Business Strategy of the Real Chocolate Company - Lab Report Example

Table of Contents 1. Mission Statement--------------------------------------------------------------04 2. Vision--------------------------------------------------------------------------------04 3. Objectives--------------------------------------------------------------------------04 4. External analysis-----------------------------------------------------------------05 5. Internal Analysis-----------------------------------------------------------------06 6. Strategic situation---------------------------------------------------------------07 7. Long Term Objectives---------------------------------------------------------10 8. SWOT Analysis-------------------------------------------------------------------12 9. Plan Control Procedure-------------------------------------------------------13 10. Conclusion-------------------------------------------------------------------------16 11. References------------------------------------------------------------------------17 List of Tables 1. SMART Objectives for RCC-------------------------------------------------11 2. SWOT Analysis of the Real Chocolate Company--------------------12 Mission Statement of RCC: "Perfection in Handmade Gourmet Chocolate." Vision: The Real Chocolate is a brand committed to deliver value. The goal of the company is to provide the customers with the chocolate products prepared in only the finest, highest quality ingredients and no artificial preservatives. The foremost priority of the company is to be included in the premier retail chocolatier in the United States. Objectives: The store’s broad objectives are: • To increase customers by a policy of communication, public relations, and collaboration. • To make use of the new technologies this will help the store to innovate new products of reduced prices and improved quality. • To ensure customer retention through ensuring quality of products and consistent, steady revenue, guaranteeing development and progress. External Analysis: In order to understand the external environment of the Company it is important to undertake the PESTLE analysis, which is as follows: Political: Decrease in over all market demand due to unstable political situation. Economic: The Economic downturn being experienced in the whole world can be lethal for the demand of chocolates. Socio-cultural: The population of U.S is getting more conscious about the problems related to health. Any product accused of effecting health of the people can lead to the loss of market share. The changing demographics of US are also affecting the demand patterns. Technological: Increased innovation and technological improvement in manufacturing and services resulting in shape of economies to scale. Legal: Improved laws regarding the health affecting food products. Environmental: The industry can face environmental threat because of the Agro-terrorism. a) Segments (main market segments): The main market segments are the B2b customers getting the franchise of the company. b) Differentiation opportunities: Artisan chocolates are creating marketing Niches. The company can also experiment with exotic flavors and ingredients mixes as experimented with big chocolates in past. Godiva Chocolatier and Russell Stover, Company’s largest competitors, hold a larger share of the global market in sales of chocolates. This likely was an outcome of being a publicly traded company and maintaining the capital required for large-scale marketing ventures. Regardless, Real Chocolate Company only maintains between eight and 12 percent of the entire market, which is insufficient for their growth requirements. Market Penetration: The revenue of the company can be increased by the introduction of new franchising schemes as this can be a low cost and high revenue option. The company should also keep its share in the annual sales of its franchised stores and outlets. Product Development: The new product to be marketed to our existing customers can be the Dark Chocolate. This will be an innovative product for the loyal customers of the Company. The Company should also introduce new franchising programs with different offers for franchisees. Strategic Environments: The Real Chocolate Company is currently working in a market where sales are being affected by competitor activities and the external environment. There are several opportunities available for Real Chocolate Company to shift its position as a follower in the sales market and emerge a leader. The company reported the revenues of $ 31.6 million which was 12 % more than the previous year. On the other hand the company is faced with threat of varied prices of chocolates and nuts due to monetary fluctuation and economic, political conditions in the countries where these products are grown. Additionally, the company does not experience high media visibility, a crucial element of the entire Real Chocolate philosophy for the general public. These issues are currently a threat to Real Chocolate long-term stability in a business environment where competition is fierce and growth is obtainable. The balanced scorecard is an extension of traditional financial measures. In the modern technological age only financial measures are not adequate. In order to remain competitive and successful in business it is important for a business to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."  (Balanced Scorecard Institute, 2009)  Adapted from the Balanced Scorecard by Kaplan & Norton Shareholder Value or Financial Perspective: a. Market share: Increase in customers by 25%. b. Revenues and costs: Increase in revenue by 10%. c. Profitability: Increase in profitability by introducing just-in-time inventory system. d. Competitive position: Gain higher level of market share by offering lower prices than competitors. 2. Customer Value Perspective: a. Customer retention or turnover: To improve customer loyalty by introducing membership card. b. Customer satisfaction: Improve level of customer satisfaction by introduction of customer feedback program. c. Customer value: Continuous customer support through online and telephonic support. With the changing business attitudes a need of rebounding between the customers and the business corporations is also felt. The call centers are seen as an important instrument in order to explain the sales executives what is being required by the customers in shape of products and services and hence improving the sales by targeting the actual requirements of the customers. The following advantages are attached with the use of call centers Greater corporate flexibility, increased sales, Happier customers. 3. Process or Internal Operations Perspective: a. Measure of process performance: 1. Composed of quality professionals and team chairpersons, quality councils should meet regularly to share experiences, problems, and ideas (Ross, no date available, p. 6-7). b. Productivity or productivity improvement: There must be a continued effort to improve all business and production processes. Quality improvement projects, such as on-time delivery, order entry efficiency, billing error rate, customer satisfaction, cycle time, scrap reduction, and supplier management, are good places to begin technical techniques such as SPC, benchmarking, quality function deployment, and designed experiments are excellent for problem solving. 4. Learning and Growth (Employee) Perspective: a. Employee satisfaction: Employee involvement should be encouraged on every step of organizational planning, from decision making to implement change in the organization. A program can be found effective when the employers guarantee the involvement of the employees at each and every step. The employers should encourage the involvement of employees in all the processes effecting the work place situation and the well being of employees. b. Employee turnover or retention: People must come to work not only to do their jobs, but also to think about how to improve their jobs. People must be empowered at the lowest possible level to perform processes in an optimum manner. There must be a continued effort to improve all business and production processes. c. Level of organization capability: Quality improvement projects, such as on-time delivery, order entry efficiency, billing error rate, customer satisfaction, cycle time, scrap reduction, and supplier management, are good places to begin technical techniques such as SPC, benchmarking, quality function deployment, and designed experiments are excellent for problem solving. d. Nature of organization culture or climate: In the highly competitive environment of the business in today’s high pace changing business environment enhancing the learning capabilities of business is the solution of half of the problems (Prahalad & Hamel, 1994, p.199). e. Technological innovation: As there are higher threats of increased taxation the business should try to invent technology which can reduce the production costs in order to keep a breast with the challenges of increased costs. Long Term Objectives: After achieving short-term goals, the vision of strategic plan will be enlarged to the long-term goals, which are as follows: SMART Objectives for the RCC Objectives Activity Time Scale Required Responsibility Promotional Objective: Improvement in promotion by introducing new methods. 1. By implementing Web based advertising. 2. By sending e- newsletters. 3. By using the relationship with media more effectively. 4. By hanging billboards on important educational places March 2010 Marketing Staff Market Share Objectives: Increase in customers by 25% 1. By using aggressive marketing techniques. 2. By gaining knowledge about the competitors steps through continuous research 3. By continuous performance evaluation and improvement. 4. By introducing new services. June 2010 Management & Marketing Staff. Profitability Objectives: Increasing revenue for 30-35% 1. After gaining promotional and market share objectives. Increase in profit to be attained by continuing above-mentioned tasks. 2. By introducing new and attractive products for infants and children. 3. By improving the outlook of the store. June 2010 Management and marketing Staff. Internal analysis: “The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix is an important matching tool that helps managers develops four types of strategies: So Strategies, WO strategies, ST Strategies, and WT Strategies. SO strategies use a firm’s internal strengths to take advantage of external opportunities. WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities. ST Strategies use a firm’s strengths to avoid or reduce the impact of external threats. WT Strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats.” (David, 180-181) Table 1: SWOT Analysis of Real Chocolate Company STRENGTHS Strong Brand name. Extended customer base across USA and Canada. Use of SAP R/3 Enterprise Resource planning software Low threat of new entrants. Continuous training programs for employees. High budgets of advertising and promotion. Good relations with media. WEAKNESSES Low ROE Subsidiaries create legal and territorial problems. Lack of funds for regional suppliers to continue expansion Old image still exists. Inconsistent marketing message. Absence of Web based presence. OPPORTUNITIES Expansion in shape of introduction of new and innovative products. Expanding market due to globalisation. THREATS Current economic climate. Over reliance on the partners. Results to be achieved in future can be less than projected Strategic Situation: The Real Chocolate Company currently maintains well-qualified and teamwork-minded staffs that are dedicated to innovation and excellence in workmanship. This is a significant resource for a business, which relies on domestic manufacturing facilities as a means of cost control. In many respects, the company maintains quality human resources focus which, in the event of excess capital availability, could drive high-quality, low-cost training to minimize complications with labour. Different manufacturing capabilities give them a modest competitive edge in terms of issues of supply chain; however this edge could potentially be lost in the event that rival competitors decide to expand domestic production efforts. This suggests a risk to Real Chocolate and a capital limitation in terms of having the resources necessary to expand production capability. Real Chocolate has to face more threats on a day-to-day basis from its rivals so that efficient resource utilization and rationalization to enhance capacity would be much more desirable form the viewpoint of strategic competitive strength. Rivals depend on their brand image and promotion strategy to increase sales while much of their competitive edge consists of pricing and quality policies. Consumers of Chocolate products are often influenced by exogenous variables like professional writing on current health issues. Plan Control Procedure The RCC for the first time will launch a planned marketing campaign in its history. The campaign will constitute all the marketing techniques strategically in order to minimize the cost of the marketing campaign. A specially designed label will appear on each and every product and in the print and web based ads. The advertisement campaign will include direct mailing, ads in magazines and newspapers, advertisements on Internet and promotional emails. The above-suggested advertising channels will help the best to convey the message of the RCC management to the masses. To deal with the changing situation of the market and consumers inferences the marketing plan needs to be monitored and controlled. For the RCC it is recommended to use annual plan control. The annual plan control is undertaken through setting small term objectives. The management should keep on analyzing the performance in the market place. If there is deviation in the performance from the goals specified in the annual plan the reasons should be analyzed. To check the plan performance market share analysis and expense to sales analysis should be undertaken. Through using market based score card two purposes can be served. 1) Evaluation of actual performance of company. 2) Provision of early warning signals. The customer performance scorecard will use the analysis of following in order to analyze the performance of the RCC. It will measure increase in the new customers. Number of lost customers. Quality of services provided. Quality of products presented. Right awareness of target market. The preferences of target market (Kotler, 2000, 696). Conclusion: Public trading in the equities market is, in and of itself, a back-up solution as it provides the necessary capital to make rapid or strategic changes in business operations and management. There is little evidence that The Real Chocolate Company is experiencing a crisis of finance, however the small gains being achieved by the company could be large-scale with a sizeable capital infusion and some additional media exposure. The proposed recommendations could be implemented in a relatively short time period depending on how quickly the legalities could be worked out by senior management. This is a tangible solution for the company and should be considered as the most viable decision for growth, which can keep pace with competitors with larger resource availability. Process solutions such as determining factors of production and other internal manufacturing issues would require planning groups to develop a comprehensive staff management and cost-savings (among countless others) strategies. However, these would be long-term obligations. Short-term, the benefit to the business is obvious. Without costlier marketing objectives or other resource-depleting initiative, real chocolate company will have a difficult time holding onto their variable 10% average market share. Real Chocolate maintains staffs that are committed to solutions and the pressures/demands placed on subordinate team members would likely be absorbed as a functional progression to improved business level and tackled with minimal disruption to business operations. For many businesses today, this is a significant problem when turnover costs and training simply does not produce an efficient work team. The Real Chocolate Company has it all and it simply requires the capital to prove it. References Fred R. David, Strategic Management Concepts and Cases, Eleventh Edition, pp.165 66. Stone, B. and Jacobs, R. (2007). Successful Direct Marketing Methods, 8th Edition. New York: McGraw-Hill. Read More