Strategic Management of Twelve Cupcakes: Industry and Company Analysis

This report provides a comprehensive strategic management analysis of Twelve Cupcakes, a cupcake chain initially based in Singapore. The report begins with an overview of the confectionery industry, including an analysis using Porter's Five Forces framework to assess the bargaining power of sup...Read More

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1STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
Table of Contents
2.0 Industry Business Description..................................................................................2
2.1 Porter’s Five Forces.................................................................................................2
2.1.1 Bargaining power of suppliers..............................................................................2
2.1.2 Threat of Substitutes.............................................................................................2
2.1.3 Bargaining power of buyers..................................................................................2
2.1.4 Threat of new entrants...........................................................................................3
2.1.5 Rivalry among competitors...................................................................................3
3.0 Company Description...............................................................................................3
3.1 Type of Business......................................................................................................3
3.2 Legal Structure.........................................................................................................3
3.3 History, Mission and Goals......................................................................................4
3.4 Ownership Structure.................................................................................................4
8.0 Management Considerations....................................................................................4
8.1 Personnel / Sales Force Factor.................................................................................5
8.2 Business Advisers....................................................................................................5
8.3 Contingency Plans....................................................................................................5
References......................................................................................................................7

2STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
2.0 Industry Business Description
The confectionery industry of Singapore had recorded total revenues of around 230.2
Million Dollars in the year 2017. The annual growth rate of the organization was around
2.5% between the year 2013 and 2017. The market consumption in the industry had also
increased by 1.5% from 2013. The confectionery based market operates with the help of retail
sale of products like, gum, chocolate and sugar. The trend which is rising in the confectionery
industry of the country is based on the demand for health and wellness (Doz 2017).
2.1 Porter’s Five Forces
Porter’s Five Forces Framework will be useful in analysing the situation of the
industry in which Twelve Cupcakes is operating.
2.1.1 Bargaining power of suppliers
According to Engert, Rauter and Baumgartner (2016), the different suppliers in the
confectionery industry of South Korea do not have high levels of negotiating power as the
markets are developed in an effective manner. Furthermore, this has been seen and analysed
that the price changes in raw inputs can affect the products of bakery.
2.1.2 Threat of Substitutes
The confectionery market consists of many different substitutes for the products
which are offered to the consumers. The baked foods can thereby be replaced by other food
items which already exist in the market (Engert, Rauter and Baumgartner 2016).
2.1.3 Bargaining power of buyers
The buyers or consumers of the confectionery industry including the supermarket,
hotel based chains and grocery stores are able to affect the levels of profitability and revenues
due to the presence of huge number of small bakeries.

3STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
2.1.4 Threat of new entrants
According to Engert, Rauter and Baumgartner (2016), it has been analysed and
identified that there are different kinds of barriers which exist in the confectionery based
industry are quite low. The small business based organizations are able to enter within the
industry quite easily. The two major determinants for the success of a new organization are
ability of the leaders and ability to build the brand recognition (Frynas and Mellahi 2015).
2.1.5 Rivalry among competitors
According to Engert, Rauter and Baumgartner (2016), the levels of rivalry in the
industry are high as many players exist in the confectionery market of Singapore. The small
bakeries are also able to provide high levels of competition to the different organizations in
the industry. There are different kinds of supermarkets along with other major competitors
which can be a huge threat for the Twelve Cupcakes which will be ineffective in nature in
managing the overall efficiency.
Summary
From the Porter’s Five Forces Model Analysis, this can be analysed that there are
different kinds of threats along with opportunities for the Twelve Bakery in the market of
Singapore. This can be seen that the suppliers in the South Korean market is less and the
price of the raw materials are huge which can become a huge threat for the respective bakery
shop along with the business of the bakery.
From the above analysis of the Porter’s Five Forces Analysis, this can be analysed
that this will be helpful for the Twelve Cupcakes while moving from Singapore to South
Korea. With the help of the same, this has helped the company in understanding the nature of
the different competitors who are present in the South Korean market and this will help them
in identifying the different strategies which will be beneficial for the overall success of the

4STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
firm in the respective kind of environment in South Korea. Furthermore, rivalry among the
existing competitors have been analysed which can help Twelve Cupcakes in managing the
overall efficiency of the organization in an appropriate manner which will help them in
becoming aware of the political and other legal risks which can affect their sales and
profitability in the South Korean market. There can be availability of the different substitutes
in the South Korean market which will be beneficial for the Twelve Cupcakes which will be
helpful for them in analysing the relative performance of the different substitutes in an
efficient manner.
Moreover, the presence of the different substitutes can be effective in nature which
will be beneficial which will be helpful in analysing the threat of the forward integration by
the different suppliers in the South Korean market along with backward threat of integration
of the firms can be analysed by the Twelve cupcakes company as well. Lastly, the volume of
the buyers has been analysed in an effective manner which will be beneficial for analysis of
the leverage of the bargaining of the company or the buyers in the market of South Korea.
Moreover, this can be analysed and identified that the rivalry is high in the market of
bakery business which can be of huge threat for the business in a negative aspect and this will
be creating negative impact on the bakery shop as well. Since, there is no such new entrants
in the firm, this can be seen that there is a smaller number of competitors in the market which
will be beneficial for the overall growth of the Twelve bakery shop as well.
From the viewpoint of the threat of the different substitutes in the market, this can be
analysed and seen that there are different other kinds of bakery shops which can be a huge
threat for the respective bakery named Twelve Bakery and this will be helpful in gaining
competitive advantage. The Porter’s Five Forces Analysis has therefore helped in managing
the overall effectiveness of the firm in an efficient manner.

5STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
Therefore, the entire Porter’s Five Forces Model has helped in managing the different
kinds of aspects such as threat of the substitutes and the new entrants wherein this will help in
managing the overall effectiveness of the firm and managing the different aspects.
3.0 Company Description
3.1 Type of Business
As per Hanson et al. (2016), the Twelve Cupcakes is a cupcakes chain which has its
operations in Singapore. The organization was established by Jaime Teo and Daniel Ong in
the year 2011. The food items which were developed by the organization were mainly based
on the food palate and choices of Asian people. First outlet of Twelve Cupcakes was started
in the United Square Shopping Mall (Twelvecupcakes.com. 2018).
3.2 Legal Structure
Twelve Cupcakes is owned by an organization named Dhunseri Group which started
its operations in the year 2011. A dine-in café was thereby established by the organization in
the year 2014 and operates 29 stores in 4 countries among which 16 stores are situated in
Singapore (Twelvecupcakes.com. 2018).
Figure 1: Company Logo

6STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
(Source: Twelvecupcakes.com. 2018)
3.3 History, Mission and Goals
The operations of Twelve Cupcakes had started in the year 2011 and the growth rate
of the organization has been quiet high since its inception. The major reason behind the huge
following of the organization is based on the brand promise related to the delivery of freshly
baked products to the consumers. The cupcakes which are provided which are offered by the
organization have proved to be fluffy in nature and highly pleasing to the palate as well
(Twelvecupcakes.com. 2018).
Figure 2: Twelve Cupcakes
(Source: Hanson et al. 2016)
The mission of Twelve Cupcakes is to provide the best cupcakes to the consumers and
to maintain the levels of freshness as well.
The major goal which has been set by Twelve Cupcakes is based on the developing
unique recipes for the cupcakes in order to differentiate the products from others in the

7STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
industry. The company also aims at reaching the consumers with the help of its physical
stores and the online stores as well (Hanson et al. 2016).
3.4 Ownership Structure
The stores of Twelve Cupcakes had been operating under the administration of the
two founders namely, Jaime Teo and Daniel Ong. However, in the year 2016 the chain was
acquired by the Dhunseri Group after the divorce of the owners (Twelvecupcakes.com.
2018).
8.0 Management Considerations
The levels of competition which are being faced by Twelve Cupcakes in the
confectionery based industry of Singapore can be countered by the organization with the help
of proper management of the following factors,
 Development of effective regulations
 Adaptability to the changing needs of consumers in the industry (Hill, Jones
and Schilling 2014)
 Management of the talent which is a part of the organizational operations
already
8.1 Personnel / Sales Force Factor
Hanson et al. (2016), has commented that the overall hierarchical organizational
approach is currently used by Twelve Cupcakes which can be replaced by flat structure. The
issues related communication can be solved with the help of implementation of the flat
organizational structure in South Korea. The managers will be able to communicate with the
followers in an effective manner with the help of this structure (Lasserre 2017).

8STRATEGIC MANAGEMENT OF TWELVE CUPCAKES
8.2 Business Advisers
The primary business adviser of Twelve Cupcakes is Dhunseri Group which has
acquired the organization in the year 2016. The group will be able to continue the profitable
operations of the organization with the help of its resources and products (Wheelen et al.
2017).
The secondary business advisers of Twelve Cupcakes are the local bakeries in South
Korea which are operating in the industry for a longer period of time and are able to provide
the company with effective advice in order to improve the products which are offered to the
management (Meyer, Heidi and Meeks 2017).
8.3 Contingency Plans
Contingency plan is important for the purpose of maintaining the operations of
Twelve Cupcakes in South Korea. The complex and massive market of South Korea can
affect the organization in many different ways. Twelve Cupcakes can start its operations in
South Korea by using low numbers of employees in different areas. The company needs to
develop a strategy of exit from the market if the operations and the products are not
successful. The selection of an organization with which Twelve Cupcakes can merge its
operations also needs to be decided beforehand in order reduce the levels of risks (Morschett,
Schramm-Klein and Zentes 2015).

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References
Doz, Yves L. "Strategic management in multinational companies." In International Business,
pp. 229-248. Routledge, 2017.
Engert, Sabrina, Romana Rauter, and Rupert J. Baumgartner. "Exploring the integration of
corporate sustainability into strategic management: a literature review." Journal of cleaner
production 112 (2016): 2833-2850.
Frynas, Jedrzej George, and Kamel Mellahi. Global strategic management. Oxford
University Press, USA, 2015.
Hanson, Dallas, Michael A. Hitt, R. Duane Ireland, and Robert E. Hoskisson. Strategic
management: Competitiveness and globalisation. Cengage AU, 2016.
Hill, Charles WL, Gareth R. Jones, and Melissa A. Schilling. Strategic management: theory:
an integrated approach. Cengage Learning, 2014.
Lasserre, Philippe. Global strategic management. Macmillan International Higher Education,
2017.
Meyer, G. Dale, Heidi M. Neck, and Michael D. Meeks. "The entrepreneurship‐strategic
management interface." Strategic entrepreneurship: Creating a new mindset (2017): 17-44.
Morschett, Dirk, Hanna Schramm-Klein, and Joachim Zentes. Strategic international
management. Springer, 2015.
Twelvecupcakes.com. 2018. "Welcome To Twelve Cupcakes". Twelvecupcakes.Com.
https://www.twelvecupcakes.com/about.htm.
Wheelen, Thomas L., J. David Hunger, Alan N. Hoffman, and Charles E. Bamford. Strategic
management and business policy. pearson, 2017.

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