Business Management Case Study 1 Assignment Questions | SMU

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Case study 1

Fresh Delights is a bakery chain that sells a variety of freshly baked breads, cakes, muffins, and warm beverages to its customers. Fresh Delights has been operating in the bakery business for the past 6 years, and the firm has managed to open 25 branches across different towns and cities. The company started as a limited liability partnership between two college friends, but recently got incorporated as a corporation. Recently, Fresh Delights’ appeal for a long-term bank loan got approved by the bank, and the firm intends to deploy the borrowed funds in expanding the bakery’s product range. They want to produce a greater variety of muffins and types of bread. Typically, the bakery chain is known for its fresh croissants and coffee. However, with the new capital injection, they want to open a new sandwich line, and different flavours of coffee-related drinks, smoothies, and milkshakes. Fresh Delights believes that this will potentially attract the younger customers as well.

To widen its product range, renegotiations must be made with the
40% of current suppliers may have to be purchased in bulk. Although bulk buying will offer discounted prices, the purchasing and procurement manager is worried about the reliability of the delivery of supplies. Lately, there have been numerous delivery delays due to road traffic and vehicle breakdowns. The problem has magnified as Fresh Delights now has outlets in different cities across the country. Moreover, certain complaints regarding the quality of some of Fresh Delights’ baked breads have also been prevalent. Keep these in mind, the bakery is considering backwards vertical integration by buying out one of the main suppliers.

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In addition, Fresh Delights believes that opting for a new, divisional organisational structure might be useful as its type of product categories are set to increase.

However, there has been an ongoing internal debate between the management regarding which organisational structure to choose.

Newer products mean more employees will also have to be hired. For instance,
Fresh Delights will have to recruit experienced and skilled chefs who can design a new menu with appealing food choices and then guide the others in terms of how the new products can be baked or prepared on a regular basis. Recruitment has not typically been a huge concern for Fresh Delights because the bakery follows a strict code of ethics and offers constant training to prepare the staff. Likewise, incentives such as bonuses during profitable months, sick pay, adequate holidays, and provident fund benefits are offered. Along with the new staff, new machines and equipment will also be required to prepare the new dishes. The finance manager has always been conservative and has accounted for high depreciation figures for all the existing equipment, and intends to do the same for the new equipment. Moreover, the operations manager is intent on purchasing expensive equipment that can last longer, enable batch production of products such as muffins, and save costs in the long run.

Read the Case Study Carefully and Answer the Following Questions. Please Refer to the Frameworks and Concepts Covered in the Subject: Basic Business
Management Fresh Delights started as a limited liability partnership and then became

• a corporation. Using your own words, explain what a limited liability partnership is, and how it is different from a normal partnership and a
  corporation. [10]
• Define a value chain and explain how Fresh Delights’ new expansion plan will change its position in Porter’s value chain model. *15+
• Fresh Delights has decided to particularly focus on the launch of a new product: gluten-free, white chocolate chips and blueberry muffins. Discuss
  how the marketing mix can be applied to this product and explain each of the elements of the marketing mix. Also, explain how social media can be used to promote this specific type of muffin. [20]
• Do you agree with Fresh Delights’ decision to switch to a divisional organisational structure? What are its benefits and drawbacks? Search the
  internet and pick a company that uses a divisional organisational structure, and how it has affected that company. [15]
• Where (which department or unit) in Fresh Delights’ new product expansion strategy do you think new staff will be required? What are the
  factors that Fresh Delights’ HR team must consider to select the rightly skilled staff? [15]
• The new product expansion strategy will lead to multiple changes in Fresh Delights’ liabilities, fixed assets, cash flow, and predicted revenues. How do you think these changes will shape the different segments of the balance sheet, the income statement, and the cash flow statement? [15]
• Search the internet and pick any company of your choice in any part of the world. Perform a thorough SWOT analysis of the company you have chosen, and discuss its condition in the four perspectives that underlie a strategic plan. [10]