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Management Accounting

Essay by review  •  February 14, 2011  •  Research Paper  •  2,553 Words (11 Pages)  •  2,219 Views

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Management Accounting II

FCB Bakery Shop

Executive Summary

FCB Bakery is a specialty food retailer. FCB uses a system that is similar to RotiBoy Bakery to provide Mexican buns in a fast and time-efficient way. FCB provides its customers the ability to order and buy the bun without waiting in long queue. FCB is offering cheaper offers to the RotiBoy.

FCB offers its patrons the finest Mexican buns, specializing in specialty coffees flavors. In addition, FCB will ensure the patrons grab their freshly made buns straight on the spot without delay. Seasonally, TDP will add other flavors such as chocolate, cheese and more flavors.

FCB will focus on two markets:

The Daily Commuter- someone traveling to/from work, out shopping, delivering goods or services, or just out for a drive.

The Captive Consumer- someone who is in a restricted environment that does not allow convenient departure and return while searching for finger food, or where finger food are an integral part of the environment.

FCB will penetrate the commuter and captive consumer markets by locating their premises in the most logical and accessible locations. The location are carefully selected in a two-sided traffic and selling the buns in less time than required for a visit to the locally confectionary shop.

In addition to providing a quality product and an extensive delicious buns, to ensure customer awareness, as well as good publicity coverage and media support, we will be using word of mouths strategy based upon customer positive feedback.

The FCB's financial picture is quite promising. Since FCB is operating a cash business, the initial cost is significantly less than many start-ups these days. The process is labor intensive and FCB recognizes that a higher level of talent is required. The financial investment in its employees will be one of the greatest differentiators between it and FCB's competition. For the purpose of this cash budgeting, the capital expenditures of facilities and equipment are financed. There will be minimum inventory on hand so as to keep the product fresh and to take advantage of price drops, when and if they should occur.

The danger in having direct competitors would rise up and establish a foothold on a community before--or in the midst of--the arrival of FCB, causing a potential for a drain on revenues and a dramatic increase in advertising expenditures to maintain market share. Knowing these risks--and planning for them--gives FCB the edge needed to make this scenario work.

The projected profits estimates a profit of $166,004 for the first year, $157,309 for second year and earnings of $147,754 on the third year.

Introduction

First, there was Rotiboy. Then came Roti Mum, Hero and even PappaRoti. These butter-filled Mexican buns topped with caramelized coffee-cream have become the latest fad to hit food-crazy Singaporeans. It has become the next biggest food craze in Singapore. What is the rationale for this bun's popularity and why it is attracting so much people crazy for it?

Most customers are enticed by the aroma of freshly baked buns to queue up and "just try". The new concept to serve it straight away from the oven is one of the reasons that attract most of its patrons. Best eaten when piping hot and it is the wonderful aroma of the coffee butter emanating from the simple bun (flaky and crispy on the outside and light and fluffy in the inside) that keep its customers coming back for more.

Rotiboy is the brainchild of 40-year old Mr Hiro Tan, who started the chain back in 1998 in Malaysia. Franchise enquiries, even from Singapore have been flooding in from everyone who saw the chance to milk the popularity of the concept. The bun's popularity across the Causeway was a major draw to investors in Singapore.

Those in Singapore can now satisfy your craving anytime as Rotiboy has now come to Singapore. Operating from a shopfront at the China Square Food Court since about 3 months ago, Rotiboy is already drawing in the crowds.

Plans have been in place already for expansion to the bigger stall next door at China Square, with a second outlet to open at Raffles Place and more to come by next year.

Business Ideas

Indeed, Rotiboy's steamroller success has drawn in more than one competitor eager to sniff out profits and jump on the dough bandwagon. Similar products have sprung up in the market, with local Roti Mum Pte Ltd opening just last December at IMM building.

This phenomenon has triggered our thoughts of plan. It will be profitable us to use this business idea and to produce similar product. Since the market share is too big for them to digest, we will be able to target at the same segment of customers as RotiBoy. Perhaps we can target on consumer who is more cost sensitive e.g. middle-age housewifeƐ'...etc. Under the 4 "P"s, we will choose to concentrate mainly on the Product and Price factors.

For product, we will use common recipe which is highly possibly used by RotiBoy as Rotiboy is actually a Mexican bun which is commonly found in Mexico. With the widely used recipes, we can produce similar product as compare to RotiBoy. The most important factor to be taken is the taste and aroma of the bun. Firstly the bun must taste delicious and must have a strong coffee's smell which will indeed attract the patrons.

For price, we will set our selling price lower than what Rotiboy is offering now in order to switch consumer's brand preference. If the product has the same taste as Rotiboy and costs lesser, consumer will rather go for a cheaper range of similar product. Moreover, there is a high demand for Mexican buns in Singapore now.

Although there are opportunities for us to make a profit out from it, however there is some risk involved. The risk for copying others' idea is relative high in long run if there are too many copycats competing for same share of pie. Lesson can be learnt from similar case like the fad of Taiwan Bubble Tea in 2001. This particular business's idea collapses when there are too many copycats blooming up after its initial success.

For our business plan, we will set up similar concept as RotiBoy since this fad just arises. We will set up our store as soon as possible so that we can be one of the few

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