Dieter knows that there is tremendous wealth to be made by opening up his own plant. Gaining a potential 10.1% of the market by 2010, Dieter knows by building his own plant he can succeed.
Right now Dieter is currently purchasing his baked goods from Browne’s bakery, he sees more potential for his business if he sets out on his own and builds his own plant. This business is extremely attractive, as shown by his history as a baker from inception of his part time Dieters Delicacies, all the way up to Dieters Delicatbles Ltd. SWOT analysis for this company:
potential 10.1% of market within next 5 years cuts out the middle man Brownes, maximize profits
Expands into new communities, building new relationships
Releasing new products in the years to come.
Ruining a relationship with a friend
He is only getting 75% of the size of plant he originally planned
Plant will not be fully functional until 2009.
More grocers buying his products, and labelling privately
Further expansion upon 5 year expectations met
Porters 5 forces.
Threat of New Entrants: Low
Expensive for New entrants, Experience is necessary, Recognition also necessary
Supplier Power: High
Low amount of suppliers, Unable to substitute, unable to change, Similar Products
Buyer Power: Moderate
Grocery store clients, Large orders, ability to substitute
Threat of substitution: Moderate
Ability to substitute,
Competitive Rivalry: Low
Low amount of competitors, High customer loyalty, quality products
Identification of alternatives
Open up small retail stores in different areas. People are already a fan of his desserts, by opening up small shops with display cases in different communities, he can serve more customers and evidently profit.
Another alternative is to Partner up with a beverage maker, what goes well with dessert? Hot chocolate, coffee, milk shakes, etc etc.
Another great alternative is releasing health conscious desserts. By marketing his new line of desserts as healthy yet delicious, he can deem the competition obsolete.
By Dieter opening up smaller shops in other cities, he can build a bigger reputation. Like before with his part time venture, it was “financially successful” if he keeps it up in different cities, they can all be financially successful. Since all cities have young kids, as well as youth and elders, and almost everyone has a sweet tooth, by opening up a store with a display case in the heart of these cities, he gains the attention of children, when the entire family comes in and tries his