The study “Optimal Development Strategy of Real Chocolate” offers to choose the best strategy - continue to follow the current strategy or developing franchise model, to promote the product through the mass marketing channel, make a strategic alliance with new artisan chocolate players etc…
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Apart from the usual stakeholders in the form of shareholders, financial institutions, employees, customers, the Real Chocolate Company has another key stakeholder the franchisees, through whom all the growth and revenue for the company will accrue in the future.
At the moment the company is comfortably placed in terms of overall performance. However, the company has to ensure maintaining levels of profits and growth in the long term, through a strategy that will give it a sustainable competitive advantage.
The chocolate industry is highly fragmented industry with about four hundred companies accounting for 90% sales. Retail chocolate sales reached $16.3 billion for the year ended December 2006, out of which the Gourmet segment is about $ 1 billion. Real chocolate has about 10% of the market share in this segment.
Competition is on the rise and product differentiation, branding will be the key parameters by which sales will increase.
The conclusions drawn from PESTEL and Five Forces analysis and the Threat/opportunities table would be as follows:
1) From Porters five force analyses it emerges that Rivalry among existing players will be the chief competitive force in the industry. A decline in profitability which often is the result of this will come from an increase in promotion and branding cost.
2) Even though the analysis reveals that entry barriers for new players to enter are not very high, new entrants may not find it attractive to enter. Entry may occur by players creating a separate niche which may affect demand for the product in which Real chocolate operates. (e.g. of artisan chocolate entry which has already happened) etc.
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Management and marketing Staff.
"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.
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...than relying on local audiences. In this case, it seems the company is greatly relying on mobile customers who in this case are outgoing people who happen to be doing their own business in busy areas where RealChocolate stores are located. Its shops are mainly located in tourist attraction centres, airports, busy mall for instance. There is always business around these busy locations but the company ought to expand to other areas. The drive to expand to other locations is likely to be hampered by the absence of vigorous marketing strategies which is a major weakness that can derail the efforts of expanding in order to counter growing competition.
Current Problem Diagnosis
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Part 5 Evaluation of Strategic Options
For RealChocolate to achieve its goal of become premier chocalatier in the US, it has to grow and reach to every part of the country. The identified strategy for this is through developing franchise model.
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External Analysis – Porter’s Five Forces Model for Industry Analysis
The analysis of the five competitive forces (suggested by Michael porter), viz. threat of new entrants, threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry among the existing companies, better explains the nature of confectionery industry and provides the basic road map to develop a competitive strategy for The RealChocolate Company (Porter, 1998).
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Real Chocolate Company's strategy has been expansion through franchising. The parent company owns the distribution and supply chain. The company uses one of porters competitive strategy of product differentiation was emphasis is on quality. Because of the perceived differentiation and quality consumers are charged a premium price. The Real Chocolate Company also uses an umbrella branding strategy, and the problem today with the CEO had to be whether they could maintain this level of growth in the years to come in the highly competitive, fragmented chocolate and confectionary industry.
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Business Strategy Case Study
Table of Contents
Table of Contents 0
Executive Summary 1
External Analysis 2
Opportunities and Threat Analysis: 2
Internal Analysis 4
Strengths and Weaknesses Analysis: 5
Current Problem Diagnosis: 6
Generation of Strategic Options 6
Evaluation of Strategic Options 7
Description of Selected Strategy 8
Action Plan for Implementation 9
RealChocolate Company is one of the most famous chocolate shops and has been in the industry for a long time now. The company deals with a large variety of...
11 Pages(2750 words)Case Study
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