Katz Bakery

Topics: Asset, Generally Accepted Accounting Principles, Balance sheet Pages: 6 (1812 words) Published: December 17, 2012
Module 5-6 assignment
Note: Before you begin the assignment for Module 5, please click the Module 5 assignment link in the online course navigation pane for instructions on how to complete and submit your responses for assessing.

(100 minutes) Kaz Bakery Ltd. Several years ago, Karina Cutlass opened a small store that sells custom-made cakes, cookies, and pastries. Being skilled in baking from scratch with specialized ingredients, she quickly gained many loyal customers. Following the success of her first year in business, she incorporated her business under the name Kaz Bakery Ltd. (KBL). Over the past six years, the business has grown significantly, and with the assistance of several private investors, KBL has expanded, with retail locations in all major cities in Canada. Each retail location has a small staff consisting of one manager and four to six part-time employees. KBL’s head office and baking facility are located in Vancouver. The baking facility was built five years ago, and the space is fully used for production. Karina added several new products (cakes, cookies, and pastries) last year and has been able to fit these into the current production schedule, but she will not be able to consider additional products. It is difficult to find employees with the skill to bake the products to KBL’s standards, and Karina is usually in the baking facility at least once a day checking on production to ensure that quality standards are maintained. One of the new pastries added is macarons, a French confectionary made with egg whites, sugar, and almonds. Macarons are produced in two separate batches — one with nuts and one without nuts. Recently, there has been an issue in that some of the macarons that contained nuts were labelled incorrectly. These macarons were shipped to the store in Calgary and sold to several customers. One of these customers is allergic to some nuts and has filed a lawsuit against KBL. An investigation into the incident determined that the production team did not separate the production schedules between nut and non-nut macarons. All of the macarons produced that day were sent to the packaging line together and were labelled ―May contain traces of tree nuts‖ rather than ―This product contains tree nuts.‖ The macarons had also not been examined carefully before being placed in the packaging. This examination is a required step in the production process, and there is some evidence that this has happened several times prior to this incident. KBL has established its brand in the market and it largely depends on the high-caliber labour it hires to maintain the consistent quality from store to store. With increasing global opportunities, Karina is concerned about losing her employees and is considering a retirement pension plan as an added benefit for the employees. She has heard about defined benefit plans for small businesses, which she tells you provide the most benefit to employees, as well as tax savings for her organization. Karina would like more information on these plans, and whether or not this is the best choice for KBL. KBL recognizes that there is a potential to sell more products to existing customers if it had a more in-depth knowledge of customer preferences and shopping patterns. There are many customer relationship management (CRM) software systems available, and KBL management determined that software that tracks customer purchases with trending analysis would be most relevant. Many of these systems offer an integrated e-mailing feature that would send personalized e-mails to customers based on their shopping habits, and KBL has decided this is a requirement for the CRM system to be purchased. Continued…

PA2 Assignment 5-6, Session 1

Page 1 of 4

Mark Ellis, the previous office manager, conducted the initial research into the software systems. He now lives in Hamilton, Ontario. He moved to Hamilton at the end of last December and is carrying out the implementation of the CRM...
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