Differentiation Strategy
Differentiation of Super Dealer products is the use of natural ingredients. Due to changes in the lifestyle triggering some chronic illnesses, people prefer raw food. Qatari’s ingredients include wheat flour obtained from local millers and natural sugars from dairy products such as cheese and milk. Natural sugars play a significant role for cancer patients and those who would like to prevent it due to their rich essential nutrients (Byers et al., 2014). Direct-to-consumer options will be available to customers, giving them the ability to have items shipped to their place of choice. The bakery will also make use of retailers and dealers to distribute products in bulk. The relationship between employees and customers will be highly observed, whereby employees will display characteristics such as responsiveness, courtesy, and reliability.
Another strategy is price differentiation. Competing on price will require recognition that customers’ expectation on prices differs. During the initial stages, the firm will offer after-sale services such as buy one Qatari and get one free. Qatari’s size and weight will also be slightly larger and heavier compared to that of the competitors. Storage and packaging will also differ. After baking, Qatari will first be stored unwrapped at room temperature to retain the freshness. Packaging has a more significant influence on consumer buying decisions (Ahmad, Billoo& Lakhan, 2012). A parchment paper label, colored blue, and containing the company logo will wrap the Qatari. Good packaging will help the product to stand out and increase brand recognition. It creates a unique identity for the product.
Legal Structure
The company will operate as a corporation. As argued by Iwai (2002), this legal structure is preferred because it contains safeguards to the corporate assets and the shareholders. This implies that there is an intermediary but not a direct relationship between the company and its shareholders and its assets so that the company’s shareholders cannot be held personally liable for the debt during insolvency or bankruptcy. Additionally, the firm is considered a thing or a person and can enter into contracts with investors but shares or dispose of assets. Thus, a corporation creates enough leeway with legal and corporate safeguards for the startup to set off and grow.
Ownership, Leadership and Management
The company’s ownership and management can be summarized in the diagram below.
According to the company’s constitution, the board of directors is the governing body, which comprises ten members (the two owners, two shareholders, two external players, two industry experts, and two general members representing the community). The company will employ a diverse leadership style (Directing and democratic styles). Directing involves task and role specification couple with supervision, while democratic leadership will ensure employee autonomy and involvement in company decision making.
Potential Investors
Banks will be the first potential investors of Super Dealers. Banks will only require the firm to produce a revenue stream or proof of collateral. Angel investors should come on board since they are likely to invest a high amount. However, the company will embrace uniqueness, a characteristic that investors will be looking for. The company will focus on ways to stand out, for instance, using natural ingredients instead of artificial additives to attract investors. Being realistic will also attract investors. The firm will only request a reasonable amount of money based on verified research and financial figures. Networking will be the easiest way for the company will be able to meet investors.
Other investors include venture capitalists and personal investors. Individual investors have the friends and family members of the shareholders. It is easy to convince these individuals, although some documentation and contracts will be required. A venture capitalist will come after the bakery is established and is in a position to expand its customer base, potentially add additional facilities, or expand the product offering. The Super Dealers will have shown a significant amount of revenue. Therefore it will be easier for the investors to be more inclined to invest a considerable amount of money. Competitive advantage will make the services and products of Super Dealers more desirable than that of its competitors. The cost advantage will provide the best value to customers. Primarily, customers will go for cheaper products; hence they will shop for the perfect product offered. Other unique features, such as quality, distribution networks, and customer service, will create a competitive advantage.
Analysis of the Business Opportunity
Concerning consumer segmentation, the product will target both men and women aged 25-40 years, with at least a post-graduate and secondary diploma. These are individuals who can read and understand the ingredients used to bake Qatari. It will also target children aged 8-13 years. The price will be as low as $0.80 per Qatari. Therefore, a household of 3 to 7 members earning between $45,000 to $ 70,000 will find the products to be affordable. Qatari is nutritious when consumed for breakfast, lunchtime, or even supper. There is no specific season for selling this type of food; people can drink it throughout the year. Super Dealers will ensure the product is available in all shops, both small and big shops in New York. In schools, children can purchase the product from the cafeteria and other lunch venues. Customers can shop online or use a credit card to shop for the product. Online purchasing and delivery will be the best for the aged who may have an underlying or weakened immune system.
Competitors
The top competitor of Super dealer is Grupo Bimbo, with its headquarters in Mexico City (Grupo Bimbo, 2015). Grupo Bimbo is a full bakery worldwide, while Flowers Foods, the best company in the US. Grupo Bimbo produces bread, cookies, and pastries. The competitive advantage of Grupo Bimbo includes expansion strategy and baking sweet and quality snacks. Flower foods make pastries, rolls, snack cakes, and buns, among others (Flowers Foods, 2018). The competitive advantage relies on using advanced technology in baking the products, making production more efficient. Pepperidge Farm products are another competitor that manufactures breakfast bread, frozen bread, buns, and rolls (Pepperidge Farm products, 2020). In total, the company has almost 17 baking brands, although its weakness relies on the price. The price of its products is very high. From the competitive analysis, Super Dealers are likely to gain a high advantage due to their focus on health-conscious customers. The price and the quality of products differentiate the company from its competitors, and therefore, a high possibility company will thrive.
Geographic Factors
Super Dealers will be located in New York City, a city with temperatures ranging between 15 to 30oC, with moderate humidity and regular rainfall (Horton et al., 2015). The weather is favorable since it will reduce the spoilage of baking ingredients. In addition, the larger population is concentrated in the urban region, and therefore the bakery’s location near the town will attract more customers.
Economic and Environmental Factors
Over the decades, the United has been the most significant world economy. A survey conducted in 2019 shows that US Gross Domestic Product rose by 2.3% (Long, & Van Dam, 2020). The baking companies contribute almost 30 billion country’s growth. Although coronavirus has significantly affected the US economy, there is a high possibility that the company will succeed. It is the right time for the Super dealer to utilize this opportunity to thrive as the US economy is rising. The most significant threat that can affect Super Dealers is an increase in the price of inputs such as cereals, fuel, and energy. The company will improve efficiency by using renewable sources of energy, such as wind and solar power. Renewable sources are environmentally friendly since they will not contribute to the depletion of the ecosystem.
Organization Success Strategies
The vision of Super Dealer
Super dealer vision is to become the chief producer of health-conscious products globally and meet consumer’s needs. The company will embrace a sustainable diet with fewer environmental impacts to increase nutritional security and healthy life. There will be a need to consume a healthy diet to feed the growing population in the future. Super Dealers supports the future development of people by manufacturing eco-friendly products such as Qatari made of flour and sweeteners from milk. Health people mean that productivity will also increase. More than three billion people suffer from malnutrition, while more than 7 billion individuals eat unhealthy diets (De Onis&Blössner, 2013). As the producers, Super Dealers will ensure that consumers are provided with what is required by the body. Distributing healthy food will be done and convenient places for the customers, reducing malnutrition and other chronic illnesses in New York.
In most cases, consumers’ perception of eating a natural diet is essential for accepting technologies in the food sector. It is hard to convince the current generation to see or provide bread and cakes with preservatives and artificial sweeteners that are unhealthy to their diet. Super Dealers will collaborate with non-organizational companies to ensure that they educate people about taking a healthy diet. The company will also inform its employees on the importance of using wholesome ingredients in baking to accomplish its vision. A collaborative effort from various stakeholders is needed to ensure that the coming generation has access to a healthy and sustainable diet. In the future, Super Dealers will have expanded their market to Australia, which has high cancer cases. Expanding the call to that country will increase Super Dealers’ sales and contribute to lowering cancer cases.
Strategies to be Adopted
Product sampling will be employed as the primary marketing technique during the onset period. This involves giving away free samples to allow consumers to experience the product and give their feedback firsthand. Danaher (2020) argues that this is the most effective marketing technique since it has an immediate value and ensures a long-lasting impact on sales. The ideal customers will be identified, and the behavior that triggers their demand towards the products studied before they can be chosen for sampling. Sampling techniques to be used include direct delivery, in-store distribution, and near-store giveaways (Danaher,2020). Sampling will also be done through related partners. The primary goal will be to make the product known, secure the target market share, and obtain feedback about product quality and the associated services. These performance metrics are o be used for future improvements.
Another strategy that the company needs to adopt is identifying advertising sources. These include business cards, billboards, social media platforms, and billboards. The country also needs to develop a sales team with professional marketing skills. Super Dealers will organize sales motivational programs to increase competition among salespeople and establish distribution centers. They also need to educate employees to ensure that they provide quality delivery services required by customers. One of the significant challenges in adopting these strategies is low cash flows that will not fund advertisements and train the sales personnel. Employees and salespeople are the business’s key stakeholders, and they can promote business success and failure. If the company opts not to train them and use the money in advertising, it will not be sufficient; hence, it will affect sales. In solving this dilemma, Super Dealers need to create a sales budget, as seen below, and implement one strategy at a time.
Sales Budget
| Quarterly 1 | Quarterly 2 | Quarterly 3 | Quarterly 4 | Year | |
| Sales in Units | 10, 000 | 35,000 | 25, 000 | 30,000 | 100,000 |
| Budgeted price | x $20 | x $20 | x $20 | x $20 | |
| Total sales | 200,000 | 700,000 | 500,000 | 600,000 | 2,000,000 |
Financial Plan
When considering whether Super Dealer Baking Company offers a viable product worthy of investment, it is essential to note that the business plan has covered the potential for critical partnerships with local businesses, key business activities, the value Super Dealer offers to its customers, and the overall customer experience. Super Dealer provides a premium product in the growing organic foods industry. This multi-billion-dollar industry provides an excellent opportunity for Super Dealers to capture a part of the overall market. Grandview Research has reported that the organic foods industry is expected to grow to over 325 billion dollars through 2025 (Organic Food & Beverage, 2017). Even if Super Dealer gains 0.5% market share, that’s more than 1 billion dollars in potential sales.
To accomplish any sales, company owners will need funding to begin prototyping products, marketing, and advertising and getting the credentials necessary to be considered a certified natural foods company. Additionally, the company, as a legal entity, has secured a variable rate loan of $50,000 and a seed startup capital of $25,000 from the owners. Funding requested includes $200,000 (which might be connected via a fixed-rate loan) to help cover initial salaries and the remainder of estimated startup and operating costs until the facility is operational and generating an income.
Projects indicate that Super Dealers will generate a profit in its first year beginning at month nine, assuming sales projections don’t vary and no economic, political, or environmental concerns inhibit sales. In year 2, the partners anticipate an additional $50,000 will be needed to ensure fixed costs are covered, begin building cash reserves for incidental expenses that may arise, and begin other market research to ensure the product continues to be a market fit. Super Dealers will also need to investigate additional suppliers, resulting in the added cost of goods manufactured. Using the local suppliers distinguishes the brand and ensures quality ingredients; however, having other suppliers that are still within 100 miles gives Super Dealers more leverage for price comparison. There is a shortage from the local supply chain.
Below are projections for startup costs and operating income and expenses:
| Startup Costs | |
| Real Estate | $25,000 |
| Organizational Costs | $1,200 |
| One Month’s Rent | $4,000 |
| City, County, Local Expenses | $2,000 |
| Pre-opening Advertising | $5,000 |
| Signage | $1,500 |
| Employee Training | $5,000 |
| Equipment | $60,000 |
| Total Startup Costs | $103,700 |
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Super Dealers Baking Company Projected Income Statement For the year ended December 31, 2020 |
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| 2020 | 2021 | 2022 | |
| Revenue | |||
| Sales in units (annual growth of 20% Y2 & 30% Y3) | 100,000 | 120,000 | 156,000 |
| Qatari bake ($20) | $2,000,000 | $2,400,000 | $3,120,000 |
| Cost of goods
($4.20) |
$(420,000) | $(504,000) | $(655,200) |
| Gross margin | $1,580,000 | $1,896,000 | $2,464,800 |
| 79% | 79% | 79% | |
| Operating Expenses | |||
| Salaries & Wages | $250,000 | $275,000 | $300,000 |
| Rent | $4,000 | $4,000 | $4,000 |
| Marketing | $5,000 | $5,000 | $5,000 |
| Startup Costs | $103,700 | $0 | $0 |
| Total Operating Expenses | $362,700 | $284,000 | $309,000 |
| Operating Income | $1,217,300 | $1,612,000 | $2,155,800 |
| Interest expense ($50,000
@7.5%) |
$3,750 | $3,750 | $3,750 |
| Depreciation & Amortization | $10,000 | $10,000 | $10,000 |
| Income tax | $500 | $750 | $2,000 |
| Total expenses | $376,950 | $298,500 | $324,750 |
| Net Profit | $1,203,050 | $1,597,500 | $2,140,050 |
| 60% | 67% | 69% | |
Continuous Improvement System
As has been mentioned, Super Dealers wants to ensure sustainable quality by training employees to focus on responsiveness, courtesy, and reliability. In addition, because the company targets consumers who may have food sensitivities, allergies, or restricted diets, it is essential to maintain a clean facility.
Cross-contamination occurs when equipment and ingredients that are natural may be contaminated or contact other items. The facility will be designed so that only materials that meet the proper standards are used during operations. This will reduce the likelihood of a customer having a bad reaction to the food. In keeping with the Kaizen Model, management and employees will buy into a value-added process, meaning only the activities that add value will be incentivized. Super Dealers wants to produce a quality product and wants the market to recognize its brand because of its quality and affordability.
Value-added processes will ensure that the company operates efficiently and exceeds industry standards.