The present research reviews a case study of Mary Jones and Sue Jackson's firm, Little Dessert Shop. The shop is located in Birmingham's Bullring Centre, which generates sufficient weekend business. However, the business partners are contemplating investing in marketing to attract additional weekday customers. In addition, Mary and Sue contemplate diversifying their product line in order to appeal to a broader spectrum of customers. Specifically, they believe that purchasing organic foods from local farmers could attract clients who are concerned about healthy living. However, using healthier components would increase the price of the products, which would be contrary to the shop's current ideals. First, the present paper analyses partnership as a type of organization using Mary and Sue's business as an example. Second, the report employs Porter's Five Forces paradigm to present recommendations for obtaining competitive advantage. The report concludes by discussing three macroenvironmental factors that can aid in enhancing current performance. Despite the COVID-19 outbreak, the research indicates that Little Dessert Shop has growth potential.
The Partnership as an Organizational Form
Partnerships are prevalent because they are simple to establish and administer. Partnerships are enterprises that two or more people establish and manage jointly (Tanski-Phillips, 2020). There are four distinct forms of partnerships, distinguished by the degree of participation in decision-making and operations. General partnerships assume that each partner shares equally in the company's responsibilities and earnings (Lupulescu, 2017). General (directly involved in the decision-making process) and limited (acting as investors) partners help to split the obligations and liabilities in limited partnerships (Tanski-Phillips, 2020). In limited liability partnerships, the business owners are not individually liable for the organization's debts or the activities of their partners (Tanski-Phillips, 2020). Lastly, LLC partnerships are multiple-member limited liability businesses in which the personal assets of partners are protected although members can be held liable for each other's acts (Tanski-Phillips, 2020). All types of partnerships are taxed differently, which affects their profitability and management concerns.
Little Dessert Shop looks to be an example of a general partnership, as Sue and Mary appear to have comparable rights and obligations. They contributed the same amount of capital to the company, making them eligible for the same proportion of the earnings. According to Lupulescu (2017), general partnerships are uncommon due to their association with a variety of problems. The major flaw of this corporate structure is unrestricted joint accountability for the company's debts and the conduct of one another (Lupulescu, 2017). In the chosen business structure, both Mary and Sue are liable for the company's debts, posing a major danger to their personal assets. In addition, partners are responsible for each other's behavior, which requires couples to have mutual trust. According to (Lupulescu, 2017), general relationships are typically formed by close, long-term friends or family members.
Despite all of the drawbacks associated with the business structure, it is the ideal sort of organization for Little Dessert Shop. There are various advantages to forming a general partnership as opposed to a limited partnership. First, this sort of organization is easy to start, as it does not involve much documentation (Lupulescu, 2017). (Lupulescu, 2017). Nonetheless, it is advised that partners have a partnership agreement outlining their responsibilities and the closing or sale of the business in the event that the partnership splits (Tanski-Phillips, 2020). Second, the organization is simple to run because the regulations are straightforward and inexpensive (Lupulescu, 2017). Finally, taxation is easy and inexpensive, which allows the corporation to optimize earnings by decreasing costs (Tanski-Phillips, 2020). (Tanski-Phillips, 2020). Lupulescu (2017) notes that “this legal form of company is appropriate and can be used in the case of small-scale activities, which do not require important funds for their exercise” (p. 15). (p. 15). Since Little Dessert Shop is a small-scale operation with a restricted number of stakeholders, the business structure is ideal. However, Sue and Mary are urged to draft a partnership agreement if they do not have one now.
Porter's Five Forces Analysis
Even for tiny organizations, the formation of a long-term plan relies heavily on external influences. One of the most influential external forces on strategic decision-making is competition. The competition is produced by five forces, according to Porter's model: the threat of new entrants, the threat of substitution, the bargaining power of consumers, the bargaining power of suppliers, and the intensity of competition (Varelas and Georgopoulos, 2017). The understanding of these five forces can assist in developing a long-term plan to become a successful industry competitor.
Competitive Competition (Strong Force)
Numerous dessert-selling businesses in Birmingham contribute to the industry's high level of rivalry. Kiss Me Cupcakes & Cakes, Krispy Kreme Doughnuts, and Cafephilia are among the 66 organizations that sell desserts as their primary product or as part of their menu, according to Trip Advisor (2021). Some of the rivals have multiple locations in and around Birmingham, which contributes to their longevity and popularity. Despite the fact that the COVID-19 epidemic caused some competitors to close their firms because of the three-month lockdown, many of the industry's larger players survived and began employing aggressive marketing strategies to acquire clients. Consequently, competition is a powerful factor in the dessert sector. Consequently, Mary and Sue must monitor their competitors in order to change their plan as necessary.
The Danger of New Competitors (Strong Force)
The dessert company is regarded as a simple industry to begin because it does not involve substantial capital commitments or specialized knowledge. The original investment of Sue and Mary was £60,000, which was sufficient to cover three years of the lease and working capital. However, even if a firm does not have enough savings to open a small store, it might obtain loans to meet its first costs. According to Cabinet Secretary for Finance (2020), the United Kingdom took a number of initiatives that lowered the cost of capital for small enterprises and gave tax advantages. Thus, the market is very straightforward to enter; nevertheless, the pandemic restricted the number of possible entrants due to demand's high volatility. In addition, the intensity of competition and the presence of larger competitors, such as Krispy Kreme Doughnuts, moderate the threat of new entrants to a certain extent. Consequently, the introduction of new competitors must be carefully monitored.
Threat of Replacement (Moderate Force)
Desserts sold in shopping centers are easily interchangeable with other items, like burgers, pizza, sandwiches, and coffee. However, none of these goods are exact replacements for the original, as each offers a unique benefit to the buyer. Other shopping center foods are not sweet. Similarly, Little Dessert Shop's items can be replaced with healthier treats, such as organic or vegan options. Additionally, many consumers choose food delivery to decrease the risk of COVID-19 infection. Therefore, it would be prudent for the company to diversify its product line and provide home delivery in order to mitigate the impact of the threat of substitution. However, such endeavors may involve investments with a high degree of risk.
Influence of Purchasers (Strong Force)
Due to a high number of competitors and a decline in the number of clients as a result of the pandemic, the influence of buyers in the business is incredibly potent. To attract customers, businesses in the industry may be willing to cut their profit margins or provide additional dessert options. Therefore, Mary and Sue must modify their plan to account for the demands and desires of their customers. This may involve conducting small-scale market research to determine what their customers value most: expanded product selection, commitment to environmental sustainability, or use of healthy components. The shop's proprietors can then employ the most effective strategies to attract more clients.
Influence of Suppliers (Weak Force)
Currently, the providers' influence is modest due to their widespread availability. Mary and Sue's major source is the local Cash & Carry; however, multiple companies might provide Little Dessert Shop with basic supplies. However, the force's influence might expand dramatically if the owners elect to purchase organic items from local vendors, whose availability is reduced. Therefore, this information must be taken into account while evaluating future tactics.
There are a variety of macroenvironmental elements that influence all industries. These variables are classified as political, economic, social, technological, legal, and environmental (Samnani, 2014). The PESTLE analysis determines these six sorts of variables. However, instead of giving a comprehensive PESTLE study for Little Dessert Shop, this paper will outline three macroenvironmental elements that can have a beneficial impact on the business.
Healthy Diet Trends (Social Factor)
Increasing health concerns among the general population is one of the most influential macroenvironmental phenomena. According to Spenser (2020), consumer health will be one of their primary concerns until 2030. According to experts, personal desire for healthy lifestyles will inspire individuals to consume healthier foods (Spenser, 2020). Particularly, it is anticipated that individuals will prefer healthful nutrition from fruits and vegetables (Spenser, 2020). This macroenvironmental aspect can be utilized by Mary and Sue to broaden their product line and satisfy a greater variety of client needs. It is anticipated that investments in the manufacturing of healthy foods will enhance sales due to the increasing number of consumers and improve the shop's reputation. Additionally, the shop's financial stability will improve if client preferences shift. However, it is essential to recognize that the aforementioned element will only have a beneficial impact if Sue and Mary decide to invest in a new product line. Increasing health concerns will have a negative long-term impact on the current business approach (cheap prices and delicious food).
Sustainable Development (Environmental, Social, and Legal Factor)
Sustainable development is a multifaceted issue that can be seen simultaneously as an environmental, social, and legal factor. Currently, the global society is becoming increasingly cognizant of environmental issues as well as social and economic challenges. In 1987, the United Nations (UN) defined sustainable development as addressing the requirements of the current generation without compromising the ability of future generations to do the same (UN, 2015). To achieve sustainable development, the United Nations (2015) established seventeen comprehensive goals with 163 targets to fulfill by 2030 in order to address the issues of poverty, inequality, climate change, environmental degradation, peace, and justice. One of the primary objectives of the United Nations' agenda is to implement sustainable waste management. Thus, Little Dessert Shop can boost their public relations by using paper bags and eco-friendly packaging. Furthermore, a commitment to healthy eating and environmental sustainability can be utilized for effective marketing. Even though these modifications diminish the profit margin, they will attract more customers, resulting in higher net profits.
Food Delivery (Social Factor)
Sue and Mary were out of business for three months following the COVID-19 outbreak at Little Dessert Shop. Moreover, after the lockdown, the number of clients declined, resulting in decreased income. The epidemic, however, spawned meal delivery as an alternative to dining out. According to EHL Insights (2020), the demand for meal delivery grew as consumers experimented with different sorts of food at home. Thus, the factor can assist Sue and Mary in expanding their firm in the future if they form partnerships with food delivery providers.
Even though the pandemic had a substantial negative impact on Little Dessert Shop, the business has the ability to grow. The corporation can broaden its product line by including healthier options. In addition, Mary and Sue may arrange for food delivery and implement sustainable packaging and waste management practices. These elements can be incorporated into a marketing strategy to attract additional customers. However, there are a number of factors to consider when choosing a development strategy. First, a general partnership is only suitable for smaller businesses, therefore Sue and Mary may opt for a different business structure if their company grows. In addition, the owners of the should monitor their competitors and evaluate the demands of their customers in order to mitigate potential threats.
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