This paper examines the essential elements of a bakery business, making a clear picture of an idea in an apparent way. This report describes the financial challenge facing ECBG Cake Studio in Chicago and the possible solution to suit their challenge using the Business Model Canvas. ECBG is a baker of custom, celebration, and wedding cakes for customers in Chicago and its Suburbs (ECBG Cake Studio, n.d.). Erin Martin is the owner and founded the company in 2011.
Business Model Canvas
Both internal and external business partners have an influence on a company’s performance.
Plouffe et al. (2016) observe that business relationships have evolved dramatically from the traditional dyadic transactions between firms and their customers into multifaceted links where an enterprise manages a diverse portfolio of stakeholder relationships. ECBG’s primary business partners include its suppliers, distributors, and resellers. The cake maker forges these relationships to business objectives such as reducing risks and acquiring resources.
The key activities in a BMC include processes that have to be implemented to fulfill business objectives. In ECBG’s case, the primary operations include cake design and production, marketing and branding, distribution, managing the company website, customer service, and order management.
The resources are the main inputs a company needs to carry out its key activities and create its value propositions. They are your assets in a business, and they are essential in supporting and sustaining a business (Dogan et al., 2018). They include the four employees, baking equipment such as oven, inventory, premises, financial resources, and intellectual resources or business ideas.
This refers to the relationship that a company has with its customers in its market segment (Keane et al., 2018). Customer relationships are usually based on specific needs such as sales or market growth. ECBG relies extensively on personal assistance as it interacts with customers in person. In addition, it has an automated process that permits customers to perform some services themselves, such as ordering. These relationships help the bakery to retain current customers, acquire new ones, and boost sales.
Like any other business, this block is the heart of ECBG Cake Studio as it represents the unique product and services offered to customers. ECBG’s value propositions are high-quality, healthy cake options, exceptional customer service, and social responsibility. The company delivers these promises by using organic ingredients and providing effortless and joyful cake ordering and eating experience (ECBG Cake Studio, n.d.). Consistent with Osterwalder et al. (2014), these elements make the bakery distinct from its competitors.
These are the specific sources that a business makes its revenue from. They can either be through the provision of services or the sales of goods (Carter, 2020). The company’s major revenue streams include direct sales of its baked products. The company has less diversified revenue streams, unlike its rival brands, which have exploited online retailing to generate more income.
This refers to the people, groups, or organizations that you intend to reach with your product and services (Patti et al., 2020). The bakery targets low to medium-income, suburban to urban adolescents, and young adults who are more indulgent. The cake maker also targets the healthy conscious segment through its organic products. These demographic and psychographic attributes describe the company’s target market.
The main touchpoints the bakery uses to connect with its customers are the front office, staff, and customer representatives, resellers, website, and social media platforms. These avenues help in creating stronger brand recognition for its products and services and delivering its value propositions to them.
As illustrated in Figure 1 below, this building block refers to all expenses and costs that the company will incur when starting your business. This is usually the last step in the process but very crucial (Ojasalo, 2018). It dictates whether the business will go on or stop. The firm uses a cost-drive structure as it focuses more on keeping operational costs down.
Figure 1: ECBG Cost Structure (created by the author).
|Particular(s)||Estimated Cost ($)||Frequency|
|LNDB cost||$7,500||Per month|
|Advertising/customer acquisition cost||$3,500|
|Staff salaries||$12,000||Per month|
The major problems evident in ECBG’s BMC are a less diversified product line and market. The cake vendor has four employees who operate between 8 am-2 pm from Monday to Friday every week (ECBG Cake Studio, n.d.). It operates within the large Chicago region and its Suburbs. These issues exist in the customer segments, distribution channels, and revenue streams. The limited focus lowers maintenance costs and gives the management more control over the business (Sun & Govind, 2017). However, it exposes the bakery to greater risk and fewer avenues to generate revenue (Sun et al., 2017).
The best solution to these problems is diversifying the company’s product line and markets. Possible options for diversification include exploiting other markets outside Chicago and developing new, improved products. Alternatively, the company may consider venturing into online business to increase its revenue streams. Expansion of the bakery business would require significant investments in production, outsourcing, distribution, and marketing, but the long-term benefits such as economies of scale, minimal risk, and increased income outweigh the costs.
In conclusion, this discussion demonstrates that the business model canvas (BMC) is a vital strategic management tool that business enterprises can leverage to clearly define and communicate a concept or a business idea. It is so powerful that, if implemented properly, the success of a business is almost guaranteed. The challenge that arises regularly is most businesses do not apply all the strategies to the end. They take short routes, which end up failing at the end. Each of the nine blocks is important in building the business and cannot be ignored.
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ECBG Cake Studio. (n.d.). ECBG Cake Studio. Web.
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