupcakes is

obvious and it is something that consumers will get excited about. It is a good time to

introduce this product and yet can also fill the gap in the marketplace and there is also

should be no fatal flaws in the product or services.

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Concept Test

Besides conducting survey, in product feasibility component, a concept test should also

been done. In this concept test, a preliminary description of our company’s product,

which is cupcakes, will be stated to the food industry expert and prospective customers

to get their feedback regarding the business idea that has been done by our company.

New Business Concept

U-Design Company

Product

U-Design Company will sell affordable, colorful, and delicious cupcakes that baked fresh in batches

throughout the day. These cupcakes are created using the highest quality ingredients by

knowledgeable cupcake specialist. We will treat customers to a heavenly experience filled with

freshly baked cupcakes. We will also offer more flavors of cupcakes everyday as the demand of

consumer is increasing.

Target Market

In the first three years of operation, u-design plans to open 3 cupcake shops. They will be located at

1Borneo, Centre Point (CP) and City Mall. The target market is children.

Why U-Design?

We come up with the idea to produce cupcake because in Malaysia particularly in Sabah, there are

limited cupcake shop and limited production of cupcake. Hence, it is quite difficult for cupcake lover

to buy cupcake. U-design will offer fresh baked cupcakes at an affordable price which is RM3.50 each

and the shops will contain comfortable chairs and tables as it will be an uplifting and fun moments.

Special Feature- No other cupcake shops does this

The special feature for U-Design is actually involves in customer creating own cupcakes. The

company’s name itself, ‘U-Design’ reflect that our company will innovate on customer creating and

decorating own cupcakes. A do- it-yourself area will be placed at one side of shop. Therefore, it will

encourage fun experience and happiness in the process of decorating the cupcakes. Besides that, we

will also offer local door to door delivery services.

Management Team
2.1.2 Product / Service Demand
U-Design Company is led by its co-founders Wong Hing Wen and Jumatriati Pasaddei with the

cooperation of the knowledgeable cupcake specialist. Page | 10

The second component of product/service feasibility analysis is to determine if there is

demand for the product. For this component, our company uses the technique of

conducting internet research. Evidence is accumulated that there will be healthy demand

for our product, cupcakes. In conducting internet research, we found several articles

and website about the demand for cupcakes. One of the articles is titled ‘Cupcake

Economics’ by Donald Marron. In this article, Marron stated that the demand of

cupcakes is very high. It is economically viable and that the new cupcake entrepreneurs

have a tough road ahead of them. In one day, it is estimated that thousands of cupcake

will be sold out to all cupcake lovers.

In another article ‘Nestle Professional Cupcakes’, it also stated that the demand and rise

of cupcakes is a global trend nowadays. There were also many kind of flavors’ that has

been introduced and sold to the customers to satisfied their needs. Demand for mini

cupcakes is also high as it is a new trend and also allows customers to sample more

flavors and to give people more option. Customers always give comment that cupcakes

always offer a little taste of luxury, and a lot of sugar, for a relatively low price and also

give feeling of celebration.

However, in Malaysia there are not much cupcakes shops or company specifically in

producing cupcakes, yet the demand of cupcakes from Malaysian is still high. This is

why the chance and opportunity to open and develop the business idea of production of

cupcakes is high as the number of company for cupcake production is lower.

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2.2 Industry/ target market feasibility.

2.2.1 Industry attractiveness

Industry/target market is an assessment of the overall appeal of the industry and the

target market for the product or service being proposed. This feasibility are consists for

two which is industry attractiveness and target market attractiveness. Industry

attractiveness is varying in terms of their overall attractive and has a certain

characteristic. The industry attractiveness are including all of this which is industry’s

market size and growth potential, whether industry will be favorably or unfavorably

impacted by driving forces, the potential for entry or exit of major firms, differentiation,

the number of competitions, industry operating margins and the last is importance of

industry’s products or services to customer.

1. Industry’s market size and growth rate and potential

The product that we will produce into the market is cakes which are have their cup or in

another words is cup cakes. Cup cake has their own unique, profitability and their own

benefit and the benefit to customer is cup cakes very easy for customer to hold it and

very easy to carry anywhere. Ours industry want to produces this product because for

ours assessment and observation, the side or size of market for this product are big

because this product are lack and still rare in the market place. Furthermore, we also

recognize that cup cakes have a high and vast demand because it’s so convenient and

give the customer more comfortable. Besides that, although our product are in growth

rate stage, we believes and confident that this product can increasing the growth rate

and also make a strong growth potential because these cup cakes are suitable for every

occasion. For example, this product can be use in formal ceremony, recreation,

marriage, wedding, relaxing form and so forth. This is make the industry are more

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attractive. So, for firm which is slow growth industry is stronger than among those in

fast growth industry.

2. Whether industry will be favorably or unfavorably impacted by driving forces.

Driving forces are consists of two element force which is internal forces and the external

forces such as the knowledge, culture and diversity, new technology and techniques,

impacts of environmental change on society, economics and political. For our opinion,

our industry will be favorably although there have the changes in driving forces. Cup

cakes can be used or can be enjoyed by all social groups regardless of whether the

change in economy, political, society and culture. Besides that, changes in economy

such as changes in society income and society lifestyle will make a more demand for cup

cakes and this is a positive position for our industry and make our product are more

interesting. This is make industry are more attractive because the favorably even

impacted by driving force. Changing economic and societal trends help industry

incumbents.

3. The potential for entry or exit of major firms.

It is not only incumbent rivals that pose a threat to firms in an industry; the possibility

that new firms may enter the industry also affects competition. In theory, any firm

should be able to enter and exit a market, and if free entry and exit exists, then profits

always should be nominal. In reality, however, industries possess characteristics that

protect the high profit levels of firms in the market and inhibit additional rivals from

entering the market. These are barriers to entry. When industry profits increase, we

would expect additional firms to enter the market to take advantage of the high profit

levels, over time driving down profits for all firms in the industry. When profits decrease,

we would expect some firms to exit the market thus restoring market equilibrium.
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Falling prices, or the expectation that future prices will fall, deters rivals from entering a

market. Firms also may be reluctant to enter markets that are extremely uncertain,

especially if entering involves expensive start-up costs. Barriers to entry are unique

industry characteristics that define the industry and must use it to accurate our industry.

Barriers reduce the rate of entry of new firms, thus maintaining a level of profits for

those already in the industry. From a strategic perspective, barriers can be created or

exploited to enhance a firm's competitive advantage.

4. Differentiation

It is important to have a differentiation for own industry products between the

competition product because the more different the products, the more attractive the

industry. Besides that, the more similar the products, the more the only strategic

advantages that a company can gain are through reducing price. First of all, we will

ensure that the differences in quality of our cup cakes are always ahead from our

competitors. We also ensure that we produce this product it can be distinguished clearly

by the customer for uniqueness and choose the high quality ingredients. It is important

because consumers may focus on the specification quality of a product/service, or how it

compares to competitors in the marketplace. Second is a difference in functional

features or design. For the terms of design, our cup cakes are available in various

shapes to meet the customer taste. Besides that, we also offer affordable prices and

make a strong brand to make it difficult to break.

5. The number of competitions

Competition may also exist at different sizes and the level of competition can also vary.

The more competitors there are, the more likely it will try to gain customer by cutting

prices. Price cutting will make a problem throughout the industry. In some levels,
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competition can be informal. So, In terms of monitoring and observation, we found that

our company has a few competitions which are direct, indirect and future competitor.

Firstly, our direct competitor is Starbuck and Secret Recipe. Starbuck and Secret Recipe

is our direct competitor because the industries offer products which are similar and

identical to our industry. Besides that, our direct competitor have a strong brand,

awareness large offer and there product are mostly atmosphere. Besides that, their

concept also flexible which is having a standardized design and many customers are

know their place means that, their industry have a strong position.

For our indirect competitor, there are consists of Big Apple Donuts & Coffee and Egg &

Cheese Tart Prince which is these industry offer a close substitutes to our product such

as donuts and tart. This competitor can affect our product if this industry produces a

unique product and very interesting that our product. Furthermore, we also have a

perception such as Southern Cake Café and Multi – Bake will be a strong competitor for

a future market. This is will further strengthen our position but we believe that our cup

cake can be comparable with our opponents.

6. Industry operating margins

Operating margin is the proportion of revenues remaining after paying the costs of

operating the business. Operating costs include expenditures on labor costs (wages),

raw materials, overhead, depreciation and amortization, selling, general, and

administrative expenses, advertising. Besides that, operating margin can be used both

as a tool to analyze a single company's performance against its past performance, and

to compare similar companies' performance against one another. So, because the cup

cakes have their vast of demand, directly it makes a benefit to industry and can make a

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lot of revenue and also give a high operating margin. In addition, with the result of the

return, it will strengthen our industry and this is making our industry more attractive.

2.2.2 Target market attractiveness

A target market is a place within a larger market segment that represents a narrower

group of customers with similar needs. First of all, customers are the main target group

in the business. They are consumers of goods or services produced by entrepreneurs. If

no customers then there is no business even if the goods or services are an invention or

innovation that is very unique. Customers consist of individuals in society such as

housewives, workers, students and others.

Besides that, a customer also consists of the human groups such as government offices,

schools, hospital and other organizations that buy goods or services business.

Furthermore, there are also customers from the industrial sector such as manufacturers,

suppliers, and venture. Seen customers like kings and entrepreneurs need to prioritize

customer satisfaction to ensure their business are ongoing. Target market are consists

of geographic segments or location, identification of target market for the proposed new

venture, ability to create “barriers to entry” for potential competitors, purchasing power

of customer.

1. Geographic segmentations or location.

Geographic segmentation is an important process because the segments divided

markets into different geographical units include regions, countries, and population

density and so on. Besides that, the strategic choice of location is one important factor

that will determine business success or otherwise. Those company which is looking

down to the business location and also far from customer focus, it can affect business
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operations. Because of that, we will choose the business location which is located in an

area with customers. We also find a location which is having a high purchasing power

and less competition because this would be the benefits for our product business and

also make sure our product a duration which is mean it can accepted by new or exists

customer.

In term of regions, our cup cakes are suitable and can be enjoyed by family sessions

because it has no negative elements in their ingredients because we oversee the healthy

and cleanliness. not only that, but we also put limits and follow the flow of religion

which is mean not contrary to religion, including the question that is illegal is

emphasized. In term of country and population density, we will analyze and interview a

few of customer to make sure when we produces the product will be attract and can be

acceptable by customers.

2. Create “barriers to entry” for potential competitors

As we know, the more competitors there are, the more likely it will try to gain customers

by cutting prices and this may invite problems for our business. Therefore, to enable our

industry always strong in the business, we must build, create and identify barriers such

as barriers to entry for those potential competitors. As the result from our analysis,

advertising and inelastic demand can be barriers to those competitors. Our industry

makes advertising as the barriers because it can make big changes and impact because

advertising can seek and make it difficult for new competitors by spending heavily on

advertising that new firms would find more difficult to afford. Besides that, established

firms' use of advertising to creates a consumer perceived difference in its brand from

other brands to a degree that consumers see its brand as a slightly different product.

Since the brand is seen as a slightly different product, products from existing or
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potential competitors cannot be perfectly substituted in place of the established firm's

brand. This makes it hard for new competitors to gain consumer acceptance. Inelastic

demand is a one of our strategy to penetrate a market sell at a lower price than the

incumbents.

3. purchasing power of customer

Consumer purchasing power measures the value in money for which consumers may

purchase goods or services. It is associated with to the Consumer Price Index or the

Cost of Living Index which where the average is used by all countries. Consumer

purchasing power indicates the degree to which inflation affects consumers' ability to

buy. As usually rule, if the customer’s incomes are rises at the same rate as inflation,

consumers can maintain their present standard of living. However, when the customer’s

incomes are rises faster than the rate of inflation, the standard of living will improve. By

the same way, if inflation rises faster than income, even if wages and salaries also

increase, this is make the standard of living will decline as consumers. This is because

although receiving more money in their paychecks, their income inadequate to

counteract rising prices. Therefore, our target market to produces this product are when

the purchasing power of customers in high level and this will make our product are be

attractiveness.

2.3 Organizational feasibility analysis

This organizational feasibility analysis is conducted to determine if our business has

sufficient skill/resource to bring our product (cupcake) to market successfully. There are

two primary issues that our company has to consider to launch our business:

management prowess and resource sufficiency.

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2.3.1 Management Prowess

As a new company, it is important to us to organize a new venture team in order to help

us to reach our goal. A new venture team is important to help us manage a new

business in its start up year. These are the element of our new venture team:

Key
employee

Board of
Management team director

Founder to founders
of a venture

Board of adviser Other

professionals

Lender and
investor

1. The Founder to founder

Our startup’s founding management is a large team because a team has advantages like

more talent, resources, ideas, and professional contacts. It’s important to have a

manager with an extensive professional and social network because they were able to

reach out to colleagues and friends to help them plug experience or knowledge gaps.

The members of our team are heterogeneous, meaning that they are diverse in terms of

their abilities and experience. Not at all, each of the members in the organization also

have a good qualification and better skill to forward our business.

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 2. Key employee

Once the decision to launch new venture has been made, building a management team

and hiring key employee begin. In our company, we are using our network of contacts

to identify candidates for key positions. When the candidates is identify, we will use a

skill profile to know what the most important skill they have and how it can be used in

our production company.

3. Board of Director

In our board of director, we likely to pay a director in company stock and ask them to

serve without direct compensation-at least until we got profit. It is important to have

effective board of director because it has strong communication with the CEO and also

complementary mix of talents. The board of director has three responsibilities in our

company that is appoint the firms officers, declare dividends and oversee the affairs of

our cooperation.

4. Board of Advisor

When start up a firm, we are forming an advisory board to provide us direction and

advice. In our company we have 5 members in boards of adviser. Our companies pay

the member of advisor a small honorarium for their service annually.

5. Lender and investor

Lender and investor are important to help our companies in startup firm. In our

company, we have lender and investor to help us by providing us a guidance and

lending legitimacy and assume the natural role of providing financial oversight. They

also give us an investment to make our product successfully in the market. In addition,

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our company also has an experience lender and investor to help and assist us in the

hiring process of venture team.

6. Other professional

There also some other professional those also help us in our company like consultant,

accountants, and attorneys. Consultant is needed to help our company and give advice

to undergo our business because we are large firm and need a help to successfully in

the market. They also conduct in-depth analyses on behalf of a firm, such as preparing

a feasibility study.

2.3.2 Resource Sufficiency (non-financial)

To analysis whether our business can be successfully, it is important to us focus on our

nonfinancial resources. The objective is to identify the most important non financial

resource and assess whether they are available. This is our most critical non financial

resources that it will need to move our business idea forward and determine if these

resources are available.

i. Management team/founder reputation

ii. Availability of affordable office or lab space,

iii. Government support,

iv. Labor pool quality

v. Proximity to key suppliers, customers, and similar firms (clusters)

vi. Strategic partnerships,

vii. Attaining IP

viii. Intellectual property protection

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2.4 Financial feasibility analysis

Financial feasibility analysis is the final component of a comprehensive feasibility

analysis. The most important issues to consider at this stage are total start-up cash

needed, financial performance of similar businesses, and the overall financial

attractiveness of the proposed venture.

2.4.1 Total Start-Up Cash Needed

This issue refers to the total cash needed to prepare the business to make its first sale.

The actual budget should be prepared that lists all the anticipated capital purchase and

operating expenses needed to get the business up and running. After determining a

total figure, an explanation of where the money came from should be provided. Showing

how a new venture’s start-up costs will be covered and repaid is an important issue.

When projecting start-up expenses, it is better to overestimate rather than

underestimate the costs involves (Murphy’s Law).

Total Start-Up Cash = RM200,000.00 (RM20,000.00 × 10 persons)

Capital Purchased = RM80,000

Operating Expenses = RM50,000

(Consist of labor costs, raw materials, overhead, depreciation and amortization,

selling cost, general cost, administrative expenses and advertising)

2.4.2 Financial Performance of Similar businesses

This component of financial feasibility analysis is estimating a proposed start-up

potential financial performance by comparing it to similar, already established

businesses. There are several ways of doing this, first, substantial archival data is

available online, which offer detailed financial reports on thousands of individual firms.

Page | 22
Other way to obtain sales data of similar businesses is through simple observation and

legwork. This approach is suitable in some cases and in others it isn’t.

2.4.3 Overall Financial Attractiveness of the Proposed Venture

When evaluating the financial attractiveness of a proposed venture, there are a number

of other factors needed to be considered. These evaluations are based primarily on a

new venture’s projected sales and rate of return/profitability. At the feasibility analysis

stage, the projected return is just a judgment call. A more precise estimation can be

computed by preparing pro forma/projected financial statements, including one-to

three-year pro forma statements of cash flow, income statements, and balance sheets.

To gain perspective, a start-up’s projected rate of return should be weighed against the

following factors to assess whether the venture is financially feasible.

 The amount of capital invested.

 The risks assumed in launching the business.

 The existing alternatives for the money being invested.

 The existing alternatives for the entrepreneur’s time and efforts.

 Steady and rapid growth in sales during the first five to seven years in a clearly

defined market niche.

 High percentage of recurring revenue-meaning that once a firm wins a client,

the client will provide recurring sources of revenue.

 Ability to forecast income and expenses with a reasonable degree of certainty.

 Internally generated funds to finance and sustain growth.

 Availability of an exit opportunity (such as an acquisition or an initial public

offering for investors to convert equity into cash).

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3.0 INDUSTRY AND COMPETITOR ANALYSIS

An industry analysis is a business research that focuses on the potential of an industry.

Before pursuing the idea of starting a firm, our company should decide an industry that

having a high potential to us to access.

i. Is the industry accessible?

For our analysis, an industry’s cupcakes have higher potential to us access which is only

a few emergence of an industry’s cupcakes.

ii. Does the industry contain markets that are ripe for innovation or are

underserved?

An industry’s cupcakes have a ripe for innovation which is customer’s own design and

deliver service that our company provided its or overcome another existing industry.

iii. Are there positions in the industry that will avoid some of the negative attributes

of the industry as a whole?

Our company has positioned itself as a company that produces cupcakes product that

consist of customer’s design and deliver service that others industry still have not using

this kind of innovation.

So our group has named to U-Design bases on the company to be a leading provider of

cupcake for any event and what is special about our company is you design your

cupcake and we produce the cupcake. Besides that, we also provide catalog that provide

flavor and design to any event such as birthday party, full moon for a child, wedding

and many more.

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With the service that we provide to the costumer and the potential the business in the

industry, we will be accepted because it is a new innovation in these products. Besides

that, it will be one of the competitors in the industry because we provide a delivery

service to the costumer. Nowadays, it affects the business manager because of the

strategy that are likely to be used and the competitive rules that have driven the

industry in a new dimension.

3.1 Environmental trends

For our industry we were in a fragmented industry because we will target customer, this

is because base on the research in the market most of the bakeries only choose to make

the same shape with their cake. Our bakery has made a new innovation where we will

provide new shape, customers choose their own desire flavor and our customers can

design the cupcake with their own design that suitable for their event. This will be the

strength for our company because we know the needs and the trend that the consumer

needs. Besides that, we also provide catalog so that our customers know some basic

knowledge or basic design that will help them in development of their own design.

3.1.1 Business Trends

The business trends are people one is affordable and look creative with nobody

have done it before and will be follow by friends. Mean that to buy cake for your

birthday is very trendy because look same all the time. By using cupcake as an

alternative for the cake will be a new trend and more attractive especially for the

kids. Our business trends are to provide an affordable and creativity design by

costumer will be their own trademark and nobody can copycat their design.

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3.1.2 Threat of substitutes

In general, industries are more attractive when the threat of substitutes is low.

In our bakery we will provide a product and service with an affordable price and

the product that they can make with their own creativity. Other than that we will

provide consumer the service that never be made in other bakery that they can

design there cupcake so they don’t switch to other substitutes product as well.

The creativity design produce by the costumer will be a trademark and will not

be reproduce by other costumer because we want the personal sentimental

value in the cupcake been design.

3.1.3 Threat of new entrants

In this industry, bakery that provide or giving their customer to design their

cupcakes for their own event don’t exist yet. So if we are the one that open the

bakery shop they must compete with our shop. In general our threats of new

entrants are low in this industry and the competitors cannot easily enter the

industry to copying what our industry are doing. There are a number of ways

that firms in an industry can keep the number of new entrants low.

These techniques are referred to as barriers to entry were the competitors that

are willing to be in the industry have to study and understand the barriers. There

were six major sources of barriers to entry in this new industry where it is not as

simple as it looks like:

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3.1.4 Economies of scale

The economies scale for this industry are small this is because it is still fresh in

the industry and most probably will be one of the most high risk in the

economies. Besides that, economies scale are small in providing package of

services in this industry. To be the first bakery that provides the cupcake and

service different is an advantage to our business.

3.1.5 Product differentiation

In product differentiation we can see our competitors like Multi bake, Strawberry,

Southern and many more. But to provide a service and product that we provide

to our customer are not the same. Besides that, cause other bakery do not give

the freedom and give the change to show their creativity in designing the

cupcake. The competitors not yet have a product that we produced, but in a

future sure they will make a same product like use. So to make our product

unique we will provide service such as delivery and customer can design their

own cupcakes.

3.1.6 Capital requirement

In this business capital requirement are large because not only for the

equipment but also the specials cupcake maker. For a bakery that not only focus

on cupcake will be hard because to maintain the quality of the service that there

will provide. In our bakery we will need to invest large amounts of money to gain

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entrance to an industry. Beside large amount of capital there need to have

specials in cupcake design and for other bakery need to employ.

3.1.7 Bargaining power of supplier

In this industry need bargaining power of supplier that have the raw material

because not only our company that doing business that using this raw material.

There have many competitors in need the same raw material. For this situation

we have to make good relationship with the supplier that will help us to get a

better price as it can help us to budget our cost of production meanwhile we can

gain more profit.

3.1.8 Bargaining power of buyer

In this industry, bargaining power of buyer is the most important to be

sustainable. Without the bargaining power of buyer the business will be a failure

because nobody will buy the product. To make the buyer concentration we make

a special service such as delivery and the most special that we provide we will

give the customer to design their own cupcake for their event. That was the

special things that customer will get from our bakery they will enjoy with our

service.

3.2 Competitors Analysis

A competitive analysis is a critical part of U- Design company business plan. It

identifying U- Design company competitors and evaluating their strategies to determine

their strengths and weaknesses relative to those of U- Design own product or service.
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With this evaluation, U- Design company can establish what makes the product or

service unique- and therefore what attributes U- Design company play up in order to

attract the target market.

3.2.1 Direct Competitors

These competitors are most important because they are going after the same customers

as the new firm that offer a similar product or service.

3.2.2 Indirect Competitors

These competitors offer close substitutes to the product the firm completing the analysis

sells. These firm’s products are also important in that they target the same basic need

that is being met by the new firm’s product.

3.2.3 Future competitors

These are companies that are not yet direct or indirect competitors but could move into

one of these roles at any time.

3.2.4 Competitive intelligence

A competitive intelligence is a way that a firm can ethically obtain information about its

competitors. For U-Design Company, there are using five ways to get a source of

competitive intelligence. The first source is come from method purchase competitor’s

products.

3.2.5 Competitive analysis grid

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A competitive analysis grid is a tool for organization the information a firm

collects about its competitors. It makes our company see how it stacks up

against its competitors, provide ideas for markets to pursue, and, perhaps most

importantly, identify its primary sources of competitive advantage.

Source of Competitive Intelligence

Source Description/ Benefit

Participants talk about the latest trends in the industry and

Attend Conferences and trade shows
display their most current products

Purchasing and using a competitor’s product can provide

insight into their benefits and shortcomings. The purchase

Purchase competitors product
process itself can provide data about how a competitor

treats its customers.

Many companies put a lot of information on their Web

Study Competitors Web Site sites, including product information and the latest new

about the company

E-mail alerts are updates of the latest Google or Yahoo!
Set up Google and yahoo! E-mail alerts
Result, including press releases, new articles, and blog
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 posts, on my keywords of interest. You can set up e-mail

alerts using your company's name of a competitors

Read industry- related books, magazine, and Many of these sources contain articles or features that

Web Site contain information about competitors.

Talk to customer about what motivate them to
Customers can provide a wealth of information about the
buy your product as opposed to you
advantages and disadvantages of competing product.
competitor's product

4.0 CONCLUSIONS

As a conclusion, there are divide to three chapters which is description of the business

idea, feasibility analysis, and industry/competitor analysis. For the chapters of

description of the business idea, our company one of the techniques ways to generate a

business idea is through brainstorming. In a formal brainstorming session, the leader of

the group’s U-design asks the participants to share their ideas. As a result, U-design is

determining to innovate the cupcakes product, which from its design and deliver to

customers. In addition, the cupcake’s design is according to own customers design. This

ways to purpose to fulfill our customers need and want.

After generating a business idea, our company using a feasibility analysis to evaluate

that business idea is viable. Through a feasibility analysis, our company definitely to

seek the business idea whether includes in these four components, which is

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product/service feasibility, industry/market feasibility, organizational feasibility, and

financial feasibility. As a result, our business ideas have a higher potential to launching

the business. Even the business idea has a high potential to launching its, but for first

safety, our company is doing a industry and competitor analysis. Throughout this

analysis, we are ripe to compete with others firm whether it exist or future firms.

5.0 BIBLIOGRAPHY

i. Bruce R. Barringer & R. Duane Ireland (2010) . Entrepreneurship. United stated

of America: Prentice Hall.

ii. Industry analisys. Feasibilty Study. Retrieved August 6, 2010 from

http://www.csuchico.edu/mgmt/strategy/module3/tsld057.html

iii. How to Start A Cupcake Business. Retrieved August 13, 2010 from

http://howtown.com/how-to-start-a-cupcake-business

iv. Cupcake Economics. Retrieved August 13, 2010 from

http://dmarron.com/2009/11/28/cupcake-economics
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 v. Drucker, Peter Ferdinand. (2007). Innovation and entrepreneurship : practice

and principles. Burlington : Butterworth-Heinamann

6.0 APPENDICES

Competitor Analysis Worksheet

This work sheet will help you define your competitors. Competitors are companies that make products or perform

services similar to yours (e.g., you deliver complete dinners, and so do they), make products or perform services that can

be substituted for yours (e.g., delivery of pizza or Chinese food), and make products or perform services that are

analogous to yours (e.g., ready-made deli carryout from supermarkets). Fill in the following table about your competitors.

You may need to create additional tables to have enough room for all your major competitors.

Competitor A Competitor B U- Design

Where is your competitor located?

What are your competitor’s annual sales?

Who are the major managers and members of the
board?
Is the company owned or in partnership with any other
corporations?

What are the competitor’s strengths?

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What are their weaknesses?

What is the company’s product line?

How do the products compare to yours, in terms of
functionality, appearance and any other criteria?
What is their price structure?

What is the company’s marketing activities?

What are the company’s supply sources for products?

What are the strengths and weaknesses of their sales
literature?
Is the company expanding or cutting back?

Sample of Cup Cakes

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