PRIVATE EQUITY AT WORK: PURCHASING CAKE MASTERS Case Solution & Answer

PRIVATE EQUITY AT WORK: PURCHASING CAKE MASTERS Case Solution

Economic Variables

After analysing the market situation in Toronto Canada, it seemed to be quite favourable to start a business in greater Toronto area because the current market situation was enormous in terms of an established GDP level as well as less employment rate in the country. The prices of foods reflected the lower level of inflation rate and would be decrease in the next five years.

The currency value of the country showed that the products could be exported in order to gain the additional profits occurred through the supply for different countries around the globe. Therefore, the market of Canada was quite weak as compared to the market of U.S however,it could be strong enough to expand the operation of business in order to compete with the price associated with United States of America.

Internal Evaluation

According to the deep information acquired to start the business operation in Toronto Canada, following factors can be included in order to know the impact in the internal activities of the business (Cake Masters).

Operational efficiency

The most important part to analyse for the proper utilization of resources is the proper use operating activities including the inventory, wages and supply chain activities. Therefore,after market analysis, it was determined that the cost of the product could be a threat for the Cake Masters to consider because it seemed to be a highly competitive situation when it comes to the cost level of the business. With the proper cost, the price can be low in order to attract the customers for the purchase of food.

The other factor to be included is the quality of food, thereforeif the price can be decreased according to the demand of the customers thenthe quality of food must be delivered in order to provide the best food and to build the brand image.

The inventory should be properly utilized by Cake Masters asit will show proper utilization of resources and to generate desire level of profit margins.Thus,if the inventory is overvalued then it will show that the business is holding high cost margins as compared to the level of sales generated through the use of finished goods.

As discussed, the unemployment rate in Canada was quite low and therefore, this shows that the level of wages would be quite modest but there could be a threat of non-skilled labour to involve in the business.It can be analysed that with the high level of employees in the country, there will be more likely that to involve the un-skilled labour.

As Cake Masters was willing to distribute the channel in different regions especially in Franco, therefore it would be likely to consider that the business could face additional problems of supply into different retail and hospitality stores because of the already established market giants in the market, who hold at least 30% of the overall food chains.

Consumer analysis

As the market of Canada was not competitive according to the price of the products as compared to the market of the United States, thereforethiscould be an opportunity to attract the potential customers in order to become profitable and to achieve the target to provide net profit to the existing shareholders.

As the comparison in the case shows that Canada holds only 10% of the food industry as compared to the U.S, therefore it has theopportunity for the new food businesses to fully expand the operations and to allow many customers to enjoy the quality products.

The case under Cake Master shows that it should first analyse the untapped market to utilize its resources in order to become profitable and then looking for different products suitable for different demographics. It should also consider the price factor for which the customers would be willing to buy. The quality factor should also be included for the customer retention and to allow the expansion into different regions throughout the country………………

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