Business Case

a. I believe that the substitutes are the strongest of the five competitive forces. See below.

1. Suppliers of Raw Materials Parts, Components, or Other Resource Inputs: Weak, because the materials needed, including the ingredients, ovens, cupcake pans, etc., can be bought from many different places from many different brands. The oven for example could be a KitchenAid bought at Sears or a GE bought from their GE Appliance website.

2. Firms in Other Industries Offering Substitute Products: Very strong, because there are many different places that customers can buy cupcakes including big companies such as Wal-Mart. Also, there are many substitute products for cupcakes such as cakes, pies, cookies, etc. practically anything in the bakery section of most convenient stores. Some substitutes may even include baking the cupcakes or baked goods at home themselves or by family members.

3. Potential New Entrants: Relatively Strong, because many people bake and are very creative with designing cupcakes for family members to enjoy and could be encouraged to enter the baking industry. The cost to enter is relatively high for the average family but not quite too expensive that only a few people can enter.

4. Buyers: Weak, because there are many of them and so they cannot compromise a price of a cupcake because the cupcake business can just turn them down and go on to the next customer willing to buy their baked goods.

5. Rivalry among Competing Sellers: Strong, because there are so many other companies and places that sell baked goods that without a competitive advantage over other sellers, buyers will leave one business for another with no hesitation. Most customers/buyers believe that every cupcake business is the same with very little differentiation.

b. Sift's Cupcake and Dessert Bar's strategy is to increase the number of stores as well as keep their atmosphere of a family environment internally and externally. They use the broad differentiation strategy because they are for all different age ranges including kids, teenagers, and adults. They have a decorate your own cupcake for the kids, the "OMG" environment for teenagers to hang out with their friends and have a space to themselves, and adults buy from them for their families, parties, their companies they work at, and school events that their kids have.The key factors that will determine a company's success in the specialty baking market is the creativity of designing the baked goods, having a broad customer market and not just for a certain age group, and getting brand loyalty from customers. The brand loyalty can be increased by having many stores all around the country. They could also get brand loyalty by giving the customers the option of purchasing their order online to either pick it up so it will be ready for them when they are available or to have it shipped to their house. The option of having it shipped to their house is a good idea because if the customers are tourists and visit their store and fall in love with their product, the can still be customers even though they don't live close by to one of their shops.

c. Though this company does not have much competitive power in this industry their idea for party rooms and self-decorating of cupcakes for kids and kids parties could become a great competitive power for them in this industry.

1. Competitively Valuable: No. Though "Sift's Cupcake and Dessert Bar" may have a few skills/specialized expertise in competitively important capabilities such as decorating, many companies can also do this.

2. Rare: No. There are many other cupcakeries as well as different types of baked goods stores for things such as cookies, cakes, pies, etc.

3. Difficult to Copy: No. Many people can bake, and bake well as well as decorate.

4. Not Easily Trumped by the Substitute Resources of Rival Firms: No. Most of the companies in this industry are the same in buyers/customers eyes. Not many companies in this industry have something