Financial Analysis of The Hummingbird Bakery

This assignment focuses on a financial analysis of The Hummingbird Bakery Ltd. It examines the company's key financial indicators, including revenue, costs, profit margins, and cash flow. The analysis utilizes financial statements (profit & loss, balance sheet) to assess the bakery's profitability, operational efficiency, and overall financial health. Students are expected to interpret the data presented and draw conclusions about The Hummingbird Bakery's performance.

E-Commerce and
Marketing
1
Profit & Loss
Weeks
Currency
Consolidated Accounts
Turnover
Cost of Sales
Gross Profit
Wages & Salaries
Directors Emoluments
Operating Profit
Depreciation
Audit Fees
Interest Payments
Pre Tax Profit

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
COMPANY.....................................................................................................................................6
TASK 1............................................................................................................................................6
1. Unique features of e-commerce websites...........................................................................6
2. Improvement of action plan to reinforce the online presence..........................................10
CONCLUSION.............................................................................................................................11
REFERENCES..............................................................................................................................13
2

ILLUSTRATION INDEX
Illustration 1: Key financials...........................................................................................................5
Illustration 2: Financial statement...................................................................................................5
Illustration 3: The Hummingbird Bakery........................................................................................7
3

INTRODUCTION
Electronic commerce can be stated as a tool that helps in performing a wide range of
online business activities so that customers can be attracted to use the products and services of
firm. Here, parties are involved in interacting electronically rather than physically so that buying
and selling take place through internet (AlGhamdi and et. al., 2012). Due to globalization, each
and every company is entering into online business and thus, focus upon digital media enables
commercial transactions between businesses and individuals. In the present study, to properly
understand about electronic commerce industry, The Hummingbird Bakery has been taken into
consideration which was launched in 2004 to become the home of quality American baking in
London. However, firm has attained huge success and opened six branches across the city and
provides delicious cupcakes, other sweet dishes as well as desserts for every occasion. Company
also possesses its online presence so that customers can give their orders online and also
provides online learning through videos and blogs about recipes of cupcakes (Brengman and
Karimov, 2012). E-commerce is becoming very popular and wide market in UK and thus it is
selling large number of products and services online. However, in 2013 it has been estimated
that value of total e-commerce sales in UK was around Pound 557 billion that represents nearly
20% of the business turnover. However, the growth of Hummingbird bakery through launching
its e-commerce website attain significant rise in the company. One among four consumers now
shop through online market as compared to visiting shops. UK bakery market is worth Pound 3.6
bullion and also it is the largest markets in the food industry.
4

Illustration 1: Key financials
(Source: Fritz, 2013)
Illustration 2: Financial statement
5

(Source: Bauer, Albrecht and Haber, 2015)
COMPANY
The Hummingbird Bakery is started in 2004 in order to become the home of quality
American baking in London. Company has started six branches across the city and is famed the
world over for its delicious cupcakes and other sweet treats and desserts. It provides a full range
of American style baked treats and desserts which includes cupcakes, layer cakes, pies, brownies
etc. Company also provides customized option for its customers that helps them to choose their
own style of products and provide best satisfaction (Li and Wei Xie., 2012).
Impact of e-commerce upon Hummingbird Bakery
E-commerce has significant impact upon the business enterprise and thus it is essential
for each and every organization to start their e-commerce website as it helps firm to enhance the
sales and profitability of firm in market. It helps in giving tough competition to competitors.
Also, business develops different opportunities in market in order to provide effective customer
service so that best results can be attained (Chen, Chen and Capistrano, 2013).
Illustration 3: Profit and loss
(Source: The Hummingbird Bakery Ltd, 2015)
It can be assessed from the above figure that Hummingbird bakery is making stagnant
profits from a period of time. While its turnover is making a slight differences. In the year 2014
6

firm is making profits before tax of 535,376 while in 2015 it is around 439,096. Hence, its
profits decreased around 96280. While, its turnover is increasing as it was 6,196,927 in the year
2014 and 6,459,232 in the year 2015. Thus, it can be evaluated that there is differences in the
turnover and profits of the firm. As its turnover is increasing while its profits is declining. It is all
because of rise of competitors and thus Hummingbird bakery is facing issues as they are getting
tough competition from their rivals in terms of cost of bakery products. While, its profits is
decreasing because firm is making huge investment in advertisement and promotion that impacts
its overall sales and profitability.
Illustration 4: P&L accounts
(Source: The Hummingbird Bakery Ltd, 2015)
Profit & Loss
Profit & Loss 2015 2014 2013 2012 2011 2010
Weeks 52 52 52 52 52 52
Currency GBP GBP GBP GBP GBP GBP
Consolidated Accounts N N N N N N
Turnover £6,459,232 £6,196,927 £5,536,614 £4,785,892 £0 £0
Cost of Sales £1,297,653 £1,134,717 £950,406 £908,417 £0 £0
Gross Profit £5,161,579 £5,062,210 £4,586,208 £3,877,475 £0 £0
Wages & Salaries £0 £0 £0 £0 £0 £0
7

Profit & Loss 2015 2014 2013 2012 2011 2010
Directors Emoluments £0 £0 £0 £0 £0 £0
Operating Profit £453,415 £556,475 £-26,631 £212,045 £0 £0
Depreciation £309,129 £366,800 £356,282 £330,482 £221,417 £119,123
Audit Fees £17,500 £17,500 £15,000 £3,000 £0 £0
Interest Payments £16,327 £22,123 £23,192 £26,483 £0 £0
Pre Tax Profit £439,096 £535,376 £-49,428 £186,579 £0 £0
Tax £-119,093 £-149,957 £8,023 £-66,466 £0 £0
Profit After Tax £320,003 £385,419 £-41,405 £120,113 £0 £0
Dividends Payable £0 £0 £0 £0 £0 £0
Retained Profit £320,003 £385,419 £-41,405 £120,113 £0 £0
Export £0 £0 £0 £0 £0 £0
Thus, from the above stated financial report of Hummingbird bakery it can be assessed
that company is making huge differences in their operating profit. However, firm faces
differences in its profits because of increasing cost of sales and huge investment in the
advertisement and promotion. As firm is promoting its online website which requires huge
money therefore, it impacts its overall growth within e-commerce. Therefore, management of
Hummingbird bakery is required to improve its profit after tax and attain success within firm.
TASK 1
1. Unique features of e-commerce websites
As per the opinion of Fritz (2013), E-commerce industry is very wide and thus, it is
usually linked with the process of buying and selling of products and services over the internet.
Further, conducting any transaction involves transfer of ownership or right by using a computer
oriented network. Moreover, every organization now-a-days uses an electronic platform because
it provides ease and helps to create better relationship in between the organization and
individuals (Fritz, 2013). It is a faster form of carrying out transaction and with the help of
Information and Communication Technology (ICT), the best customer service can be provided
8

to attain desired targets. Here, The Hummingbird Bakery provides various online services and
products to its customers such as cakes, cupcakes, gifts and books, bakery items, videos as well
as tips of preparing cakes etc. Also, there are different unique features presented on the website
so that customers can attract to place their orders and by which, organization can give tough
competition to the rivals. However, website of the company is very attractive and thus, it
provides a wide range of choices for its customers to order their cakes and other varieties so that
large number of individuals can be attracted to purchase the products online directly from the
website (Bauer, Albrecht and Haber, 2015).
Illustration 5: The Hummingbird Bakery
§
(Source: Roberts and Zahay, 2012)
According to Lee (2014), website of the company is well presented and navigated that
provides clear information with attractive designs of cakes, cupcakes, selection boxes, pies, tray
bakes and whoopie pies. The Hummingbird Bakery also provides an attractive service for its
clients as they provide home delivery as soon as possible along with cakes and bakery items.
Business also delivers gifts and books and customize cakes as per the orders of customers (Lee,
2014). Business also focuses on including unique features such as providing baking videos, tips
9

and recipes of cakes to its customers. Along with this, individuals can give their reviews and ask
FAQ's that are updated frequently. Thus, these are the unique features that are provided by The
Hummingbird Bakery to its clients that influence them to purchase the cake directly from the
website. Also, customer is required to check the website regularly if they have any query
regarding the ingredients used in making cakes. Every single ingredient i.e. from butter to
buttermilk will be listed in the ingredient’s FAQs so that customers can be informed about the
necessary ingredients and thus, it can also enhance the sales of company (Chen, Chen and
Capistrano, 2013).
Website of the company allows customers to purchase and sell the products and services.
Also, people can register with the firm and make an account on the website to get more clear
information and easy accessibility to sell the goods on this website as well as purchase the
products. However, when an individual has an account, then website will automatically record
the history (Li and Wei Xie., 2012). By which, they can contact with them in the near future for
any sale as well as providing information about the new launched product in market as per Li
and Wei Xie., (2012). It can be done through sending message to the customers in order to
provide clear information about the products.
Following are the seven unique features involved in an e-commerce website-
 Ubiquity- According to Manzoor (2010), it can be stated that commercial transaction or
any other activity that is related with the e-commerce is available everywhere such as at
workplace, homes and now-a-days even on mobile phones. Individual is able to sign up
with e-commerce website through smart phones and thus purchase and sell the products
at any place and any time. However, the ubiquity of e-commerce website helps
companies such as The Hummingbird Bakery to help and reduce transaction costs for
customers as they can directly order their preferences through company's websites and
receive it at their doorstep. It helps the customers in saving their time to go to market for
purchasing products (Manzoor, 2010). However, during this time, people can download
the application of business on their smart phone and carry out e-commerce transaction.
For instance, The Hummingbird Bakery has created very attractive websites with proper
navigation facilities so that consumers can be informed about each and every product
available with proper description and its prices so that they can order as per their taste
and preferences. It provides wide range of choices to select from cakes, cupcakes,
10

selection boxes, weddings and bespoke, pies, tray bakes, whoopie pies, cheesecakes etc.
(Wilson and et. al., 2012).
 Global reach- As per the Floren (2012), it means that e-commerce technology helps in
carrying out commercial transaction to cross the national boundaries and thus make it
more conveniently to enhance market reach. Thus, because of this reason, many e-
commerce companies will create e-commerce website to handle customers and provide
them with products and services around the globe (Floren, 2012). For example, The
Hummingbird Bakery undertakes and ubiquity website so that people around the globe
can view products online and purchase the same by carrying out transaction.
 Universal standards- It means that company follows same standards around the world
and thus provides similar commercial transaction so that sales can be improved. Also, it
is stated that due to universal standards, the organization sells the goods globally at the
same prices. Hence, Hummingbird Bakery follows universal standards which share the
products on its websites with specific price rate to all the nations which are using this
website. Also, it is free for the users to visit the website and thus they can register
themselves to get more detailed information of the products (Rouse, 2014).
 Richness- According to AlGhamdi and et. al., (2012), it means that complexity and
content of the message should be very rich and it should provide wide range of
information to consumers to attract them and enhance sales of the firm in market. Thus,
the websites of the company is filled with rich content and attractive pictures of cakes,
cupcakes and pies that influence customers to purchase the products (AlGhamdi and et.
al., 2012).
 Interactivity- Interactivity is the technology which allows the business to carry out two
way communication among business and consumer. With the help of this, Hummingbird
Bakery provides interactivity to allow everyone to carry out inquiry, product features,
price, FAQs etc., so that online transaction can be carried out (Fritz, 2013).
 Information density- As per Bauer, Albrecht and Haber, (2015), here, it assesses that
total amount and the quality of information are available to all market participants.
However, it reduces information costs and thus enhances quality of information to make
it more useful and important. Hummingbird Bakery provides wide range of information
regarding products and services in the website with clear quality pictures which attracts
11

customers to purchase the goods. It saves time of users to search the details of
information about products and also the information provided is accurate and useful
(Bauer, Albrecht and Haber, 2015).
 Customization- It is the best unique feature that helps in targeting customers who
possess specific requirement so that best quality products can be provided to them.
Hummingbird Bakery provides this feature to its customers and helps them to customize
the cakes as per their orders (Roberts and Zahay, 2012).
B2B models- Hummingbird Bakery follows such model in order to sell the bakery products to
business customers so that they can further sell it to end consumers. It helps business to enhance
its market share and thus expand its operations in larger area (Manzoor, 2010).
B2C models- While, in such model company directly sell the products to the end customers
through the outlets. It can also be done through internet or online.
According to the view of Li and Wei Xie., (2012), it can be assessed that ubiquity is the
feature which is implemented effectively in Hummingbird Bakery website because it involves
various countries who possess this official website and thus people can directly sell or purchase
the products from different countries. Also, it provides flexibility to consumers to compare the
products among different country and selects the best quality products to enhance sales of the
firm. While, the interactivity feature is implemented poorly in the Hummingbird Bakery because
it affects operations of the firm in market (Li and Wei Xie., 2012). However, it provides
community to allow every individual to announce, inquire and discuss products among each
other. Therefore, it is essential for the business to increase interactivity among seller and
consumer and thus make the website more famous.
2. Improvement of action plan to reinforce the online presence
It can be assessed that business is required to develop clear and direct language so that
best action plan can be created. It also helps in building an effective online presence for
Hummingbird Bakery so that customers can easily click and view results regarding different
information about products and services. Also, firm is required to improve its quick reply to
FAQs so that it is the best thing to create an effective online presence. Further, it is essential for
digital marketing team of Hummingbird Bakery to regularly update its videos and links provided
so that customers can view them and improve their knowledge regarding preparing cakes,
cupcakes and pies (Wilson and et. al., 2012). It also assists in providing information about the
12

ingredient of the products so that online presence helps in attaining desired results. Also, it is
significant for Hummingbird bakery to provide attractive pictures of cakes and other items so
that business can influence customers to purchase products online and thus give tough
competition to the rivals.
Furthermore, it is essential for Hummingbird Bakery to carry out proper competitive
analysis method in order to determine firm's competitiveness. Hence, it assists firm to gain
competitive edge over rivals and thus attain desired targets (Lee, 2014). Here, Porter Five Forces
model has been assessed that helps in identifying the high or low level of threats of market entry,
substitute products, competitive rivalry, bargaining power of suppliers and customers. During the
fiscal year 2000, bakery industry retail sales faces tough competition as there were huge varieties
of products that involves 73% of beverages, 14% of food items and only 8% of cakes. Therefore,
it is essential for Hummingbird bakery to provide best quality products and services to its
customers in order to enhance the sales and profitability of firm in market.
Moreover, it can be assessed that it is essential for business to undertake the concept of
cloud computing that helps Hummingbird Bakery to practice such method by using a network of
remote servers hosted on the internet to store, manage and process the data rather than a local
server or personal computer. Also, management of bakery is required to develop effective
customer relationship management so that different strategies to be formed in order to manage
and assess customer interactions with employees and helps in retaining potential customers
within firm for long term (Fritz, 2013).
Also, ERP has been implemented within Hummingbird Bakery that is a software used by
businesses in order to collect, store, manage and interpret the data from different business
activities and achieve desired targets. Hummingbird Bakery is also required to adopt social
media marketing method such as Facebook, Google, Yahoo, Pinterest etc. that helps in attracting
customers upon a large scale. With the help of this method it assists business in enhancing the
sales through attracting young audiences (Bauer, Albrecht and Haber, 2015). Marketing team of
Hummingbird Bakery is required to undertake digital marketing method that helps in targeting
customers and making them interactive so that products and services can be delivered to them
effectively. However, through using digital technologies it helps company to reach and convert
the potential customers and retain them for long term. It also promoted brand image of firm and
engage new as well as existing customers in order to increase the sales of firm.
13

CONCLUSION
It can be concluded from the above study that online purchases possess various
advantages such as it saves the time and effort of customers to visit the market and purchase
products. With the help of online business, it provides firm a chance to deliver products to
customers at their doorstep. Also, it is essential for the company to form an attractive website
that involves pictures, product description and price so that individual can compare the same
with other rivals to buy the goods.
14

REFERENCES
Books and Journals
AlGhamdi, R. and et. al., 2012. Factors influencing e-commerce adoption by retailers in Saudi
Arabia: A quantitative analysis. International Journal of Electronic Commerce.14(7).pp.
15-19.
Bauer, H. H., Albrecht, C. M. and Haber, T. E., 2015. Enhancing Customer Trust in E-Commerce
Through Web Portals. Revolution in Marketing: Market Driving Changes. pp.57-61.
Brengman, M. and Karimov, P. F., 2012.The effect of web communities on consumers' initial
trust in B2C e-commerce websites.Management Research Review.35 (9).pp.791 – 817.
Chen, J. V., Chen, Y. and Capistrano, E. P. S., 2013. Process quality and collaboration quality on
B2B e-commerce. Industrial Management & Data Systems. 113(6). pp. 908–926.
Fritz, W., 2013. Internet-Marketing und Electronic Commerce: Grundlagen—
Rahmenbedingungen—Instrumente. Springer-Verlag.
Lee, G., 2014. E-Commerce, E-Business and E-Service. CRC Press.
Li, P. and Wei Xie., 2012. A strategic framework for determining e-commerce adoption. Journal
of Technology Management in China. 7(1). pp. 22–35.
Manzoor, A., 2010. E-Commerce. Amir Manzoor.
Roberts, M. and Zahay, D., 2012. Internet marketing: Integrating online and offline strategies.
Cengage Learning.
Wilson, A. and et. al., 2012. Services marketing: Integrating customer focus across the firm.
McGraw Hill.
Online
Floren, C., 2012. The Top 10 e-Commerce Challenges for Business Owners.[Online]. Available
through: < http://www.myecommerce.biz/blog/2012/03/the-top-10-e-commerce-
challenges-for-business-owners/>.[Accessed on 6th April 2016].
Rouse, M., 2014. E- Commerce. [Online]. Available through:
<http://searchcio.techtarget.com/definition/e-commerce >. [Accessed On 6th April 2016].
The Hummingbird Bakery Ltd, 2015. [Online]. Available through:
<http://www.192.com/atoz/financial/business/04436474/>. [Accessed on 18th April 2016].
15