Case Analysis “Julie's Bakeshop”

Executive Summary

Julies Bakeshop has been known in the Philippines for over 30 years for its quality products. It has been a strong brand in the bakeshop industry. But as time goes by, one of the biggest problem of JBS was the economic instability that led to the gradual increase in the prices of the raw materials that are the major ingredients and supplies in the production of the bread. These raw materials are the LPG, sugar, dough and etc. JBS was known for its quality and affordable products, and now, their dilemma is how they can manage with the demands of the consumers knowing that the cost of production is getting costly.

It is a challenge for JBS to cope up with this knowing that most of the consumers patronize their products because of its quality and low price. One of the problems in this case also is that most of the people especially in their Imus, Cavite branch have low purchasing power.

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And lastly, people nowadays are getting health conscious and they want something that could cater their demands. To vent out these problems, we have come up with alternatives. First is to increase the price of the breads and pastries. The other alternative is to make the products smaller in terms of grams. And this will be a challenge for JBS because they are recognized for the good standards of their products. But still, the alternative courses for JBS to consider are, they should think of some ways to maintain the high quality standard of their products by minimizing their costs while maximizing their profit.

Alternative ingredients that are still approved by BFAD is a good thing to consider and buying in bulk is also an advantage.

JBS should also grab the opportunity of the health consciousness issue of the people by making them a different target market and produce healthier breads like wheat breads and gluten-free breads and pastries. In that way, JBS could easily satisfy the consumers and entice more potential customers. As a result of all of these alternatives, the cost of production will be reduced, the demand of their products may increase as well as the purchasing power of their customer. Given these solutions, it will help JBS to still come up with quality and high standard products at its affordable price and maintain a good image in the bakeshop industry. Likewise, the generation of profit is expected to increase if these alternatives are executed.

Introduction

Julie’s Bakeshop has over 30 years of experience in the bakeshop industry. It was just a small bakeshop before and grew to become part of the Filipino’s everyday life. Now, JBS have expanded and there are over 500 Julie's Bakeshop (JBS) operated by about 130 franchisees all over the Philippines. It is undeniably the Philippine's strongest bakeshop brand and the country's largest bakeshop chain. Julie's Bakeshop's (JBS) was a strong Filipino brand and its leadership in the neighborhood bakeshop category is unquestionable. The many innovations on their quality products and best practices JBS introduced when it started in 1981 are now considered standard and imitated by all other bakeshops. And while others are still catching up, JBS is not only expanding in the Philippines but overseas as well. Ultimately, the foundation for its extreme popularity is the taste and quality of its bread products.

Years of experience has led to the perfection of a proprietary Julie's Blend that caters to the varying and discriminating palate of our customers. JBS was known for its quality and fresh products. Keeping with the standards of the first Julie’s Bakeshop in 1981, the current crop of Julie’s Bakeshop branches operate with expert guidance from a Research and Development Department that continually improves and kitchen-tests their product line in a full-scale baking laboratory. Thirty years and hundreds of kitchen-tested bread varieties later, Julie’s Bakeshop currently offers an extensively expanded product range. Now, coping with the changing market, they do not offer only breads but now a wide variety of pastry products.

Problem Statement

The economic instability that is one of the biggest problems today wherein the prices of LPG, sugar and most of the raw materials that is used in the production of breads and pastries of Julie’s Bakeshop has been gradually increasing. It is known that most of the consumers buy from Julie’s Bakeshop not just because of the quality but also for the low price. Also most of the people have low purchasing power especially in the Imus, Cavite branch.

In order to address this issue, there are two alternatives that have been made. First is to increase the price of the breads and pastries. The other alternative is to make the products smaller in terms of grams.

Issues

1. Because of the increase in the prices of the raw materials used in the production of bread, Julie’s Bakeshop is in turmoil whether to give up the standard quality in terms of size in grams of their bread or to give up their competitive advantage of offering low prices for their breads and pastries.
2. The change in the environment wherein the people nowadays become more health conscious has affected Julie’s Bakeshop. People who are more health conscious tend to avoid eating bread.
3. The low purchasing power of consumers in Julie’s Bakeshop especially in their branch in Imus, Cavite will be affected if ever they decide to increase their price in order to compensate with the high costs of production.

Alternative Courses of Action

1. Since the prices of the raw materials are increasing, Julie’s bakeshop should think of some ways to maintain the high quality standard of their products by minimizing their costs while maximizing their profit. They can use some of alternative ingredients for the production of their products that were still approved by BFAD. Buying in bulk is also an advantage. By doing so, the price of each raw material is reduced, meaning you are getting more of your money.
2. Grab the opportunity of the people who are now becoming more health conscious by making them a different target market and make breads that are healthier like wheat breads and gluten-free breads and pastries. In that way, the bakeshop could easily cope up with the environment because of the satisfaction of their customers in their products and services. As a result, the demand of their products may increase as well as the purchasing power of their customer.

Recommendation

Julie’s Bakeshop is known as the strongest bakeshop brand and the largest bakeshop chain in the Philippines. Because of their success in the industry for about 30 years, they were able to franchise 130 bakeshops all over the country. Unfortunately, because of the changing environment, Julie’s bakeshop was not able to cope up with the environment. To resolve this issue, they should always consider their customers’ needs and wants so that they can easily cope up with their changing lifestyles. Having a research on their target market might help them in making decision about their products and services. Proper target segmentation must be observed in distributing their products. Another issue is about the increasing prices of raw materials needed for production. To maintain the good image of their business, the bakeshop should consider having alternative resources of their products to avoid economic instability. They should always prepare a clear execution of their action plan to come up with an excellent result. Alternative courses of actions must be executed. Given the following solutions, there’s a possibility that the bakeshop might increase their sales volume while generating income.

On the government side, Julie’s bakeshop was able to comply with the government’s requirement of becoming a member of BMBE. But besides that, Julie’s bakeshop was also able to encourage all franchisees to become a BMBE or Barangay Micro Business Enterprise member and follow the BFAD approved ingredients.

Economic Factors

Despite Julie’s Bakeshop’s success in its industry of making bread, the economic instability our country is facing today wherein prices of LPG, sugar and most of the raw materials used in the production of bread is gradually increasing is creating a dilemma for them. Because of the low purchasing power of their customers especially in Imus, Cavite, Julie’s is now thinking of either increasing the price of their breads which goes against their positioning in the market of having low priced breads or decreasing the size of their breads in terms of grams without having to increase the price but decreases the standard of quality that they currently offer.

Socio-Cultural

With the fast changing environment, there is also a change in the views of people, most them become more health conscious that is why Julie’s saw the opportunity to build a better image to this segment perhaps by producing more healthy varieties of bread. This creates a challenge for Julie’s Bakeshop on diversifying their varieties of bread without compromising the tastes of every market segment.

Technological

Through the help of new technology available today, Julie’s Bakeshop produces bulk amounts of bread through the use of mixers, rollers and kneaders that makes the production a lot easier and faster. With the use of new baking products, it could make the manufacturing process more effective and efficient that increases productivity. With this being available, Julie’s should think of alternatives for the high priced raw materials in able to accommodate consumers with low purchasing power by taking advantage of this kind of technology.