Case 2: Biddy\'s Bakery (BB) 1 marks Biddy\'s Bakery was founded by Elizabeth Mc
ID: 388249 • Letter: C
Question
Case 2: Biddy's Bakery (BB) 1 marks Biddy's Bakery was founded by Elizabeth McDoogle in 1984. Nicknamed "Biddy." Elizabeth started the home-style bakery in Cincinnati, Ohio, as an altemative to commercially available baked goods. The mission of Biddy's Bakery was to produce a variety of baked goods with old- fashioned style and taste. The goods produced included a variety of pies and cakes and were sold to the general public and local restaurants. The operation was initially started as a hobby by Elizabeth and a group of her friends. Many of the recipes they used had been passed down for generations in their families. The small production and sales facility was housed in a mixed commercial and residential area on the first floor of "Biddy's" home. Elizabeth (Biddy) and three of her friends worked in the facility from 6 a.m. to 2 p.m. making and selling the pies. The operation was arranged as a job shop with workstations set up to perform a variety of tasks as needed. Most of the customers placed advanced orders, and Biddy's Bakery took pride in accepting special requests. The bakery's specialty was the McDoogle pie, a rich chocolate confection in a cookie crust Meeting Capacity Needs Initially sales were slow, and there were periods when the business operated at a loss. However, after a few years Biddy's Bakery began to attract a loyal customer following. Sales continued to grow slowly but steadily. In 1994 a first floor storage area was expanded to accommodate the growing business. However, Biddy's Bakery quickly outgrew its current capacity. In May 2000 Elizabeth decided to purchase the adjacent building and move the entire operation into the much larger facility. The new facility had considerably more capacity than needed, but the expectation was that business would continue to grow. Unfortunately, by the end of 2000 Elizabeth found that her sales expectations had not been met, and she was paying for a facility with unused space. Getting Management Advice Elizabeth knew that her operations methods, though traditional. were sound. A few years ago she had called upon a team of business students from a local university for advice as part of their course project. They had offered some suggestions but were most impressed with the efficient manner with which she ran her operation. Recalling this experience, she decided to contact the same university for another team of business students to help her with her predicament. After considerable analysis the team of business students came up with their plan: Biddy's Bakery should primarily focus on production of the McDoogle pie in large volumes, with major sales to go to a local grocery store. The team of business students discussed this option with a local grocery store chain that was pleased with the prospect. Under the agreement Biddy's Bakery would focus its production on the McDoogle pie, which would be Page 4 of5 delivered in set quantities to one store location twice a week. The volume of pies required would use up all of the current excess capacity and take away most of the capacity from production of other pies. Elizabeth was confused. The altermative being offered would solve her capacity problems, but it seemed that the business would be completely different, though she did not understand how or why. For the first time in managing her business she did not know what to do.Explanation / Answer
1. Elizabeth could not make appropriate forecast of her sales when she chose to move to a bigger facility. She could not realise if the sales will rise enough over the time to justify the additional cost incurred in purchasing new facility, which could not be utilised fully owing to lack of expected growth. She should have assessed her market better to go for right production capacity to meet the needs and justify the costs at the same time.
2. By using up most of the capacity for a single product, the bakery will lose its niche position of a unique baker producing pies and other products with forgotten recipes, that are no lomnger available elsewhere. In this way, it will start losing its loyal customers who visit her for these speciality products. Mcdoogle pie will put the bakery in the list of run of the mill bakers working for others, robbing it off of a character which it has developed over these years. Additionally, there is no guarantee of Mcdoogle pie doing good with grocery chain, a situation that will be worse than current state of affairs.
3. Currently they have a flexible production system where a number of different items can be produced at a single facility without changing the process much. There are no dedicated line for different products as their quantities are small and varieties are more. The new system is of a mass production system where the process will be designed for one kind of produce, to be produced in lage volumes.
4. By accepting the proposal, the bakery will lose its niche and speciality look and will surely lose its long standing customers. It is not sure how its Mcdoogle pie will do in the market. If it does better, there will be a new set of customers, mostly institutional in nature. If it does not do better, there will be difficult time for Biddy's, as a backtrack will be diffficult. Further, there is a risk and uncertainty in the nature and length of Biddy's relationship with grocery chains, which is not there while dealing with niche retail customers.
5. I would advise her, not to go ahead with proposal and lose her special niche character, as it has relatively low competition in that sector and the business has loyal customers. It can start using her excess capacity by producing Mcdoogle or any other popular pie for grocery chains or any other customers, and later augment her capacity further if this business succeeds, without altering her niche retail position.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.