Analysis Of Fra-Pa’s Frozen Yoghurt Shop: Partnership, Macro Environment, And Competitive Advantage

Pros and cons of a Partnership Firm for Fra-Pa’s Frozen Yoghurt Shop

There are many types of business organizations like a sole proprietorship, partnership, private, and public company. Considering Fra and Pa’s shop, it is a partnership firm. Partnership firm is a business that is owned by more than one individual; with the name of “firm name.” It is not considered as a separate entity different from its partners that are members. The features of the partnership firm, that are also observed for Fra- Pa’s yogurt shop include:

• A number of people – the number of people to run a partnership firm is more than one person. In this case, there are two-parters involved
• Contractual relationship – the partnership firm is created with the legal relationship, either in the written or oral agreement between the two in this case.
• Profit and loss sharing – in the partnership business, the profit and loss of the company are shared according to the percentage of share in the firm. In this case, it can be said that both the partners are equal sharing in the firm, whether it is profit or loss scenario
• Restriction on transfer of shares – the shares of any one partner cannot be transferred to any outsider without another consent
• Unlimited liability – the liability of partners are not limited to the firm, as in the case of a company(Lee & Oh, 2017)

This yogurt partnership shop has various pros and cons. Here, Pros of being a partnership firm for Fra- Pa’s shop are

• Ease of formation – forming a partnership firm was not very difficult, considering Birmingham legal authority.
• Capital enlargement – instead of a single person, two individual are involved in this form, which leads to an increase in capital, because both of them introduce capital to the firm.
• Combination of skill – both the individual have a different set of skills and talent, for example, one being chef has cooking talent, and another being hospital manager, consist of skills to manage things within the firm.
• Diffusion of risk – since two individuals are involved, the risk to the firm is distributed, and have mutual support on one another(Von, 2014)

Cons of the same include:

• Unlimited liability – like the company, the liability is not limited to the firm, it is unlimited for Frank and Paddy
• Divided authority – the authority is divided among the two individual with a different perspective, this could lead to conflict among the two
• Delay in decision making – since the decision is unanimous for both the individuals, this may take time, and lead to delayed decision making
• Risk of implied authority – this is the major disadvantage is that the authority is implied and if one incompetent person among the two can take wrong decision for the whole firm(Course, 2015).

Macro environment analysis 

The factors to study the macro environmental analysis of Birmingham for Fra- Pa’s to improve the business of frozen yogurt are:

1. Socio/ Cultural factors

These factors included the social and cultural factors exist in the external environment in the Birmingham city of United Kingdom. These factors are very vital when it comes to the food industry because of it, the culture that influences residents to perceive the taste and preference of customers. Some aspect of these factors includes:

• Busy lifestyle – a lifestyle of UK residents are very busy, the impact of this aspect leads to an increase in the use of ready to eat food. The organization can offer attractively packed yogurt to attract most people with a busy lifestyle
• High health awareness – people of UK are very much aware of healthy products, and ingredients. Therefore, it becomes essential for the organization to provide the best ingredients that are beneficial to an individual health also
• Obesity level – obesity level in the UK is very high, due to which Fra- Pa’s while providing health conscious a product, which will be helpful for the organization to gain market. moreover, through this aspect, the organization can target people who are gaining weight and like to have ice-cream or some flavored dishes without gaining weight
• Increased consumer spending – the spending has been increased to a large extent, which can be advantageous for the organization to target residents. People have become more interested in the entertainment fields like movies in the theater, sports club, and various other places that are most visit. To gain opportunity from this aspect, the organization has to ensure the product availability at these place to attract more customers(Forster, et al., 2018)

1. Technological factors

• Flavor innovation – considering technology, people are interested in experimenting and trying a new flavor, which is also necessary for the firm to improve their products, and improvising taste of the yogurt
• Ingredients – as already discussed the ingredients must be healthier, as the product is yogurt, which is consumed by the customer to healthier food. Therefore the firm should introduce healthy ingredients, targeting different flavors for different age groups. For example fresh fruit flavors for kids, strawberry, mango, chocolate flavors, and some flavors like avocado, Aloe Vera, and various another flavor for old age consumers as well(freepestelanalysis, 2018)

1. Economic factors

• The decrease in inflation rate – in the UK the inflation rate tends to decrease, which will eventually increase the willingness of residents to spend more. This could be the best time to target customers for yogurt that firm wishes to offer. Moreover, the brand needs to get awareness, for which Fra- Pa must promote and market their products.
• Cash-strapped consumers – for the price sensitivity of customer, it is better for the firm to offer goods at less price than those of competitors to attract more customers(Read, 2013)

Porters 5 force model 

1. Rivalry among industry – the yogurt industry is very large in the UK, and major competitors include Muller, Onken, Activia, Yeo Valley, Actimel, and many more. The firm has to bring innovation in products to gain a competitive advantage (dairyreporter, 2018)
2. The threat of substitute – this is the major force that will influence the firm operations because the substitutes for the products include ice cream and various other dairy products.  which can take customers. For this, the firm needs to attract more and more customers, but retaining those customers are more crucial(Utami, 2014).
3. The threat of new entrants – entering into this market is not difficult in this industry, which is beneficial for the firm, as there are no restrictions while investing in this market. nevertheless, this can be challenging as well, because any new firm can enter into the market with more innovation in the future, which will eventually become the competitor (Harding, 2017)
4. Bargaining power of buyers – since the competition is high, and shifting from one brand to another is easy for the customers, the power goes in hands of buyers and the firm has to offer the products within competitive prices only. This factor could be handled by providing the best quality product, and best taste that no other firm can beat. If product differentiation is done by the firm, it would be possible to keep their prices high even in the competitive market(Ogutu & Mathooko, 2015)
5. Bargaining power of supplier – this aspect is in the favor of the Fra- Pa, because the ingredients that are used are available through a number of suppliers, and shifting from one supplier to another is not very difficult for the firm. This is the reason that the ball is in a court of the firm and not the suppliers, due to which the firm can minimize the cost of the product while improving the profit margin in each product. Therefore, bargaining power is not with a supplier in this case. The firm can select the best supplier considering price, but most importantly considering the quality of ingredients to create the best product out of it and serve the customers(Dobbs, 2014)

Conclusion 

To conclude through this report, it can be said that FRA- PA’s frozen yogurt shop, is offering yogurt to the residents of Birmingham. The location to offer the product was the Bullring Shopping Centre. The firm is specialized in frozen yogurt of different flavors. The type of business that the organization is working was a partnership firm, where two people work together for equal profit and loss. UK macro environment was analyzed and the social factors included busy lifestyle, high health awareness, obesity level, and increased consumer spending.  Technical factors were flavor innovation, and ingredients. Moreover, while analyzing competitive industry through Porter’s five-force model, Fra – Pa’s can achieve competitive advantage.

References

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