Breadtalk Economic Analysis

1906 Words Nov 4th, 2008 8 Pages
BreadTalk Group Ltd.

1.0 Introduction
1.1 Background information on the industry

The F&B industries play an important role in Singapore’s economy. Being a multinational country, the F&B industries have been influenced by culture from different nationalities and countries. Singapore has been ranked as one of the three major eating capitals in the Asia Pacific region and the other two countries are Hong Kong and Australia. Singaporeans’ extremely large appetite for eating out has rose the incredible rang and numbers of F&B outlets, from upmarket restaurants and eateries to inexpensive cafes (Springs Singapore, 2008).

There is a great opportunity to be an entrepreneur in this industry because of its low entry barriers. Having this
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As a result, there is a direct relationship between Singapore’s population and demand for BreadTalk.
Figure 3: Increase in demand

2.1.2 Price of Substitute goods

The price of substitute goods is the second factor that affects the demand for BreadTalk. “Substitute good is a good that competes with another good for consumer purchases. As a result, there is a direct relationship between a price change for one good and the demand for its ‘competitor’ good” (Layton, Robinson & Tucker, 2005). There are so many substitutes of bread from puffs to breads from other brands available in the market. If the price of bread from other brands increases, consumers switch to other cheaper brands. As a result, the demand of BreadTalk increases and demand curve shifts to rightward.

2.1.3 Income

The third factor that affects the demand for bread is consumer’s income. The products from BreadTalk can be categorized as normal good because it is (BreadTalk total brandind solution, n.d), on average, 20 percent more expensive than other bakeries. “A normal good is any good for which there is a direct relationship between changes in income and its demand” (Layton et al., 2005). As shown in Table 3, consumer’s income, as represented by GDP, rose from 49,301 in 2006 to 52,994 in 2007. The sales of BreadTalk increased from 31.4 millions in 2006 to 39.1 millions in 2007, as shown in Figure 2.2. This shows that when

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