Question 2 - Sift Cupcake Case Analysis

2. How strong are the competitive forces confronting Sift and other specialty bakers? Which one of the five competitive forces is the strongest? Prepare a five-forces analysis to support your answer.

- The five-forces analysis will be provided sequentially herein and followed by a conclusion to which is the most outstanding competitive force.

* Supplier bargaining Power: Weak. Due to the fact that the potential input materials, including the ingredients, ovens, cupcake pans, etc… are easily acquired from numbers of different providers and the diversity of existing material brands is very significant, this factor is concluded as weak

* Customer bargaining Power: Weak. This conclusion comes after the reason that cupcakes are not daily consumed products because of their high calories contained. Customers infrequently buy this product in small quantities. Furthermore, the switching costs for customers between different bakeries are quite insignificant, therefore the overall buyer bargaining power is not strong.

* Potential New Entrants: Relatively Strong. Many creative home-bakers can be excellent in designing cupcakes which are consumed by their family members and these bakers could be encouraged to enter the baking market. In addition, the entrance cost for this industry is relatively significant for the average family but not quite so expensive that only large suppliers can enter.

* Rival Sellers: Strong. There are numbers of other companies and bakeries that provide baked goods with very small differentiation. This leads to the fact that customers will abandon one business for another without hesitation due to the evaluation of competitive advantages.

* Substitute Products: Very Strong. Customers can not only choose from a wide range of different places for getting cupcakes (including big companies such as Wal-Mart) but also select many substitute products for cupcakes such as cakes, pies, cookies, etc. nearly any baked goods in the...