1.

Chosen Business: Bakery

2. Brief description of the business

The group has come up with BakerIE as the name of the small bakery business that we wish to
operate. The name “BakerIE” rooted from the incorporation of two different subjects: bakery and
Industrial Engineering where the initials “I” and “E” came from, which signifies the group members’
college degree program, Industrial Engineering.
This business is all about cakes, breads, and pastries. The business sells a variety of fancy and
customized cakes with different flavors that are suitable for all sorts of occasions. The business also offers
freshly baked breads and pastries enriched with a delightful taste at every bite to brighten up your day.

3. Analysis of buyer power and supplier power

The buyers' power in the Bakery Industry is very high due to several reasons. One, there are many
buyers of cakes, breads, and pastries. There are cases that these customers are acquiring volume
discounts and/or low prices in convenient places such as supermarkets, grocery stores, hotel chains, and
convenience stores established by the big players, thus increasing buyer power. Three, majority of the
buyers already have a perceived price in mind before they make a purchase since they have adequate
knowledge about the bakery product(s).
The suppliers do not have much negotiating power, resulting to a low supplier power. The
ingredients needed for each of the product are widely available in local areas and importing foreign
ingredients is no longer necessary. If suppliers opt to change the price, this is not because of their
bargaining power, but because of the fluctuations in the global demand and supply
In order to remain competitive, obtain greater market share, and establish a reputable name in
the industry, the group strategized to create high switching costs for the consumers. To achieve this, it is
crucial to recognize the need to provide unique and essential products for the consumers. The group
envisions to produce customized cakes, fancy-looking breads from foreign inspirations, and
"eggpandesal", a ready to-go bread in which the scrambled egg is already inside the pandesal, to name a
few.
Moreover, the group shall make use of rewarding system / credit system to make the customers
feel that their loyalty is valued. For every purchase, there is a corresponding point to be rewarded on their
cards which can then be used to redeem other available products and/or for future purchases in the
bakery.

4. Analysis of threat of new entrants, threat of substitute, and rivalry among competitors

Establishing a bakery nowadays do not require large amount of capital, therefore, the threat of
new entrants is considerably high. However, making a name for the business is not as easy as entering the
industry because of low product differentiation and numerous existing competitors. These two factors
result to a medium level threat of new entrants.
There are many substitute foods and viable alternatives for bakery products such as rice meals,
cereals, snack stores, and home-made goods. As for birthday and anniversary cakes, there is no superior
quality substitute to satisfy the demand of the occasions. Another substitutes are the healthier pastries
offered by the competitors that cater the customers’ demand of healthy and nutritious foods. These
existing substitutes may be sold by other stores that are in close proximity to the customers. The
economical customers will opt to buy those products with the belief that they can save more. Hence, the
threat of substitute is high.
The level of rivalry among competitors is high because of several factors. One, many competitors
exist in the industry, be it foreign and local brands. In this case, the players in the industry tend to be
aggressive and competitive in nature to keep their market share. Two, there is low product differentiation
which results to three: low switching cost for customers. With the combination of low product
differentiation and low switching cost, the customers have the free power to come and go. This is risky
because competitive rivals have the tendency to satisfy these customers more than we do.
To combat these unfavorable level of threats to the business, different differentiation strategies
will be applied. Product differentiation that offers unique bakery products, service differentiation for
ordering ease and operation efficiency for customer satisfaction and retention, and the application of
marketing psychology to know the best pricing strategy to beat the competitors.

5. Porter’s Generic Strategies

After evaluating the attractiveness of the business using the Porter’s Five Forces Analysis, the
group has decided to be risk takers and pursue the Bakery Business. In line with this, the group chose the
Differentiation Strategy that will focus on a wide selection of unique products to satisfy the customers.
The group decided to target a broad market because this strategy combats the high level of rivalry among
competitors. By targeting the broad market, the number of our consumers will not be limited.
In order to stay competitive, the group will provide differentiation strategies. For product
differentiation, BakerIE will provide products such as customized cakes, buns, sandwiches, and all other
sorts of unique bakery products inspired from the big players in the industry. On top of that, BakerIE will
also make sure that every bakery product in our store is freshly baked. As for service differentiation, the
group plans to employ different management information systems to improve operation efficiency and
customer satisfaction. The management information systems are expected to address the queuing
problems, award loyal and frequent customers the corresponding points for their every purchase in
BakerIE, avoid holding large inventory levels, monitor optimal storage temperature for the products and
ingredients, and ensure the freshness of the products.

6. Describe how MIS can help you implement your business strategies

The importance and role of MIS is similar to the importance and role of an IE. Since MIS is
applicable not only in computer-related fields, degrees and programs, it is implied that MIS has that
flexible nature since it can also be put into practice for businesses’ positive gains. Using MIS makes the
business operations more efficient and reduces the possibility of errors committed by the employee and
management. Moreover, MIS can improve the quality of service provided to the customer since the
collection and analysis of data to better understand the varying customer preferences become more
effective. Aligning customer preferences to the business strategies provide greater competitiveness of the
business against existing competitors. If all of these things are put to practice simultaneously, business
competitiveness will greatly increase and the chance of success in applying the differentiation strategies
will have higher chance of success.
Since the main strategy of our business is differentiation, the group has decided to incorporate
MIS as a vital tool in the success of the strategy implementation. One MIS that can be implemented is the
Rewarding System / Credit System. This allows the customers to avail for a certain membership card which
can then be used for every purchases made in the BakerIE. The total amount of purchase per single
transaction has a corresponding points to be credited on the customer’s membership card. The
accumulated credit points can be used to purchase products and/or souvenirs alike sold in the BakerIE.
Another useful MIS is the ease of placing an order online via our website. In today’s era, majority
of people do not want to wait and have low tolerance to queuing problems. The application of this MIS
can address the pain of waiting and the practical queuing problems since they would no longer have to
fall in line to place an order most especially during peak hours. They can also pay via credit card so they
would just have to pick up their order upon arrival to our store.
To make the application of MIS more fulfilling, the group also applied their knowledge about Just-
in-Time (JIT). JIT Inventory System will be a great differentiation tool since it works by monitoring the
quantity of each product that are still on display. Once the JIT counter reaches a specific number of
quantity that should be on display, say a ‘reorder point’ per se, it will send some sort of signal to the
kitchen that the particular product needs to be replenished. This can prevent overproduction and
underproduction of bakery products. This system can also track the products that customers bought, the
quantity, the date of purchase, and the number of customers who bought the same products. The
management can use these data as business analytics in order to better understand customer preferences
and the factors affecting them. Understanding the customers’ needs is a key to satisfying their needs.
Lastly, the business opts to employ a kind of MIS that will optimize the storage temperature of
the bakery products and ingredients to ensure their freshness. Since not every competitor has this kind of
system, this can definitely add value to our products. This does not only ensure the freshness of the
products but the quality of our products as well, right from being just raw inputs and ingredients up to
being transformed into the tasteful and appetizing outputs.