Essay Preview: Bakery Case
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Mr Lim incorporated in the Muadzam Shah. It is equally owned by its three partners; mother and two sons. The retail bakery industry in the Muadzam Shah is recently experiencing rapid growth in the sugar free and gluten free bakery industry. The health couscous consumer is slowly finding out that they can have sweets if they are made correctly. The number of consumers with chronic problem is 20%. These diseases are at an all high.
Mr Lim wants to establish a large regular customer base, and will therefore concentrate its business and marketing on local residents in Muadzam, which will be the dominant target market. This will establish a healthy, consistent revenue base to ensure stability of the business. High visibility and competitive products and service are critical to capture this segment of the market.
Mr Lim expects to raise RM50, 000 of its own capital, and to borrow RM20, 000 guaranteed by the JM bank as a ten-year loan. The extra start-up revenue will come from grant in the amount of RM15,000 to help in the purchase of kitchen equipment. This provides the bulk of the current financing required.
Mr Lim anticipates sales of about RM120, 000 in the first year, RM80, 000 in the second year, and RM90, 000 in the third year of the plan. Mr Lim should break even by the third month of its operation as it steadily increases its sales. Profits for this time period are expected to be approximately RM40, 000 in year 1, RM98, 000 by year 2, and RM99, 000 by year 3. The company does not anticipate any cash flow problems. Since it has a broad variety of products and will be the only Gluten Free and sugar free bakery in Muadzam Shah.