1.) What is Sift Cupcake and Dessert Bar’s present strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fits the competitive approach that Sift is taking? Explain. Sift made a decision to diversify their products from not only cupcakes, but to a more traditional desert style menu to reach a broader market. Incorporated a marketing strategy that includes promoting business through various platforms such as radio and social media outlets. Participates in many social events and gatherings such as weddings and community affairs. They cater to a niche market where similar places do not offer the same services. Offers customer and designer baking services.
Quality products, clean environment, great customer service. Overall to expand their stores and reach new markets while keeping the family oriented atmosphere internally and externally.
Out of the 5 competitive approaches I believe they have a superior product and/or specialist strategy. Sifts can cater to specific needs, as well as specialize for different occasions. Since they use quality ingredients for all of their foods there product is also superior to those of other substitute products. However, they use a broad differentiation strategy because they cater to all age groups. This will hopefully generate brand loyalty.
2.) Are the strategies winning? What is your appraisal of Sift’s financial performance based on the data in case Exhibit 9? How well is the company doing financially? Use the financial ratios above and the exhibits in the case for your assessment of Sift’s financial performance.
While analyzing the company’s financials it becomes apparent that the COS has been consistently increasing. According to their balance sheet they lack cash flow so this could be a detriment to them in the future if not fixed. However, Sift has continually grown there net sales per year. This shows their brand and marketing strategy along with customer satisfaction has been working to their advantage. Sift’s long term debt is also relatively low, which will help a growing company when looking for loans and financing to help expand. Their profit margin on goods is also something that can be looked upon as a plus. Ingredients are cheap.
Strengths: Differentiation (specialty cupcake store), variety and creativity along with great customer service makes them hard to duplicate, great location, and high quality goods. Weaknesses: Single store operation, store managers are not well trained; poor hiring decisions. Cupcakes are easily substituted for other deserts as well as other brands of cupcakes. Not high brand recognition Opportunities: Expanding stores to penetrate new market segments and geographic areas, continue the growth of marketing and advertising. Retail bakery sales are expected to grow by 8.1% by 2014. Threats: Direct competition with competitors (Karas and Sprinkles), substitute products and the economy. Consumer Trends shifting towards healthier foods.
4.) What are Sift’s issues?
Line of credit is stretched out so how do they secure the loan? How does Sift get into and penetrate new markets?
How do they standardize their workforce?
5.) What recommendations would you make to Andrea and Jeff Ballus to strengthen the company’s competitive position and future strategic and financial performance? Which of the three strategic options under consideration by Sift’s owners have the best fit with its internal and external situations?
Out of the three strategic options under consideration I have to pick number three because it is important to expand based on the financial growth of the company itself. This will give financial growth as well as help increase there market share. Expanding to fast could be a detriment to company and not generating enough cash flow could become a problem so rapid expansion might be too overwhelming for Sifts. They need to secure their loan and work on penetrating new markets as the company is growing in itself. They need to standardize their workforce as well and hire managers that are well equipped to handle the everyday duties of the business.