Introduction to Business: Fra-Pa’s Frozen Yoghurt Shop Case Study

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INTRODUCTION TO BUSINESS
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Table of Contents
INTRODUCTION...........................................................................................................................3
Question 1: Evaluate Partnership as a business’s type reference to Frank Jones and Paddy
Jacksons Fra-Pas Frozen Yoghurt Shop..........................................................................................4
Question 2: Use the Porters 5 Forces to analyze Fra-Pa’s Yoghurt business and advice on how
they can achieve competitive advantage by managing the relationships with these forces............5
Question 3: Discuss any Three of the Macro environmental factors with particular reference to
how they can help improve the Frozen Yoghurt business...............................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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Introduction
Fra-Pa’s Frozen Yoghurt Shop is the aftermath of the partnership established by Frank Jones and
Paddy Jackson before eighteen months. The partners are in a dilemma whether to purchase in
bulk from cash and carry or to utilize fresh organic products for the yogurt. This business has
been established as a partnership of which an effective evaluation will be undertaken. Apart from
this, the model of Porter’s 5 forces will also be applied for gaining an insight into attaining
competitive advantage. Some macro environmental factors will be discussed for making
improvements within the partnership business.
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Question 1: Evaluate Partnership as a business’s type reference to Frank Jones and Paddy
Jacksons Fra-Pas Frozen Yoghurt Shop.
Partnership refers to the formal arrangement where two or more parties provide their cooperation
for common objective implying the management and operation of the business. The partners
involved in the business share the entire profits as per the terms and conditions being agreed
between them. Fra-Pa’s shop is a partnership where both the partners Frank Jones and Paddy
Jackson invested an equal amount of money, efforts, and expertise for making it a successful
venture. One of the biggest benefits of this partnership venture states the expertise of both the
partners in the hospitality sector. This would assist in operating the business more tactically and
effectively. The business has been running strongly from last few months that can be evident
from the sales revenue being enhanced rapidly (Sarmento, and Renneboog, 2016). It would not
be wrong to say that this business can be a successful venture due to many reasons. The expertise
of the partners, the location of the outlet, and the frozen yoghurt products contribute towards the
success of the partnership business. However, it should also be noted that this business lacks in
promotion and advertising that makes it less popular. The advertising and promotion of the brand
or business require a high amount of investment in terms of efforts, time, and money as well.
The business has been established as an ice-cream parlour which is specialised mainly in selling
the frozen yoghurt. It can be seen that such a business is unique in that vicinity as no other
business is engaged in selling frozen yoghurt. This implies that the business has opportunities to
develop goodwill and tap a wide number of customers. The business is also planning for the
development of diversified product ranges which would not result in conflict with the partnership
or business structure. The basic benefits of the business can be stated as knowledge, revenue, and
future growth of the business. As per these criteria, the business has become capable of
generating the adequate level of sales revenue and both the partners possess a good level of
knowledge in hospitality sector (Albers, et. al., 2016). By future business, it would be difficult
for the business to attain long-term growth since the competition would be increased rapidly as
there are chances of imitating the concept. Therefore it becomes mandatory for the business to
shift their focus significantly on the promotion and advertising of the business. Apart from this,
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the business would need additional human resources for the smooth functioning of the
operations.
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Question 2: Use the Porters 5 Forces to analyze Fra-Pa’s Yoghurt business and advice on
how they can achieve competitive advantage by managing the relationships with these
forces.
Porter’s 5 forces model implies the powerful tool adopted to understand the competitive intensity
of the business environment as well as the potentiality of the strategy being adopted. As per this
model, there are mainly five competitive forces having the capability of affecting the industry
significantly. This model would assist Fra-Pa’s shop in the business analysis along with the
attainment of competitive advantage. This model would be applicable in the business by making
Fra-Pa aware of how to maintain and manage sound relationships with these competitive forces.
For Fra-Pa shop, the following would be the key competitive forces of the industry that would
impact the business in different ways.
(Figure: Porter’s 5 Forces Model for Fra-Pa’s Frozen Yoghurt Shop)
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INDUSTRY
RIVALRY
BARGAINING
POWER OF
SUPPLIERS
Strong
THREAT OF
SUBSTITUTE
S
Low
BARGAIININ
G POWER
OF BUYERS
Low
THREAT OF
NEW
ENTRANT
Strong

(Source: By Author, 2019)
Bargaining power of suppliers: High bargaining power of suppliers indicates the selling of
supplies or raw materials at higher prices or low quality which further impacts the profitability
level of the business. Mainly such situation arises when either there is a low number of suppliers
or availability of few substitute raw materials (Mathooko, and Ogutu, 2015). Considering Fra-Pa,
the suppliers of organic raw materials or ingredients are low in quantity as well as this would
increase the selling prices of the frozen yoghurt. This would impact the demand of the frozen
yoghurt and reduce the business profitability.
Bargaining power of buyers: Strong bargaining power of buyers exerts when there are few
buyers, low switching cost, bulk purchasing, price-sensitive buyers, or availability of various
substitutes. Strong bargaining power of the buyer implies the selling of products at low prices or
high quality. Both situations affect profitability by increasing manufacturing costs. In the case of
Fra-Pa, it can be seen that there exists a low bargaining power of buyers as no other business
serves frozen yoghurt in that vicinity (Jurevicius, 2013).
The threat of substitutes: Availability of substitute products lowers the buyers switching cost in
case of product price rise. Such a situation leads to the reduction in the bargaining power of
suppliers as well as the market attractiveness. It can be realised that there is a low threat of
substitutes for Fra-Pa as there are numerous food venues, but substitutes of frozen yoghurt are
not available in the vicinity of Bullring Centre.
The threat of new entrants: This force signifies the easiness of entering into a particular market
or industry. The chances of rivalry increase when the industry possesses low entry barriers and
high profitability. Fra-Pa has been operating in an industry that contains low entry barriers that
increase the threat of new entrants for this partnership business. Such a threat becomes high due
to the low capital requirement for establishing the business in such an industry. Increased
customer loyalty and registered patents/trademarks can assist Fra-Pa in reducing the impact of
new entrants.
Industry Rivalry: Industry rivalry for Fra-Pa is not intense as there are no such competitors exist
and the industry is growing significantly (Adi, 2015). However, frozen yoghurt can be
substituted with other healthy products which intensify the industry rivalry for Fra-Pa. This
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business requires the development of diversified and unique products at attractive prices as well
as good quality.
Competitive advantage
As per the model, it can be said that for Fra-Pa, strong bargaining power of suppliers, low
bargaining power of buyers, low threat of substitute, and the strong threat of new entrants exist.
The business needs to focus on promotion and advertising on a large scale. Manufacturing of
frozen yoghurt from organic ingredients would be a strategic and unique move that would assist
in attaining competitive advantage and ensure long-term survival. It is vital to consider that these
products must be offered at the prices according to the customers with better quality.
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Question 3: Discuss any Three of the Macro environmental factors with particular
reference to how they can help improve the Frozen Yoghurt business.
(Figure: Macro-environmental factors for Fra-Pa Frozen Yogurt Shop)
(Source: By Author, 2019)
Economic factors: The economic factors that affect the business are comprised mainly of
economic growth of Australia, unemployment rates, the income of customers, and inflation rates.
The economic condition of Australia has been improving, and reduction in the unemployment
rate has been realised. This directly impacts the disposable income of the Australian people by
providing them with employment that further improves the standard of living (Musingarabwi, et.
al., 2016). This can be tapped as the opportunities by Fra-Pa where high prices can be fixed to
the products along with better quality.
Social factors: The key social factors for Fra-Pa are lifestyle attitudes, income distribution, and
health consciousness and others. The people of Australia have become highly conscious of their
health and lifestyle. This is because an unhealthy lifestyle has become a vital cause for various
diseases and health issues. Out of them, obesity has become the most common disease in
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TECHNOLOGICA
L
ECONOMIC
SOCIAL

Australia. Fra-Pa requires the inclusion of organic ingredients for the production of frozen
yoghurt. This would not only be healthy but also attract the other customers who are still
untapped by the business.
Technological factors: The technological factors for Fra-Pa involve innovation level, automation
of the process, technological awareness, and research & development. Incorporating innovation
and automation in the products and processes would assist the business in gaining a competitive
advantage as well as reducing the cost level (Frue, 2017). Research & development would lead
to savings in cost and implementing the latest technologies for marketing, production, and other
operations. However, Fra-Pa should consider the disruptive technological changes and ignore the
implementation of the technologies that become obsolete in quick time.
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Conclusion
Businesses such as Fra-Pa have the potentiality to survive effectively in the highly competitive
business environment due to the engagement in the products that are unique and not served by
others. This partnership can be considered in the light of success as it possesses an adequate level
of finance, knowledge, expertise, and potentiality as well. The model of Porter’s 5 forces would
assist the business in the identification of potential threats and powers that can affect the
profitability level of the business. The key factors that belong to the macro business environment
are technological factors, social factor, and economic factors as well. These factors affect Fra-Pa
frozen yoghurt shop to the large extent for which the business requires tapping the advantage of
the opportunities provided.
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References
 Adi, B., 2015. An evaluation of the Nigerian telecommunication industry
competitiveness: application of porter’s five forces model. World, 5(3), pp.15-36.
 Albers, S., Wohlgezogen, F. and Zajac, E.J., 2016. Strategic alliance structures: An
organization design perspective. Journal of Management, 42(3), pp.582-614.
 Frue, K., 2017. PEST Analysis Example for the Food Industry. [Online] Pestleanalysis.
Available at: https://pestleanalysis.com/pest-analysis-example-for-the-food-industry/
[Accessed on March 16, 2019]
 Jurevicius, O., 2013. Porter's Five Forces. [Online] Strategicmanagementinsight .
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed on March 16, 2019]
 Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and
other factors that influence the choice of response strategies adopted by public
universities in Kenya. International Journal of Educational Management, 29(3), pp.334-
354.
 Musingarabwi, D.M., Nieuwoudt, H.H., Young, P.R., Eyéghè-Bickong, H.A. and Vivier,
M.A., 2016. A rapid qualitative and quantitative evaluation of grape berries at various
stages of development using Fourier-transform infrared spectroscopy and multivariate
data analysis. Food chemistry, 190, pp.253-262.
 Sarmento, J.M. and Renneboog, L., 2016. Anatomy of public-private partnerships: their
creation, financing and renegotiations. International Journal of Managing Projects in
Business, 9(1), pp.94-122.
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