Real Chocolate Company's Business Strategy - Case Study Example

 Business Strategy Case Study REAL CHOCOLATE COMPANY Table of Contents Table of Contents 0 Executive Summary 1 Introduction 2 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 Conclusions 10 Bibliography 12 Executive Summary Real Chocolate 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 chocolates on a daily basis and has almost over 100 varieties of chocolates that it produces in times Christmas and Valentines Day. The company has been financially strong and employees close to two hundred and fifty employees. Being spread across twenty five states in the United States the company has created a mark for itself. This report has analyses the company profile and a set of possible strategies that the company can adopt has been discussed herein. One of the strategies that have been suggested is the start of an e – Commerce website. Details of the benefits that the company will gain from this have been discussed in detail in this report. Introduction Chocolate Industry is one which is ever growing, especially the gourmet chocolate segment. Real chocolate company is a small public company in America. Real chocolate company have a variety of products that they produce to cater to the needs of the customers. The company has strong values and bases all the production of chocolate only at very high quality standards. Real chocolate company offers a wide range of chocolates, as many as 100 varieties, 15 varieties of fudges and over 30 varieties of caramel covered apples. The company has focused on ensuring that the appearance and the quality of the chocolates are not affected under any circumstances. Real Chocolate Company has used the strategy of marketing its products with the help of advertisements, flyers, and mail orders and even in store marketing. They main aim is to gain high publicity with the lowest possible investment, thus they work on participating in regional events, sponsorships and a number of different charitable causes. External Analysis This section aims at analysing the opportunities and the threats that are prevalent in the environment. Both of these generally exist independently of the firm. These differ from the strengths and the weaknesses as these are more based on factors that are external to the firm. Opportunities and Threat Analysis: The Real Chocolate Company is faced with a number of threats from various companies. This section deals with the opportunities and threats of the company. The opportunities are mainly the most favourable conditions in the environment which can be used by the company to produce higher rewards, if correctly recognised. These normally exist for every company however they need an action to be useful for the company. Real Chocolate Company has been in the industry for a long time. This company has a strong a strong opportunity to compete with the larger companies. The demand for the chocolate has been seen to have increased a lot over the years. The company has an opportunity to change the production process from a manual to an automated system, if the demand for the chocolate increases. The chocolate industry on the whole has been increasing over the years. Of the entire chocolate industry, the Gourmet chocolates accounts for as much as 10 percent of the chocolate industry. This provides Real Chocolate Company with a very big opportunity to increase their market share and spread the name of the company across the entire United States. Real Chocolate Company has a very big possibility of opportunity in the field of e – Commerce. It is seen that most of the companies that are present in this industry do not provide for a facility like e – Commerce. With the growing use of the Internet and the growing interest of the people in buying their goods using e – Commerce sites, this will prove to very beneficial for the company. If noted closely the competitors have websites which provide the customers with an awareness of the company and the various products that the companies provide. Real chocolate on the other hand does not have a website which might even provide the basic details of the company. Also with the vast variety of products and the various choices that the company already has, it can use the e – Commerce website to provide offers. The threats on the other hand mainly refer to the barriers and the conditions that cause a break in the path of the company to reach up to the objective. In the case of Real Chocolate Company, it is seen that the company is faced with a lot of competition. This poses the biggest threat. The above table highlights the number of companies that are in this field. With competition from such big companies which are well developed and have well designed production plans with well backed brand names and images which are famous world wide. This poses as the biggest threat for the company. Also another big threat faced by the company is the fact that the competitors have huge availabilty of funds, however in the case of Real Chocolate company, the funds are limited and although the company does have a number of shops across the place and a huge variety of chocolates, the company still lacks behind its competition in terms of the automated production. Also due to the limited funds the company intends to wait until the demand increase further only then will the company go ahead for a new production process. Internal Analysis An Internal Analysis of a company covers the internal factors that provide the company with strengths and also in some terms cause the company’s weaknesses. This is completely dependent on the firm itself and this highlights the internal affairs of the firm. Strengths and Weaknesses Analysis: The strengths of a company mainly are the positive points that the company has independently without taking into consideration the market and the external environment (Jobber, 2004). In the case of Real Chocolate Company, one of the biggest strengths of the company is the fact that the company has a strong regional recognition for a number of years. Also the company has built a strong customer following over the years, with the varieties of chocolates that they provide to the customers. The company’s other strength is the fact that the customer makes hand made chocolates which is very popular among the customer. Also the warmth of the people within the shops makes the customers feel special which brings them back for more. These form the biggest strengths of the company. Also a great strength of the company is the varieties of chocolates that they produce. Also, the fact that the company has been around for such a long time, and is hand made it attracts a number of customers thereby increasing the sales and the revenues of the company. However the company is also faced with a number of weaknesses. These are mainly the factors which form a hurdle for the company to succeed. These again are the internal factors. A strength that has been discussed also forms the weakness of the company. The fact that the products are hand made and not machine produced; this creates the possibility of the end product to be different in size and weight. This creates the possibility of uneven products and this in turn can also mean a lot of wastage of the materials as well. A big weakness of the company is also that the company is not backed up by any other big brand. This causes the company to lack behind in terms of finances as well as in the marketing and advertising. Real Chocolate Company is also known for the high marketing tactics, where the company spends minimum to gain as much publicity as possible. This however has not proved to be very beneficial in a lot of manners, basically because firstly, the marketing is very regional level, secondly, it does not reach out to all the categories of people. Since the marketing is done in regional events, sponsorships and a number of different charitable cause. This makes the reach to the public to a very limited amount and thereby causes a strong limitation for the company. Current Problem Diagnosis: The current problem of the company is the lack of good marketing. The company producing excellent quality chocolates, however due to limited marketing it lacks too much attention from the public. Real Chocolate Company in a number of ways and aspects is well developed to be able to compete with larger firms as well. If the company’s marketing issue is rightly dealt with, the company will show a much higher and better progress. This is majorly because it is a known fact that any product that is well marketed and advertised, can be sold easily in the market. This lack of marketing refers to all the aspects of the business in terms of proper advertisements, marketing and even having a presence on the Internet. The major problem can be diagnosed to be a lack of strong marketing efforts for the company and a lack of a strong effort of using technology to rightly highlight its strengths. Generation of Strategic Options As discussed in the previous section the company is faced with a very strong issue, i.e. lack of the right marketing for the company and its products. Based on a good understanding of the company, there are a few options that can be recommended for the company. Real Chocolate Company can use one of its biggest strengths, i.e. the variety of chocolates that it offers to market itself. Opening of outlets which are more of Chocolate bars, i.e. a place for people to hang out and provision of variety of products like chocolate milkshakes, chocolate coated food, and almost anything that can be related to chocolate can be served here. This can be opened in strategic places all across the cities and provide a ‘one of the kind’ meeting place for people. This is a great idea that can be implemented however the investment in this kind of a place is very high and so are the running costs. The company can also provide for ‘Chocolate on the Wheels’. This would simply mean a truck with a variety of chocolates which can be placed in the city centre or can be mobile across the various strategic areas. Yet again here the costs involved are quite high and the need for a dedicated truck is necessary. The last option for the company which seems t be viable as well as more beneficial both financially as well as non – financially is the option of an e – Commerce website (Beynon-Davies, 2004). This is a simpler idea, and even though there are a few costs involved, it is comparatively lower than the other ideas. Also this is in a number of ways more beneficial in non monetary terms as well. This makes it the best option for Real Chocolate Company at present. Evaluation of Strategic Options One of the best strategic plans for the company to be able to come out of the problem it is facing is the development of an e – Commerce site, along with a well detailed site for the company. This site requires detailing important features of the company and allowing the customers to gain a good feel about the history of the company. Also, the e – commerce site is a recommendation because of the high increase of the use of the internet and the use of e – Commerce sites. The past few years has seen a major increase in the use of the Internet for purchasing of products. Thus this is one strong opportunity for the company to display all its products and create a strong database of clients. Real Chocolate Company has a very strong advantage for the number of varieties of chocolates that it produces. In times of special seasons like Christmas and Valentines Day the company produces almost 100 additional products. This is a very strong marketing point for the company and this can be used very strongly to improve the current standing of the company. Drawing on the TOWS analysis, it is clear that the company has all the positive aspects for a very successful business and is simply lacking a strong marketing strategy (Johnson, Scholes, and Whittington, 2006). Thus to improve the company’s performance and to create a stronger brand image, the creation of a website will be very beneficial. An e – commerce website will allow for reduction of costs and increase in profits. With the reduction of costs the company can utilise the website to offer people different offers. Inclusion of wonderful gift ideas, inclusion of special offers and also the company can offer for bulk orders to be undertaken. This will provide the company with a chance to create a strong data base. This also provides for a chance for the company to create new relationships, which in simpler terms means that the company can use this to expand its business to a more varied group of people. It also allows for the company to rightly create newer relationships with potential business associates and also new product manufacturers. Description of Selected Strategy The strategy of starting a website for the company is basically to provide for an easier option for the customers. This is also a mode to open up the market segment that is being catered too by the company. As is seen in the recent past the number of users prefers to buy products over the internet. This is fast growing trend and it has been seen that people buy even groceries online. Thus if Real chocolate Company provides for a website which has e – Commerce facilities, it requires to be user friendly. The design of the company’s website requires to appealing and also simple and user friendly. The company has a very strong benefit that it has such a wide variety of chocolates. This can be used as strength for the company and this can be well laid out on the website (Kotler, & Armstrong, 2007). Since the company deals with a product that is liked by almost every person the designing of the website can be done very easily. The website can provide the customers with detailed information of the various chocolates and can also provide a number of offers to the online orders. In short the website will be descriptive, interactive, and simple and yet with a strong focus on providing the customers with the best products. It is essential to understand that the company make a number of non monetary benefits from the inclusion of the website as well. This is majorly because the website apart from acting as a point of sale for the chocolates, also acts as a marketing option. Once the website is well developed and all the products are correctly displayed on the website, and the website is search engine optimised, then the number of visitors to the website to a great extent will be increased. This can prove to be beneficial in the sense that the website will act as a point of information for the customers as well as a point of sale. The website could also undertake orders which are for shipping chocolates internationally as well as nationally. This will provide for a wider market reach. Action Plan for Implementation To put this plan into action, the company will require a team of two to three people, who can design and develop the website. This can also be done if the company outsources the work of the website development to a development company which can also in future maintain the website and also make any necessary changes for Real Chocolate Company. The entire process of getting this website live can be done in a period of three months. This would require a certain amount of investment which can be decided only after understanding the size of the site. Real Chocolate Company can use this to their benefit and tie up with associates and other related businesses (Sloman, and Sutcliffe, 2004). This will be useful as they can advertise for one another on their websites. Also, Real Chocolate Company has the option of tying up with supermarkets and well established stores to create a stronger brand awareness of it self. Conclusions Real chocolate company has a strong possibility and the ability to compete with the larger companies in the industry. Looking at the current situation of the company and based on the industry requirements, the company shows high potential to make a lot of profits. The implementation of an e – Commerce website will allow for the company to in a very strong way reach out to a larger group of people and also provide the company with strong marketing. Since the marketing strategy is one of building an e – Commerce website, the marketing tactics are more based on the website and the user friendliness of the website. Also it is essential to understand that making sales via this medium is more beneficial to the comp any as it reduces the cost of transactions. Also as the customer is not present the cost reduces as there is lesser need for human resources to complete a transaction. Also the use of a website to make a sale also increases the use of direct debits which helps reduce the transaction costs and time spent on cheque payments. These form the basic tactics for the company as the strategy is to include an e – Commerce website for the company. The reduced costs can allow the company to provide for better options and offers for the online users and can also provide other benefits to the online users. Bibliography Beynon-Davies, P., 2004, E-Business, Palgrave Macmillan, New York Jobber, D., 2004, Principles and Practice of Marketing, 4th Edition, McGraw – Hill, Berkshire Johnson, G., Scholes, K. and Whittington, R., 2006, ‘Exploring Corporate Strategy’, 7th edn, Prentice Hall, Essex Kotler, P., & Armstrong, G., 2007, ‘Principles of Marketing’, 12th edition, 9 March 2007, Prentice Hall Sloman, J. and Sutcliffe, M., 2004, ‘Economics for Business’, 3rd edn, Prentice Hall, Essex Read More