This report is prepared to start new business called “Frozen”. It concerns the idea of opening a small ice-cream shop with simple product line. The main aims of this report are to analyze current situation of the targeted market as well as competition within. Basing on these findings, the suitably estimated budget and monthly profitable gaining are made.
In the report, the findings answer 6 questions below
- What is the strengths and weaknesses as well as opportunities and threats of the Frozen
- How the competitors, suppliers, customers, substitutes and new comers affect the business
- What is the strategy applied by Frozen Shop
- How the estimated financial report of the shop is
All information is collected from secondary sources on internet. Following these findings, the conclusions are drawn and a number of plans are made.
- Business model overview
- General company description
The goal of Frozen is to become a healthy, successful chain-store in Hanoi market within 10 years. Its objectives can be divided into 3 phases, namely penetrating, competing and surviving, and expending.
In penetrating phase, its objective is to build and raise brand awareness to attract the target customers surrounded University of Commercial. It will take this shop about 6 to 12 months to build its brand and become familiar with its customer.
Next 4 years is an important period as the shop may deal with a detrimental competition of either its existing rivals or new entrants. Its objective of such crucial phase is successful compete with others, surviving and sustainably developing. Additional services and product lines are also planned to implement in order to survive and adapted to quickly changing environment.
The next stage is expansion. After positioning itself in current market, the Frozen is projected to open new outlets. The first new one is subject to open in the 5th year since the original one started, and the second is planned to start a year after.
- Five Forces analysis
- Threat of new entrants
This business model does not require much investment to start. Thus, the entry barrier is really low which allows new comers easily to enter and compete directly to Frozen Shop. Besides, by investing a small budget in machine, the existing cafés or restaurants also can integrate this service to their original one, changing from indirect to direct rival of this shop.
- Threats of substitute products or services
This shop has minor threats from substitute because although there are many substitutes for ice-cream like yogurt, smoothies or sherbet and so on, the switching cost is relatively high. Thus, it prevents customers from changing product especially those live away from home with limited budget.
- Bargaining power of suppliers
The bargaining power of suppliers is really low as there arean absolutely huge number of cone as well as plastic tumbler cup suppliers in market. The switching cost is low, around VND100 to VND 200 per unit. Thus, the alternative suppliers are almost always available for Frozen whenever its present one unacceptably raises its cost.
- Bargaining power of buyers
The Frozen Shop faces weak buyer power because customers are fragmented and have little influence on price or product. Moreover, the cost of switching this store’s products to those of someone else is somewhat higher because of either the distance they must go or the higher price they might purchase. Furthermore, the ice-cream price of this shop is slightly lower than its counterparts, making its price be acceptable and lower the buyer bargaining power.
- Rivalry among existing competitors
The shop does not have direct competitors yet. They only need to compete with the indirect one like cafés or teashop. However despite of many stores around the University of Commerce, the rivalry among Frozen and them is low because of them serves different customers’ needs and demands. These demands exist together, although sometime overlap but do not eliminate each other. Besides, because of its low investment in equipment and these assets are easy to be sold, the exit barriers for Frozen Shop is low. Thus, this shop does not need to remain in an industry to compete to death with others but exit easily whenever it feels hard to keep up with rivals.