Threats

Main “Victorio Cakes” threats are:

• Although a niche market, relatively high level of competition and a certain range of substitute products on the market.

• High rate of growth of technology. Other firms introducing more technology may operate much quicker than “Victorio Cakes” and complete both orders and delivery in a shorter period of time, which might out compete some of the “Victorio Cakes” potential customers, depending on how much the customers are willing to wait for the cakes to be made.
• There might be other firms entering the custom-made cake market in the future, trying to make similar or better products than the ones produced by “Victorio Cakes”, which might also increase the level of competition and make it harder for “Victorio Cakes” to compete on price, and harder to gain customers and sales growth in the long run.
• Some firms that already exist on the custom-made cake market might be more specialised at producing cakes and have more experience than “Victorio Cakes”, as well as being better known than “Victorio Cakes”, benefiting from customers’ brand loyalty.
• Decrease in the population or ageing of the population might potentially decrease the demand for “Victorio Cakes” products, because there will be less potential customers who will be willing to buy their custom-made cakes.
• Increase in the number of people who become more aware of their health and diet and social patterns, might potentially decrease the demand for “Victorio Cakes” products, because they do contain a certain level of saturated fat and aren’t too healthy, if these cakes are eaten on a regular basis. Another threat, as a consequence of this, might be that “Victorio Cakes” might have to decrease the amount of saturated fat that will be used in their products and use organic ingredients to create a healthy image for their products and encourage more customers to buy their products this way. However, this will lead to higher costs as a threat for “Victorio Cakes”, because they will have to buy more expensive ingredients to make their cakes, which will increase their costs, and if they increase their prices, there will be another threat in terms of potentially decreasing demand for their cakes due to higher prices.
• Also, if there’s, for example, an economic crisis, or increase in the interest rates, then people will be less likely to buy luxury goods, such as custom-made cakes produced by “Victorio Cakes”, which might also decrease the demand for them.
• Although, “Victorio Cakes” is not planning to make large investments into the marketing and promotion in the short-run, in the long-run, if it invests large amounts of money from the limited budget that they have, “Victorio Cakes” might see a decrease in their profits, or in the worst circumstances go into a deficit, having to take more loans from the bank, not being able to pay back due to a decrease in demand due to economic recession that the UK is currently experiencing and, as a result, going bankrupt as the worst result of that.

Minimum Wage Rate