January 16, 2011
Biddy’s Bakery is a start up home-style bakery in Cincinnati, Ohio. Elizabeth expects to catch the interest of the general public and local restaurants with a variety of baked goods. Elizabeth’s business mission is to stand out from her competitors and “produce a variety of baked goods with old fashioned style and taste”p.95. Biddy’s Bakery personnel consist of three Elizabeth’s friends with production and sales were placed from her home on the first floor. This paper seeks to address the following: the challenge Elizabeth faced in meeting her capacity needs and what she should have considered before moving into the larger facility, determine what is wrong with the proposal made by the team of the business students and why, how the business would be different if Elizabeth accepts the proposal made by the business students. Finally, I will discuss the advice you would give Elizabeth on how to proceed. Explain the challenge Elizabeth faced in meeting her capacity needs and what she should have considered before moving into the larger facility. Growth and expansion require careful planning; Elizabeth should have considered the financial benefits, whether her cash flow can support the additional inventory, equipment, labor cost, insurance, higher rent, utilities, office expenses, or a new facility. On the other hand, expanding an operation doesn’t mean she will gain more profits? Most Entrepreneurs gain more profits overtime being in business for years. However, Elizabeth may produce more volume in a larger store and end up working twice as harder. She will be unable to be in two places at the same time being a manager. Elizabeth should consider if she will rent the additional space that is unused. Renting the space out will help with her additional cost. Nevertheless, the owner should consider if economies of scale will allow the business to sell the products or services at...