Table of ContentsIntroduction to Bakery Industry in Pakistan4Critical Success Factors of Baking Industry4Key Processes in a Bakery4Bakery Industry Analysis5Internal Rivalry5Threat of New Entrants5Threat of Buyers5Threat of Suppliers6Threat of Substitute Products6Harold's International7Company Analysis7History:7Harold's Oven (Bahria town)8Vision8Market segmentation8Target Market8Positioning8Special Offers8Off Season(During this season sales decreases)8Organizational Structure9Critical Success Factors of Harold10Software used10SWOT Analysis11Strengths11Weaknesses11Opportunities12Threats12How Harold's Oven can exploit Opportunities and overcome Threats13Competitors Analysis14Major competitors14Rahat bakers14United bakers14Suppliers Analysis16Major suppliers16Customers Analysis16Major customers16Product Mix17Cookies17Cakes18Muffins19Patties19How Harold's Oven can gain and sustain Competitive Advantage20R&D20New Products development20Production Skills20Technology20Supplier and Customer Relationships21Customer Relationship Management21Suppliers Relationship Management22Proposed Strategies23Growth Strategies23Market Penetration:23Product Development:23Market Development:23Business-Level Strategies23Differentiation Strategy:23Cost Leadership Strategy:23Functional Level Strategies24Marketing Strategies24Human Resources Strategies25Information Systems Strategies25Kaizen Approach26

Introduction to Bakery Industry in Pakistan"Bakery industry in Pakistan today has an important place in the industrial map of the country. Bakery products are an item of mass consumption in view of its low price and high nutrient value. With rapid growth and changing eating habits of people, bakery products have gained popularity among masses. The sector, typically, constitutes cakes, breads and biscuits. Critical Success Factors of Baking IndustryThe environment determines which are the critical success factors that the company must have and use it to achieve business success. Available capital inflows, strong economic potential, High quality raw materials, products and services, Trust market Competence of staff and equipment The use of best technical and technological practices, Training of personnel, Implementation of standards Key Processes in a Bakery Production and distribution Supply and storage Sales

Bakery Industry Analysis

Internal RivalryThere are many players in the bakery industry that's why competition is quite tough. The industry is characterized by many small bakeries, but there has been a recent trend towards consolidation and economies of scale. Businesses compete on price, quality, differentiation and relationships with key suppliers.

Threat of New EntrantsBarriers to entry in this industry are low. Economies of scale are beneficial, but are not required for industry success. As a result, small businesses can enter the industry with a relatively small amount of capital. The two main determinants of a new company's success is the leaders' ability to acquire sufficient distribution channels to cover operating costs and their ability to build up brand recognition and loyalty. Distribution channels typically involve retail outlets, such as supermarkets and grocery stores, and they can be more easily acquired if the bakery has an established brand or the marketing resources to create one. Threat of BuyersBuyers of the bakery industry's products, such as supermarkets, grocery stores, hotel chains and convenience stores, are able to appropriate much of the industry's profit due to the large number of small bakeries that are all competing to find outlets for their products. As a result, buyers are able to command low prices and volume discounts.

Only large players have the power to level the playing field and achieve a more balanced share of the profits. Threat of SuppliersSuppliers do not have much negotiating power in the bakery business due to the well developed markets for their products and the commoditized nature of what they are selling. Bakeries can be affected by price swings of the raw inputs, but the changes are a result of supply and demand determinants rather than suppliers' negotiating power.

Threat of Substitute ProductsMany substitutes exist for bakery products. Breakfast cereals, rice and potatoes are all viable alternatives and individuals can also make all of the baked goods they want at home. Bakeries rely upon price and convenience to keep individuals switching to a substitute or baking what they need at home.

Harold's InternationalCompany Analysis

History: Harold's oven is a chain of Small Retail Bakeries in Islamabad. They Started their business with the name Harold's international in 1994 at that time they were dealing with food stores only but in 2007 along with food stores they also extended their business into bakery named as Harold's oven. Currently Harold's international has 6 food stores and 3 bakeries located in Islamabad.

Locations of 3 branches of Harold's oven are as follows Bahria Town, phase 6 Islamabad

Jacaranda Family Clubclub avenue, sector-e, phase-ii,P.O. 1531, DHA, Islamabad.

Cafeteria-1 NUSTH-12 Islamabad

Harold's Oven (Bahria town)

Vision"To be the Baking Expert" Market segmentationThere prices of Harold's Oven products are higher as compared to their main competitors and secondly they shops and store is located costly area of the city. Keeping these factors in view its market is divided into upper middle to upper class. Target MarketTarget market of Harold's Oven is mainly the middle and upper middle class. Positioning"The taste you can never forget" Special OffersThey offer certain offers (E.g Discount Cards) on their annual anniversary which continues for three days. Off Season(During this season sales decreases)Summer : May ,June ,July and August

Total Employees: 41

Organizational Structure

Critical Success Factors of Harold Product quality Manufacturing Technology Reduction in repayment from the sale Freshness of products Ensuring the safety of products, standardization Production innovation

Software used Point of sale(POS) a software used for the management of sales Bar coding used for inventory management A software for accounts management

SWOT Analysis Strengths New and different varieties of Cakes, Cookies and Muffins Taste Quality Product packaging Managerial Expertise Original molds for Characters GO DIEGO GO, BUTTERFLY DORA THE EXPLORER, WINNIE THE POOH TINKER BELL, SPONGEBOB THE TRAIN, SPIDER MAN LIGHTENING MCQUEEN, SUPERMAN PIRATE SHIP, ARIEL PRINCESSMICKEY MOUSE, SUN FLOWER

Weaknesses No customer data base No menu regarding product range and prices No seating arrangements for customers Harold's Oven is not spending enough on brand building unlike its competitors. Outlook of bakery is not that much appealing and interior maintenance is required. Not paying attention to employees attire. Too narrow product line

Opportunities Expansion of the Product Linein the future with the introduction of Products e.g. Juices, Shakes etc Growing concern for Health and Multigrain Food Productswill become a reason for increase of our sales as Harold's Oven always provides freshly made Cakes and Muffins. Faster Market Growth: - Bakery Industry is growing at a fast speed and demand for quality food is never ending due to high bakery items consumption habits of people in Pakistan.

Threats Increasing Local Competition(existing and potential): Severe competition in the Bahria Town with the well-established players like Rahat Bakers and United bakers is one of the major threat for Harold's Oven. Moreover many un-organized players in Bahria Town are also snatching the large Market share.

Technology Up gradation: Strong competition demands Technology Up gradation to sustain competitive edge and to survive in the market for which a large capital is required. Economic downturn: The strong domestic economy has been good for the Bakery Industry as bakery products other than Bread are not part of Customers' Basic need . However, unforeseen or unanticipated economic recession in Pakistan is reducing disposable income of the customers and ultimately reducing sales of bakery products. Government polices: For Example Heavy taxes in the form of sales tax and income tax on retail business Demand of Substitute Products: Increasing demand for substitute products due to economic downturn is another major threat for Harold's oven.

How Harold's Oven can exploit Opportunities and overcome Threats

Target new and emerging market opportunities Predict future growth areas in bakery Benchmark leading executives opinions on the future of bakery Assess the key trends in bakery for example you don't have any idea that what types of flavors are going to be in vogue next month or next season unless you keep your eyes wide open and investigate where the flavor trends are heading overall. By taking full advantage of peak season and converting special occasions (e.g. Eid-ul-Fitar, Valentine's day, Mother's Day, Father's Day etc)into extraordinary events that clients will remember forever. Market research is a useful tool for assessing the attitudes and behavior of potential consumers so Harold's Oven should focus on it in order to exploit Opportunities and overcome Threats

Competitors Analysis Major competitors Rahat bakersRahat bakers are in the bakery business since half century. In 2010, Rahat Bakery entered cyberspace through use of the internet under the name www.rahatbakers.pk. This opened new opportunities for the company through its new mail order cataloging service which supplies bakery products across the country.

United bakersUnited bakers are in the bakery business since last twenty years. Although, famous for their highly flavorful Grissini Breadsticks, United Bakery is also making the finest natural Sourdough Breads, Italian style breads, and bread loaves in all of the most popular sizes and shapes.

Strengths, Weaknesses, Opportunities, and Threats Analysis

StrengthsHarold's OvenRahat BakersUnited Bakers

What are your business advantages?It is risk free because you are assured of a market.It is one of the easiest and cost-efficient start-up business. Recognition and Profit Maximization

What are your core competencies? >Mousse Cake >Opera cake >Muffins >Cookiescup cake, mousse cake, pizza, butter cream cake, donuts, double trouble brownie. >Kiwi fruit flan cake >Plane cake >Chicken patties>Cash unit cake

Where are you making the most money?>Cakes>PattiesPizza, sweets, shakes Chicken Patties (less costly)

Weaknesses

Where do you lack resources?No expansion and promotion due to lack in financial resourcesNo Advertisement yet No Advertisement system

Where are you losing money?Juices, Shakes and PizzaSaladsFast Food and Sweets

What needs improvement?Outlook, Interiordiscount offerNew Products (but not possible as soon due to high prices of raw material etc.)

Opportunities

Any beneficial trends?Eid-ul-Fitar, Valentine's Day, Christmas and New YearEid-ul-Fitar, Valentine's Day, Christmas, New Year, Mother's Day.Eid-ul-Fitar, Valentine's Day, Christmas and New Year

New technologies?Fresh Pizza store and Ice-Cream Machine Pizza machine and ice cream machine.cold stores, fresh Pizza store and Ice-Cream Machine (will start to use soon)

Threats

Successful competitors?Rahat BakersNoneRahat Bakers

Changing business climate?Increased in Competitionhigh competitionhigh competition

Vulnerabilities?Heavy taxes in the form of sales tax and income tax on retail businessChanging customers' preferencesRahat Bakers have less prices of some products as compare to the United Bakers

Suppliers Analysis Major suppliers Modern Flour Mills(Naseerabad ,Peshawar Road, Rawalpindi) Asif Dairy (Butter+Fresh cream)

Customers Analysis Major customers Shifa International Hospital Al Ghurair Giga(construction company) NUST,IslamabadCustomers Demography Middle and Upper-Middle Class

Product Mix

Product widthProduct depth

CakesFresh cream cakesButter cream cakesDry cakes,1 lb, 2 lb,3lb

BiscuitsSpecial biscuitsRegular biscuits

MuffinsSmallLarge

Patties

Chicken PattiesVegetable Patties

CookiesBiscuitsQuantityPrice

Special Cookies1 kg760

Regular Cookies1 kg500

CakesFresh Cream Cakes QuantityPrice(Rs.)

Plain brownie Cake2 lb690

Walnut Brownie Cake2 lb690

Opera Cake2 lb690

Mousse Cake(Strawberry, Blueberry, Death by Chocolate, Dark Chocolate,Orio,Chocolate Chip)2 lb690

Moose Cake3 lb890

Walnut Brownie Cake2 lb690

Vanilla Wafer Cake2 lb500

Mixed Fruit Cake2 lb560

Pineapple Cake2 lb500

Black Forest Cake2 lb500

Chocolate Chip Cake2 lb560

Red Cherry Cake2 lb560

Blueberry Cake 2 lb500

White Chip/White chocolate cake2 lb500

Chocolate Cherry 2 lb500

Butter Cream Cakes QuantityPrice

Roasted Almond2 lb500

Chocolate FudgeCake2 lb500

Chocolate FudgeCake1 lb280

Almond Chocolate Cake2 lb500

Marble Cake(Vanilla,Chocolate)2 lb500

Marble Cake1 lb280

Dry Cakes QuantityPrice

Plain Cheese Cake2 lb500

Chocolate Cheese Cake2 lb500

Mixed Fruit Cake2 lb500

Pista Cake2 lb500

Almond Cake2 lb500

Lemon Cheese Cake2 lb500

MuffinsMuffinsQuantityPrice

Large1 unit80

Small1 unit60

PattiesPattiesQuantityPrice

Chicken Patties1 unit30

Vegetable Patties1 unit

Other products include

Donuts Salad Ice-cream

How Harold's Oven can gain and sustain Competitive Advantage R&D New Products developmentHarold's Oven should develop new products to maintain and improve its market position. New products can include: New varieties and flavors - these are called line extensions where different varieties or flavors of the same product are produced. Quality improvement of an existing product, either functional or nutritional. Developing a new, innovative product resulting from new ingredients Production SkillsHarold's Oven can gain competitive advantage via enhancing its production skills by Hiring professional chefs and experimenting with baking. TechnologyTechnologycan help Harold's Oven to create or extend a competitive advantage by generating hard-to-imitate products. Having competitive advantages through technology will help in decreasing costs and increasing profits. The real goal here is to find some way to make these advantages sustainable, and technology can help Harold's Oven in finding ways to do that.

Supplier and Customer Relationships

Customer Relationship Management On average, it costs over 10 TIMES more to acquire a new customer versus retain an existing one A 5% gain in customer retention can result in an 80% gain in profits.Harold's Oven should consolidate its customers into a single database and record all their holdings and history there, so that sales partners always have this information to hand. Moreover KeepingGood Records about its e.g. what they bought, when they bought, and if they bought through a sale or special promotion. Through this database Harold's Oven can segment your customers and send them customized offers via E-mail. Moreover customers will appreciate knowing that company is thinking about them "after the sale." They will be more likely to purchase again because of your customized offers and communications. Some Strategies Regarding sustaining Customers Lapsed customers have purchased from you, but not for a while. You need to get them to purchase again by making them a similar offer that created their prior purchase.For example, if they purchased because you were having a sale or offering a discount, you'll need to offer them comparable savings to get them to purchase again. traditional loyal customers have made repeat purchases from you at regular prices. Instead of offering them a sale price, you need to treat them special. Brand customers may have only purchased from you once, but demonstrate potential to become loyal customers. You should pursue them with promotions that further develop their positive perception of your brand.

Suppliers Relationship Management

Harold's Oven should plan sufficiently in order to request orders from suppliers with acceptable lead time and without multiple changes. If every order requires emergency handling, the relationship will never work. To overcome such problems and to maintain a good suppliers relationship Harold's Oven should use Electronic data interchange (EDI),a software that helps manufacturers, suppliers and retailers improve production planning, reduce inventory, improve inventory turnover and improve stock availability.Moreover using this software will also help Harold's Oven sharing quicker and more effectual Information and to reduce cost. Harold's Oven can further improve Suppliers Relationships via making partnership agreements with key suppliers and reducing number of suppliers as a specific cost is associated with making good relationship with each supplier.

Proposed Strategies Growth Strategies Market Penetration:Harold's Oven can increase its market share for present products in present market through greater market efforts e.g. increasing advertisement expenditures, offering extensive sales promotion items or increasing publicity efforts etc. Product Development: Through this strategy Harold's Oven can increase its sales by improving or modifying present products e.g. improving features, improving quality, enhancing styling etc. Market Development: Harold's Oven can increase its market share for present products through entering new geographical areas e.g. Rawalpindi and other adjacent areas. Business-Level Strategies Differentiation Strategy: Through this strategy Harold's Oven can differentiate its products from those of competitors by providing distinctive levels of service, product or high quality .Moreover the main advantage of this strategy is that when you are successfully able to differentiate your products then the customer is prepared to pay a premium price. Cost Leadership Strategy: This strategy can also help Harold's Oven to increase its market share by having the lowest per unit cost and charging lowest price available on the market.As mentioned by the manager of Harold's Oven "We never go for price war". However cost leadership strategy can help Harold's Oven to reduce its per unit cost via economies of scale or through other cost cutting techniques and by charging the lowest price available on the market which will help Harold's oven to convert competitors' Point-of -Difference regarding price into Point-of Parity.

Functional Level Strategies Marketing StrategiesThe basic principle of marketing strategies is to sell the right product, at the right price and promote it in the right place to the right people(target Market). Harold's oven can utilize following marketing strategies. Product StrategyIn this Strategy Harold's oven should Specify the exact product or service to be offered and should link product features with market needs/wants. For Example Harold's Oven should evaluate New or existing product? for new or existing customers? Pricing StrategyHarold's Oven should keep in mind the following factors while determining the price of the product: Positioning of the product Cost of developing and manufacturing the product. Cost of competitive products. Condition of the economy. Moreover via differentiating its products Harold's oven can adopt Skim pricing strategy and can charge a premium price. Promotion StrategyHarold's Oven can select following Promotion strategies to increase its sales Push - spending on promotions and discounts to push products especially during off season. Pull - spending to build brand awareness so consumers will ask for it by name especially during peak season e.g. There should be regular and sustained marketing through fliers distribution, FM Radio and Cable TV for making strong brand equity.

Channel or Place StrategyCurrently Harold's Oven is Selling directly to consumers through own stores However Several strategies will need to be implemented to establish a credible presence in the market. These may include: Selling bakery products to private distributors at wholesale prices. Selling bakery products to supermarket outlets and to shops at wholesale prices. Specialty items like cakes and pastries may be sold to schools canteens within the premises of Bahria Town at wholesale prices or at the bakery at retail prices.

Human Resources StrategiesHarold's Oven should train its employees and there should be Extrinsic or Intrinsic Reward Systems to motivate employees because motivated employees can provide best services. Information Systems StrategiesThrough information systems strategies Harold's oven can manage sales & inventory in an efficient way. For example Internet sales and development of customer databases Using softwares just like Electronic data interchange (EDI)Kaizen ApproachFor continuous improvement out of following key processes Production and distribution Supply and storage SalesHarold's Oven should determine the quality level of the observed process and Identify the processes that need to improve.

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