The Potential of SMEs in the U.K. Bakery Sector: Cakes Today

Subject: Case Studies
Pages: 15
Words: 4100
Reading time:
16 min
Study level: Master


The present presentation purposes to analyse the potential of SMEs in the U.K. bakery sector, and the various factors influencing their success. The industry experiences real competition and change like all the other industries. SMEs play a major role in the industry’s survival. Such SMEs need to analyse the environment and utilize effective change management initiatives to survive.

Benefits and Shortcomings of SMEs

SMEs are essential business establishments that facilitate rapid economic growth (Tsoukatos, 2020). The entities exhibit both merits and demerits. Some of the benefits of such economic establishments include small size that makes decision-making process easy and fast. Flexibility is also high due to the small size, while communication flow is easy. Limited resources and restricted market reach are some of the establishments’ shortcomings (Tsoukatos, 2020).

Company Analysis

Cakes Today Ltd is the organization of choice to analyse in this presentation. The organization is one of the best fairing SMEs in the U.K. bakery sector. The entity is family owned. Cakes Today in known for the preparation and delivery of quality and tasty cakes within hours (Cakes Today Limited, 2021). Being family-operated exposes the firm to noteworthy issues that need change. Market reactivity is a major challenge requiring solution in the firm (Moon and Lo, 2019).

Company Background

Cakes Today Ltd produces cakes of all kinds for the same day delivery. It was founded in the year 2013 by the Karsh Patel family, in the U.K. It manufactures different sorts of cakes with various tastes. The business organization has 100 employees. The overall management of the enterprise is under the family (Moon and Lo, 2019).

Corporate Culture

Cakes Today Ltd’s vision is to enrich families with flavours. Its mission is to offer affordable and quick-delivery tasty cakes for clients hosting memorable events. The company struggles significantly to meet such goals. That is because of the various underlying challenges that emanate from the organization’s culture. Being a family-operated firm, for example, makes it hard for the entity to give employees’ interests, particularly on aspects like participating in decision-making, significantly hard. Technology adoption is also another challenge that the entity faces. The issue mainly emerges from the founder’s desire to personally test and approve things personally, mostly using manual means. Disregarding workers’ feelings and doubting technology’s impact in promoting organizational growth are two major issues that the company needs to fix. Cakes Today operates mostly by reacting to the market, instead of being pro-change (Moon and Lo, 2019).

Organization Values

Cakes Today Ltd’s values include timeliness, passion, integrity, teamwork, quality, and safety (Moon and Lo, 2019). The attributes purpose to make the entity a market leader. Integrity, punctuality, and quality form the basis of the firm’s operations. The founder never tolerates delays in order processing delivery. The aspect makes the firm dear to many party folks who depends on its faster services (Horne, 2018). It is possible to place an order and receive the exact product within the same day. The speed, however, exists at the expense of pressure among workers (Moon and Lo, 2019).

Organization Structure

The company is using functional type of organization structure (Moon and Lo, 2019). Work is assigned to different departments headed by various mangers. The overall governance of the firm is centered on the founder and family head, Karsh Patel. The business organization has departmental heads responsible for the operations in the divisions. Employees are also categorized based on their specialization and skills (Marín-Idárraga and González, 2021). There is minimal interaction among employees in the various departments. Issues and concerns regarding each division are reported to the department managers, who then escalate them to the CEO. The executive, for example, takes too long to notice the grievances arising from the workers. Such at times lead to human resources issues with the potential to hurt the organization’s performance. The CEO believes that what workers mainly care about is fair remuneration, which the organization struggles to offer to the workforce, at times through borrowed funds (Moon and Lo, 2019).

Change Management Strategy

The presentation aims to identify some of burning issues eating SMEs, particularly in the U.K. baking sector. The work utilizes Cakes Today for such a purpose. Goksoy (2016) cheers problem identification, analysis, and evaluation as one of the most promising strategies to realize change within organizations. The scheme leads to the realization issues and their root causes for ease of solution. The change management strategy analysis covered in here will seek to determine the specific issues limiting technological innovations among SMEs and those leading to challenged HR management.

Problem Identification and Analysis

The present discussion utilizes Andriopoulos and Dawson’s (2018) model to investigate the intended aspects and SMEs. The two scholars provide one of the most effective schemes of relating environmental, macro-environment, and firm’s environment in the bid to understand the specific factors that that affect SMEs. Andriopoulos and Dawson’s (2018) paradigm offers an all-inclusive guide towards the appreciation of the relationship between change and situational factors. The model’s application stands to aid Cakes Today realize some of the key situational issues that cause struggles within the firm. As SME, Cakes Today ought to be enjoying some rare benefits that come with small size workforce and other related facets. Nonetheless, the organization keeps on facing challenges that put it in the red zone. The model thus stands to prove to the firm that assuming business-related technological interventions and human resources’ interests is dangerous and costly.

Macro-Environmental Analysis – PESTEL model

The PESTEL model focuses on the macro-environment factors affecting a firm and the industry it operates within. Such dynamics include economic, social, legal, environmental, political, and technological forces. Equity and equality, for example, form a major part of the U.K.’s bakery sector’s political force (Koukoutsis and El-Khoury, 2019). Other crucial political aspects affecting the industry include the shaky current government and its push for the Brexit policy. The nation currently faces significant pressure that expose it to the dilemma whether to quite or maintain the EU business block membership. The outcome of the undergoing campaigns and the Prime Minister’s stand constitute crucial political force that affect firms in the country. The nation also endeavors to enact and implement fair policies that disregard race and ethnicity (Moon and Lo, 2019). Organizations operating in the economy thus have to exhibit operational corporate social responsibility strategies to attain this goal. Tax payment further constitute crucial economic force, where all businesses in the U.K. have the obligation to disclose genuine records for the taxation purpose. The rising cost of business around the world due to COVID-19 further impacts the bakery sector adversely. Firms in the U.K. have to exhibit high levels of integrity to attain positive publicity. Disclosing genuine information regarding products’ ingredients, as well as taking care of the emerging health-sensitive consumers in the market form a major economic and social force in the market. Environmental conservation efforts further constitute a major place in every organization operating in the U.K. The Grocer (2019) says that embracing environmental conservation strategies depicts a business’s care to the environment and humanity. Firms in the U.K., therefore, have to release annual reports concerning their environmental conservation endeavors to win the public’s following, as well as, receive some government approvals. Firms in the U.K. also adopt technology to attain competitiveness. The facet (technology) is thus a must-have for the many entities purposing to make real profits by eradicating mistakes and errors, as well as boosting the quality of customer services (Grocer, 2019).

Macro-Environmental Analysis – SMEs’ Growth Opportunities

The point that SMEs like Cakes Today Ltd experience several environmental factors that impact their operations necessitates the utilization of existing business opportunities for growth. Adopting elements like process automation, for example, stands to help Cakes Today to use innovation to facilitate quick process flow. Entering the organic diet market also stands to help the SME to grow its revenues and solve the issue of limited resources (Koukoutsis and El-Khoury, 2019). Cloud computing would also be effective in enhancing proper data storage for the business.

Industry Environment Analysis – Porter’s Five Forces Scheme

Porter (2017) provides a set of five business environment analysis factors that view organizations from different perspectives and context. Sector-based rivalry is one of the factors proposed by Porter to measure the impact of the environment on an entity. The U.K. bakery sector exhibits high internal rivalry. The sector has some major players and very many small players. Amalgamations are rare in the sector, which companies compete on prices, quality, and customer and supplier relationships, and differentiation. The sector also exhibits reduced entry barriers. Small business require significantly low capital to start operations in the sector, while supermarkets offer ready and reliable distribution channels for the start ups in the industry (Moon and Lo, 2019). The sector experiences high threat of substitutes. Many U.K. citizens substitute bakery products with breakfast cereals, potatoes, and individually-baked products (Moon and Lo, 2019). Organizations shift prices to make going for the substitutes hard to make sales. Lastly, the U.K.’s bakery industry experiences increased customer bargaining power, and reduced suppliers’ bargaining power. The availability of many small bakeries gives supermarkets, hotels, and individual consumers increased power to make choice on where to buy, while the existence of many raw material suppliers makes individual supplier’s impact low (Anwar, 2018).

Industry Environment Analysis – business threats

The use Porter’s five-force model reveals several threats that Cakes Today Ltd experiences while operating in the U.K. bakery sector. Such threats include economic uncertainties, high costs of operations, enactment of unfair business policies, and stiff competition. Other risks include the emergence of global pandemics that affect workers’ health and wellbeing, as well as employees’ safety (Kumar, Singh, Harish, and Bhavish, 2021). Such threats impact the firm adversely by making it hard for the entity to plan appropriately.

Internal Environment Analysis – VRIO Scheme

VRIO is a tool of analyzing a business’s internal environment. The model looks into an entity’s operations’ value, organization, imitability, and rarity (Miller, 2010). Cakes Today has a robust brand in the U.K.’s bakery sector. The firm’s outstanding punctuality, quality, and flavors prove some of its major values. Cakes Today’s food products are a valuable resource because they are highly differentiated, thus increasing customers’ perceived value regarding the products. Employees working for the firm are also valuable resources. A majority of them exhibit rare product and industry knowledge, thus giving Cakes Today greater value. Better still, the company’s distribution network is highly valuable. The facet allows the firm to meet customer needs within hours, thus giving it some rare competitiveness. However, Cakes Today’s financial and organizational culture are non-valuable resources. The company struggles financially, while its culture assumes key workers’ concerns, leading to reduced investment potential and commitment levels, respectively (Alimohammadirokni, Emadlou and Yuan, 2021). Food products, distribution channel, and employees are the only rare resources for Cakes Today (Moon and Lo, 2019). The company’s formulations and tastes are not common the market, while the ability to provide quality cakes within hours is unique for the organization. Having over ninety percent of the employees exhibiting over ten years experience also gives the firm significant rarity (Moon and Lo, 2019). The company’s financial resources are, however, not rare, according to the VRIO analysis (Moon and Lo, 2019). The distribution channel, patents, formulations, and workforce quality are costly things to imitate. Many young bakeries can never realize what Cakes Today has on these domains. However, the company’s financial resources are poor and many organization beat the firm on such. Lastly, the patent and distribution networks for Cakes Today are highly organized, which the financial resources are poorly organized. The company’s rare, imitable, organized, and valuable resources gives it substantial competitive advantages that make the entity a major force in the sector (Moon and Lo, 2019).

Internal Environment Analysis – Company Strengths and Weaknesses

The VRIO model analysis depicts significantly interesting findings about Cakes Today Ltd. The company fairs significantly well on matter customer services, products’ quality, and supply chain reliability. Nonetheless, Cakes Today fairs badly concerning workers’ protection and remuneration and the utilization of technology. The weakness mainly comes from the entity’s limited resources. The various weakness further affect the firm negatively by deflating the strengths (Moon and Lo, 2019).

Change Management Plan

Cakes Today Ltd requires an appropriate change management scheme. The point that there exist several models for this purpose demands that organizations vet and utilize only the models that pass some basic tests. Lewin’s three-stage change process is per excellent of such vetting tools. The model proposes a set of three phases of modification to a firm’s structure. Such stages include the freezing, refreezing, and unfreezing (Crosby, 2020). Freezing involves the disruption of an organization’s status quo. Lewin appreciates that every change involves pain. The disruption aspect helps firms and managements to question their past and present dealings. Change then comes when the management doubts their past and present operations. The model then re-establishes calmness by creating a new normal at the refreezing phase (Crosby, 2020).

Change Management Strategy – Lewin’s Model Application

Cakes Today Ltd needs to adopt change to deal with its weaknesses better. Lewin’s model shows that the organization exhibits forces that both support the change, and others that oppose the transformation. High competition from the other market players and the desire to reduce operation costs constitute the two principal forces that require the firm to change. Limited finances and the desire to maintain control, however, oppose the change (Moon and Lo, 2019). Competition from rivalry businesses is the main force in the market, thus the awarding of the highest score, while global pandemics influence the market moderately. Resources limitation, however, receives the highest rating as an opposition to change because of the entity’s small size, meaning that the will to change might be there, only for the entity to lack the necessary funds for the change (Moon and Lo, 2019).

New Innovation and Adoption for Technology to Tackle Threats from Large Organizations

Enterprise Resources Planning (ERP) system is a key technological innovation that Cakes Today requires to realize growth and manage the excessive competition in the industry, particularly from the large players. Cakes Today’s human resources are rare and highly valuable, based on the VRIO analysis model. What the asset requires is proper management through effective technological tools to take the company where it should be (Crosby, 2020). The ERP scheme is one of the few technological facets with the ability to make such possible. The system is crucial in improving entities’ efficiency, which Cakes Today struggles with significantly. The company, for example, finds it hard to manage its various tasks effectively to boost its competitive edge. That is why an Enterprise Resources Planning (ERP) software is a must-have in the business. ERP schemes help organizations to integrate their operations into a unit force. The systems, for example, makes sales and decision-making processes efficient and timely. Cakes Today’s employees are highly informed about the market. The workers’ knowledge can be utilized to boost the entity’s success. However, the CEO’s desire to control everything makes this aspect hard to achieve. Combining the ERP software adoption with an effective process improvement tool, like Work-out, is a sure way of making Cakes Today realize real change and growth.

Technology Adoption for Rivalry Management – Market force path

It is crucial for Cakes Today Ltd to ensure a balance between new technology adoption and market forces implementation to manage the piling pressure from large organizations in the bakery sector. The company, for example, needs to pay significant focus to the emerging cause marketing trend and purpose to adopt it. Cause marketing is a strategy that helps organizations to convert their products from mere items that can be competed using elements like price and quality variations, into a cause. Companies like TOMS Shoes, in the U.S., exhibit an excellent understanding of this aspect. The entity is famous for the ‘One for One’ marketing strategy, where the firm donates a pair of shoes to a need child around the globe whenever a customer purchases a pair from the business. The move enables customers to serve at least two purposes by buying products from TOMS. Customers, for example, get high quality shoes for their personal use, while also serving their philanthropic need, buy making a purchase at TOMS. Cakes Today stands to benefit highly by adopting such a market strategy. The company can start by donating part of its annual income or cakes for some identified street families , whenever a customer purchases one. Doing such will help Cakes Today to convert its products from mere compete-able items into a cause, thus helping the firm to manage pressure from many large organizations in the sector (Moon and Lo, 2019).

Change Agents

Technological agents of change are innovative factors that firms or employees of organization find it necessary to adopt to tackle more sophisticated tasks that old strategies cannot solve at times. Technological agents often handle issues to do with process efficiency. For example, Cakes Today’s outstanding brand and reliable distribution channels leaves the firm struggling with efficiency issues. The two elements fall under the market-based agents, because they seek to meet clients’ interests and desires. Nonetheless, Cakes Today’s efficiency issue can be solved through the adoption of the emerging business technologies. The Enterprise Resources Planning (ERP) scheme is one of the must-implement technological aspects for Cakes Today. The invention stands to promote efficiency in the organization, as well as incorporate employees’ issues in the entity’s decision-making process, thus solving one of the most perturbing issues at the organization (Crosby, 2020).

Change routes

Customer demands and environmental issues are critical market forces that Cakes Today embrace currently. The aspect accounts for the entity’s well-developed distribution channels that the firm realizes through the combination of technological means and the operation of large fleet of delivery vehicles and workforce. However, the point that the investor utilizes manual systems when making decisions leaves many concerns from the workforce’s side that can aid in improving the distribution line even more. Cakes Today thus needs to adopt new technology, like the ERP system, to integrate all the business aspects and promote efficiency (Pathak, 2018).

Business Direction of Change Management

Cakes Today Ltd currently embraces market forces to realize competitiveness. The entity needs to transform into a technology-based entity to realize even more competitive capacity. This part suggests possible things for the firm to realize a balance between market and technology agents of change. Embracing new ideas is a tactic that the firm needs, other than remaining reactive. The other strategy concerns process automation through the adoption of digital models. The firm further needs to remain sensitive to the market, as well as strike a balance between market and tech agents for assured success (Moon and Lo, 2019).

Strategic Choice Method

Strategic choice method is a model that purposes to help parties come up with the most appropriate change management tactics. The approach utilizes several factors that it evaluates to determine the specific sources of uncertainty in a firm. The strategic choice method is thus a reasoning framework exhibiting four styles of idea conceptualization that include designing, shaping, comparing, and selecting (Pathak, 2018).

Shaping Facet

Cakes Today Ltd requires change that is influenced by several factors. Such (factors) include financial constraints, competition, organizational culture, skills, and employees’ interests. All these factors are interrelated. Understanding, for example, that work culture influences almost all the other factors makes it easy for the firm to act appropriately. The shaping method helps in such determination. Cakes Today’s management needs to stop using conservative policies to retain business control. The entity is family-operated and always intends to maintain the status quo. The culture is significantly myopic and leads to demotivation and poor performance. Consequently, Cakes Today exhibits substantial struggles to make things work under the current environment. Paying higher salaries is one of the erroneous tactics that the firm utilizes to motivate and retain employees. That occurs despite the fact the entity keeps on missing its revenue targets, thus exposing it to massive borrowing (Moon and Lo, 2019).

Designing Facet

The shaping aspect operates in tandem with the Physics law of action and reaction forces. The aspect believes that every action generates some response or reaction. That is why this facet is very crucial in choosing the correct change implementation path. The designing facet appreciates that cost has an implication on approval, while uncertainty affects configuration (Pathak, 2018).

Model Comparison (Greggs)

Greggs is one of the leading players in the U.K.’s bakery industry. The company’s success results from several aspects. Examples of such elements include the adoption and effective utilization of technology. Greggs’ focus on the need, as opposed to the means, is a key factor behind the organization’s use of rare technologies that many players in the sector do not have (Gregg, 2021). The company operates in the same market as Cakes Today. Greggs, is however, a large organization that misses the benefits associated with SMEs. Embracing technology, however, creates the difference between the two firms. Greggs offers its employees autonomy. The organization also treasures openness among workers. Such aspects give Greggs the ability to create a pool of bright ideas that work well for the entity. Cakes Today can also benefit from this culture. That is especially so because Greggs’ success never comes from its financial muscles per se, but from its operations strategies (Gregg, 2021).

Model Comparison (Edinburgh’s The Beach House Café & Bakery)

Edinburgh’s The Beach House Café & Bakery also operates in the U.K.’s bakery sector. The entity provides an example of businesses that succeed through the use of technology and innovation. Quality is the number one competing aspect for this firm. Edinburgh’s The Beach House Café & Bakery combine both computer-monitored in-process controls to ascertain the quality of their diverse line of products, while also giving customers the freedom to review and rate the firm online (Moon and Lo, 2019).

Similarities and Differences among Greggs and Edinburgh’s The Beach House Café & Bakery

Greggs and Edinburgh’s The Beach House Café & Bakery do not occupy the top positions in the U.K.’s bakery market by default. The two organizations put in substantial efforts to realize the success that post. Greggs and Edinburgh’s The Beach House Café & Bakery exhibit noteworthy similarities that can explain this issue. The two firms are family owned public businesses, for example. Being in operation for years and embracing customer care also make the organizations similar. Greggs and Edinburgh’s The Beach House Café & Bakery further embraces openness, unlike the case of Cakes Today. The willingness to go public also says a lot concerning the two firms’ preparedness to give away the entity’s private owners and control. Cakes Today can learn so much from the two organizations. Of much importance to note is the point that Greggs and Edinburgh’s The Beach House Café & Bakery never started operations with immediate success. Learning from them gives Cakes Today a significant opportunity to become a real market force in the future. Cakes Today can start going the two market leaders’ way by embracing technology and effective human resources management strategies (Moon and Lo, 2019).

Cakes Today’s Choosing Facet

Cakes Today Ltd needs to make these choices to succeed. Embracing gradual change and accepting technology are some of the principal choices that the firm must make. The others include training workers and adopting the right organizational culture to support the change resolutions (Moon and Lo, 2019).


Cakes Today Ltd needs to realize increased competitiveness for a better future. The goal is, however, impossible to come true under the current condition. Change is necessary if the organization intends to realize its forthcoming objectives. The organization opts to become a market leader in the U.K.’s bakery sector. The failure to appreciate employees’ interests, embrace technology, and adopt a new culture is punishing the firm significantly. It is either the firm chooses to make the hard decision and survive, or choose to remain conservative and risk dying slowly with time (Moon and Lo, 2019). Cakes Today can succeed immensely by combining both ERP system adoption and cause marketing. The former facet will make the company realize improved efficiency and proper process management for success. The ERP paradigm also stands to help the firm incorporate the missing employees’ contribution aspect in making key business decisions that can bring about change. Moreover, cause marketing will help in converting the company’s products into a cause, which is hard to compete using price and quality strategies that the other players utilize to manage the business. Cakes Today needs to adopt these new strategies and watch the firm grow beyond its imaginations.

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