Friday 29 July 2011

Unit 5B: Exercise 5-5 Long Run Costs and Economies of Scale

The business I would create would be an ice cream shop that provides fresh onsite gourmet ice cream following strict standards to produce the best and most high quality product for our customers. The name of the ice cream parlor would be Udderly Ice Cream. The plan will be to establish future franchises however, the first location will be a location established in the lower mainland of British Columbia. Research will be conducted to determine the best high traffic area for the first location (i.e. Schools, parks or shopping malls) in order to capitalize on market share. The competitors we would be targeting to steal market share from would be Ben & Jerry’s, Baskin Robbins.

The business size will be a small take out style venue and will have a small amount of stools along the front window area with a narrow table top for some patrons to sit and enjoy (no more than 10-15). The balance of the store will be dedicated to ice cream production in the back and space for the customers in the front to view the products in the freezer area. The back production are need not be to large as all of the product will be manufactured from one standard base product and all of the flavor varieties (from traditional to wacky like jalapeno-bacon, anything with bacon is good).

The short run costs would be labour, rent/lease, utilities, ice-cream making equipment and raw products. The long run cost would be very similar in that the initial concept is to keep the same store size and quantity of labour at future franchise locations. However, the best long run opportunity may be the sourcing of raw products for production.

An example of a local Edmonton based business with a similar model would be the Marble Slab Creamery: Web Page http://marbleslab.ca/index.php/creamery

Marble Slab Creamery Strengths:   1). Unique frozen slab technique of preparation
                                                      2). Uses the freshest and highest quality ingredients
                                                      3). A unique experience as soon as you enter the store
                                                      4). Offers portable slab catering service

Marble Slab Creamery Weaknesses:   1). Product line is very similar to competition

No comments:

Post a Comment