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									Alex Milovic
MNGT 3280
Amy’s Bread Case study
April 5, 2005

                                       Amy’s Bread

Strengths: Amy’s entrepreneurial spirit; Toy Kim Dupree-excellent right-hand manager;
Already has about 50 wholesale customers, plus 30 on a waiting list; Company is finally
turning a profit; Positive work environment (5 day work week, better pay than
competition, benefits package, 401(k) plan, employees allowed to speak freely, low
turnover); Retail business allows for higher profit margins, and now represents 25% of
Amy’s business; Good niche product mix-high quality bread products, micro-bakeries;
Makes herself available to the press/public, leads to word of mouth advertising; Can now
secure bank financing due to Amy’s proven track record; Wholesale business
(representing 75% of the business) is more stable than retail business.

Opportunities: Much higher profit margins in high-end breads (black olive, apple
walnut rasin-$2.40 wholesale, $3.40 retail profit with the high-end breads vs. $1.71
wholesale, $2.60 retail without high-end breads); Retail business (currently 25% of
business) allows for higher profit margins and payment is only in cash; Hiring another
manager could allow Amy more time to run the company; Buying 31st street location
would allow for production facility expansion and the ability to cater to customers
currently on the waiting list; Leasing the 15th street location could allow both retail and
production expansion.

Weaknesses: Bakery industry is highly competitive with low wholesale profit margins;
NYC locations are very expensive; Higher labor costs due to hand-production techniques
(35% of CGS); Ingredient prices are volatile; Ingredients are more expensive than the
competition’s; CGS is 65% of net sales; Competitors can enjoy better economies of scale
due to automated production and cheaper ingredients; 75% of the business is through
lower-profit wholesalers; Current production location is too small to meet growing

Threats: Dieting trends (i.e. Atkins diet) could affect consumer demand for bread.

Mission: To produce high-quality, handmade breads for wholesale and retail customers
through our retail locations and door-to-door deliveries.

Objective: Amy’s Bread has seen steady growth over the last few years. This success
has overextended both the employees and the warehouse space. Amy is looking to move
operations to one of two locations: a building on 31st street, or one on 15th street. The 31st
street location would allow Amy to expand her wholesale business and allow her to
invest in a property instead of leasing. Amy should also look into adding a manager to
allow her the time to focus on the overall business. Her most profitable bread lines are
the high-priced breads, she should look into increasing the number of high-priced bread.
Eventually, Amy should consider opening small retail locations in New York City.

Action Plan:
Who                    What(goal)                When           How
Amy Scherber and       Hire new assistant        3-6 mo.        Recommendations from
Toy Kim Dupree         manager                                  Amy, Toy, or her
                                                                business contacts.
Amy Scherber           Purchase 31st street      3-6 mo.        Secure funding through
                       location                                 bank loan, personal loan,
                                                                and current savings to
                                                                purchase $300,000
Amy Scherber           Purchase 3 retail         3 mo.-2 yrs.   Purchase small retail
                       kiosk/booth locations                    locations in high-traffic
                       over the next 2 years                    areas to increase retail
                                                                business. One in
                                                                Rockefeller Center mall,
                                                                one in the village, one to
                                                                be determined.
Amy Scherber           Purchase 4 additional     6 mo.          Purchase vehicles with
                       trucks to increase                       Amy’s Bread logo to
                       deliveries                               increase delivery speed
                                                                and capacity.
Amy Scherber           Increase percentage of   2 yrs.          Grow business through
                       retail sales from 25% to                 additional high-priced
                       35% over the next 2                      items and additional
                       years                                    retail locations.
Amy Scherber, Toy      Introduce 5 new high-    3 mo.-1 yr.     Create new, high-quality
Kim Dupree             end breads over the                      bread products. These
                       next year.                               will be sold in both retail
                                                                and wholesale channels.
                                                                This will increase the
                                                                average profit margin.

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