Opening a New Donut Shop near an Established Donut Shop

Running head: MANAGEMENT
Management
6/9/2019

MANAGEMENT 1
Scenario (b). Opening a new donut shop near an established donut shop
Introduction
The intent of this report is to discuss about the position and situations faced by a
Donut shop when being opened near as established donut shop. The report high highlights
this with the help of different models that is SWOT analysis, Porter’s Generic Strategies.
Porter Five Force Framework and Value chain model.
Swot Analysis
Strength
The major strength of the new donut shop will be its variety of donut for the customer
and will also be established as a coffee house.
The business has planned to have an attractive infrastructure which will be majorly
focusing and encouraging people to be environmental friendly (Lagas, 2015).
Weaknesses
The owner of the business has limited knowledge about how to operate a business
because in his past he has always been in the service industry.
Opportunities
The major opportunity for the new donut store will be to attract maximum number of
customers with its attractive infrastructure and tasty donut.

MANAGEMENT 2
Threats
The major threat for the donut shop is competition from existing donut shop which
has already covered the nearby area and trust as well as loyalty of the customer (Smith,
2019).
Porter’s Generic Strategies
Focus Strategy – Under Focus Strategy the Donut Shop will be majorly focused
towards providing different variety and flavours of donut to its customers. Porter’s Five Force
Framework
Cost Leadership Strategy – Under this, the business will offer donut and coffee to its
customer at low rates in comparison to other donut shops available at near location. This will
help business in snatching the market share as well as customers of the existing players
(Scheele, 2014).
Differentiation Strategy – The donut shop will differentiate its donut from its
competitors by adding different flavours and using natural and organic ingredients while
baking the donuts while taking into account the health of its customers.
Porter Five Force Framework
Threat of Substitute
The substitute product threat for Donut shop is low because it offers donut that is
baked using natural and organic ingredients.
Threat of New Entrant
The entry of new players is easy due to limited barriers to entry, which makes this
threat intense for the business (Burns, 2016). However, considering the natural and organic
nature business will experience low threat of new entrant.