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The Fudge Cottage Case Study

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Updated: Jul 6th, 2020

Introduction

There are several factors determining efficiency and performance within different organizations. These factors also dictate the successes and failures of business entities. A holistic analysis of the fudge cottage presents a clear picture. Ideally, innovation stands out as the fundamental cornerstone for effective business performance.

Since its innovative establishment during the early 1980s, the fudge cottage has steadily expanded its operations. Apart from this, the fudge cottage has doubled its capital and liquidity base from the time of its foundation and commission. The management of the company has consistently revised and improved its strategic leadership approaches. Indicatively, there leadership strategy is commendable.

This is because it is based on performance and transformative principles. A fiscal examination of the company depicts many facts. There is an evident historical record of effective performance and management. Generally, it is crucial to analyze some of these companies.

This initiative helps to provide critical results and learning points for other emergent entrepreneurs. The objective of this paper is to discuss the fudge cottage based on the Porter’s five forces analysis. Consequently, there is a financial analysis of the fudge cottage.

Porters’ Five Forces Analysis of the Fudge Cottage

Organizations enjoy distinct factors of efficiency. Such factors enhance the level of organizational competitiveness. Moreover, they also act as the fundamental tenets for success and efficiency in their operations. It is crucial to provide a strategic analysis of these forces of success. The Porter’s five forces analysis presents a critical process for examining the successes and achievements of the business organization.

This kind of business analysis presents the application of five fundamental forces. These forces are crucial because they help to identify the major competitive factors or elements within a business environment. The fudge cottage company can also be examined based on these five basic elements.

The company has a critical demerit on its supply power. Ideally, this is the foremost element in the description of an organization’s major successes.

The fudge cottage does not enjoy from a large pool of suppliers of its raw materials. It is critical to indicate that these suppliers form critical components. They are crucial external stakeholders. The fudge company has limited suppliers. Therefore, it lacks the capacity to control its supply expenses.

It is important to investigate the buyer power and its consecutive influence on the performance of the fudge cottage. The company has continued to develop and strengthen its brand over the last years. However, there is limited market. Generally, the fudge cottage has a narrow range of buyers. Therefore, it has failed to monopolize its brand and prices.

The fudge cottage faces considerable competition from emergent producers. In a typical global market, there must be healthy competition. These competitors have influenced the market dynamics in a remarkable way. Therefore, fudge must be prepared to develop and integrate transformative mechanisms for arresting the situation. There are a significant number of potential competitors.

Notably, these competitors also have attractive brands. Precaution must be taken because technological advancement and globalization has stimulated the development of new business strategies.

Marketing and effective product promotion strategies have become critical cornerstones. Particularly, these help in improving performance and attaining the highest competitive edge. The fudge product is important to all customers. Therefore, the company is not faced with the threat of substitution. Fudge falls under the category of confectionaries. Consumers use this category of products in different ways.

However, there has been a notable shift from confectionaries to the consumption of MacDonald’s products. Observably, the company must take deep precaution and adopt more innovative approaches. These approaches must be aimed at customer attraction and retention. Such undertakings shall assist in evading the threat of substitution. The last factor of analysis is the threat associated with the new entry of businesses.

It is forecasted that the advancing century is yet to experience the highest numbers of business initiation. Technological advancement has led to the innovation of proper and more sustainable economic and business models. Ideally, the fudge company faces significant threats of new entrants into the business. This calls for increased level of open-mindedness and novelty amongst all workers.

Collective bargain and focus must be drawn from all personalities in the company. The high level of technology makes it hard for organizations to patent their systems. Additionally, they have inadequate capacities to control and manage their market dynamics. It is therefore indicative that there is a high threat of new entry. This might lead to an increased rate of competition.

Financial Analysis of the Fudge Cottage

The fudge cottage has doubled its capital base from the time of its establishment in 1981. According to its annual financial presentations, the company has had a steady rise in its liquid cash, assets, total expenditures and capital. This is portrayed evidently from 1990. During this period, the net income before tax was rated at $ 3, 855. These figures have persistently increased steadily in the preceding years.

The fudge cottage has experienced a remarkable shrink in the total sales. This is evident from 1990 in which the total sales were valued up to $ 209, 910. However, the consequent years have been characterized by a slump in the sum, with the sales marking as low as $ 210, 910 in 1993.

The negative trend has also been noted for expenses incurred by the company. Evidently, the company has had a shrinking total expenditure, noted in 1993 to reduce to $ 120, 918. The variation in expenses such as employee wages has also been demonstrated in a lucid manner within the organization’s statement of activities.

The variation can be owed to different factors, including the negative impacts of global economic crunch. Observably, the wages have moved on a positive trend from the period of the foundation of the fudge cottage. In 1990, the total wage accounted to $ 25, 885. This has increased to a total of $ 29, 745 in 1993.

The impaction of this trend is that despite the shrinking total sales, the company has continually experienced higher costs associated with the hiring of the workers. Analytically, this leads to the realization of a potential loss. Some other potential expenses that have increased over the years within the organization include the fixed expenses.

These are related to the telephone costs, advertising and promotion, delivery, stores supplies, office expenses, as well as legal and accounting charges. The fudge cottage also incurs many expenses related to income revenue. These include payroll taxes and others.

The financial growth is well documented in the company’s income statement. An increase in current assets from 1990 is a major indicator of the developing wealth. However, the company has also been affected by the global economic crunch.

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IvyPanda. (2020, July 6). The Fudge Cottage. Retrieved from https://ivypanda.com/essays/case-study-the-fudge-cottage-case-study/

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"The Fudge Cottage." IvyPanda, 6 July 2020, ivypanda.com/essays/case-study-the-fudge-cottage-case-study/.

1. IvyPanda. "The Fudge Cottage." July 6, 2020. https://ivypanda.com/essays/case-study-the-fudge-cottage-case-study/.


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IvyPanda. "The Fudge Cottage." July 6, 2020. https://ivypanda.com/essays/case-study-the-fudge-cottage-case-study/.

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IvyPanda. 2020. "The Fudge Cottage." July 6, 2020. https://ivypanda.com/essays/case-study-the-fudge-cottage-case-study/.

References

IvyPanda. (2020) 'The Fudge Cottage'. 6 July.

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