Ways For Choc Deluxe Ltd To Get Rid Of The Present Difficulties - Essay Example

Business Report: Choc Deluxe Ltd Abstract Choc Deluxe Ltd. is one of the eminent small scale multinational companies in the premium chocolate segment. However, due to the scarcity of its chief ingredient, Criollo cocoa beans, the company used inferior quality of raw material Forastero cocoa bean in order to address increasing demand during the time of Christmas. As the immediate consequences, the company experienced excessive negative publication and disruption of long-enduring brand loyalty. Therefore, the company is required to take immediate corrective actions with the help of social media marketing and establishing relationship with big supplying companies of quality cocoa. If the company can follow all such recommendations, it will be able to recover its lost market share in the near future. Contents Introduction 2 Discussion 2 Key Issues 2 Operations 3 Marketing 4 Accounting and Finance 4 Senior Management 5 Key Actions that should be Taken to Rectify the Current Situation at Choc Deluxe Ltd. 6 Conclusion and Recommendation 7 Reference List 8 Introduction In this era of global competition, all the multinational companies experience huge competition in the global framework. Such competition further intensifies due to the market expansion and increasing demand in the emerging markets of developing countries. Therefore, all the companies involved into business are required to maintain the quality standards of their products and services so that they can retain their competitive position in the concerned market segment and confirm the provision for future growth (Kayser and Budinich, 2015). Choc Deluxe Ltd. is a fictitious small scale chocolate producing company that especially concentrates on premium segment. This global industry player has been able to establish its business within a short span of time and it is expected that the company will show a growth rate of 30% within the next five years period of time. Such growth has been forecasted by experiencing huge demand of the products, particularly from the emerging economies. Therefore, it is implied that the company is required to expand its production capacity in order to address such increasing demand in upcoming days. However, while planning for production expansion, management of Choc Deluxe Ltd. identified that they do not have required level of supply of Criollo cocoa beans, which is the key ingredient for the company’s products. As the Christmas was approaching, the company has already committed to supply bulk of their products and services in various departmental stores and other retailers (Extracted from the Case Study). In this business report, the investigation will be done for identifying ways for the company to get rid of these present difficulties. Discussion In the next segment, two questions, arising out of the present scenario of Choc Deluxe Ltd., will be discussed. The first question will investigate the issues in the operational, marketing, financial and management levels that has led the company to face such business problems and the second question will identify the possible ways for Choc Deluxe Ltd to overcome the situation and confirm its future success (Srivastava and Mock, 2002). Key Issues Business function explains the interrelationship among the key attributes functioning of which leads to accomplish the responsibilities of a particular business. Therefore, successful coordination among the variables of business function is of utmost importance in order to achieve desired final outcome from business. Such business functions can be attributed as operations, marketing financial and management level functions of an organization (Smith, 2010). Though Choc Deluxe Ltd. was performing steadily in the competitive market segment of premium chocolates, the company is recently experiencing certain business troubles. As these attributes of business function are responsible for smooth running of business, these attributes are also considered to be responsible for any difficulties that the business experiences at any point of time. Operations The individuals associated with operational activities of a business are considered to be responsible for ensuring the activities of every individual business aspects such as production, distribution, marketing and sales of the products and services to be efficient and uninterrupted. The operations department is required to coordinate among various segments of business; for instance, they should confirm about the sales forecasts from the research and development department and accordingly acknowledge production department, whether they should increase or decrease the quantity produced in order to meet the forecasted sales and avoid wastage. Consequently, the operations department should confirm whether they are having a steady supply of the raw materials in order to ensure uninterrupted production process. Based on the flow of supplies of raw material and production capacity, they should confirm order of delivering their goods and services to various retail outlets and target customer. Considering the case of Choc Deluxe Ltd., the operational department of the company that monitors the day to day activities of business and synchronizes among various departments of the company, failed to realise the gap in supply of Criollo cocoa beans which is considered to be the most important raw materials for their premium quality of chocolates. Rather, they took massive orders from various retail outlets and departmental stores in order to capture the seasonality effect during the time of Christmas and expand the sales quotient to a great extent. Hence, prioritizing sales increment without analysing the production capacity by the operations department of Choc Deluxe Ltd. had exposed the business towards reputational crisis (Mullins and Komisar, 2013). Marketing The marketing department of Choc Deluxe Ltd. was already aware of the fact that the unique selling proposition (USP) of the company is the quality of chocolates that the company produces and its brand loyalty. Marketing segment of any company should understand the importance of brand loyalty as it involves considerable effort and hard work of the marketing employees to build up the brand loyalty. Such brand loyalty that influences the consumers to purchase the products of the particular brand again and again, smoothens the sales propensity which is also a major part of marketing. It also holds maximum importance for the company as well as this ensures steady flow of revenue for the company and ascertains its growth possibilities. Though the marketing department is not directly responsible for the crisis experienced by Choc Deluxe Ltd., indirectly, the company can definitely held responsible for the concerned situation. When the individuals in this company came to know that the management has decided to use Forastero bean instead of Criollo cocoa beans as a raw material, they should have warned the company about the possible consequences of such activities. Quality of the premium chocolates produced by Choc Deluxe Ltd depends on Criollo cocoa beans; therefore, using Forastero cocoa bean largely decreases the taste of the chocolates which in turn result in customer dissatisfaction. Customer dissatisfaction influences them to shift to any competitors’ brand thereby hampering the long established brand loyalty. Therefore, once destroyed, it will take ample of time and effort from the marketing department to regain the lost loyalty. Sales and revenue was also hampered due to deterioration of the quality aspect. If the marketing department could have identified all such possible outcomes of using inferior quality of cocoa bean well in advance, the company would have not contradicted with the present situation (Power, 2002). Accounting and Finance Accounts and finance department of Choc Deluxe Ltd. failed to price its products in an efficient manner. Experiencing the growing demand from emerging markets such as India and China and also noticing the recovery of western countries from the global recession and financial crisis, the finance department forecasted that the demand of the products will increase by30% within 2020, generating revenue of 4.5 million by the end of mentioned time period. However, at the time of addressing the demand, when the production capacity was analysed, the scarcity of the main raw material has become prominent. In such circumstances, the department suspected that if the supply of the product decreases, the price of the product will automatically increase due to the huge demand in the market. If price increases, the consumers will shift to other competitive products, resulting in huge loss for the company. However, chocolates, especially premium chocolates come under impulsive buying products. Therefore, if the company would have increased the price of the product and targeted the premium customer segment, loss in additional sales would have compensated by increase in per unit product price. Moreover, where quality and brand loyalty are considered to be the USP of the product of Choc Deluxe Ltd., the finance department should not have concerned about sales. Rather than taking decision on deteriorating the quality of the products and thus deliberately hampering the established brand loyalty, if the finance department had increased the price of the chocolates, the company would not have faced such disruptive situation (Scarlett and Koslow, 2009). Senior Management The whole problem of Choc Deluxe Ltd. indicates the lack of forward looking capability of the senior management of the company. Moreover, as all the departments of the company are run by the senior management, the lack of business awareness of individual departments such as marketing, finance etc., largely reflects lack of business awareness of the management itself (Vavra, 2007). The senior management must be knowing well in advance that Criollo cocoa beans is the main ingredients for producing the premium chocolates and it takes five long years to get ready for harvesting. Therefore, the senior management should have given more importance on forecasting the expected growth and should have driven more intensive market research to indentify the prospect of premium chocolate market. Such action would have helped the company to create provision for sufficient raw materials, either by expanding their production of Criollo cocoa beans through planting new trees or by creating provision for importing Criollo cocoa beans from large suppliers or vendors. Moreover, when the company was exposed to the production problem, the senior management failed to take decision which would have been appropriate for the company. As the company is engaged into producing premium chocolates and brand loyalty is considered to be main USP, increasing price of the product would have satisfied the requirement of a small segment of premium customers. Instead of that, decision of the senior management of using 80% of Forastero cocoa bean and printing that the product consists of Criollo cocoa beans exemplifies fraudulent initiative of the company. Such activity definitely resulted in negative publicity and mass attrition of customers. Key Actions that should be Taken to Rectify the Current Situation at Choc Deluxe Ltd. During the contemporary business context, Choc Deluxe Ltd. is encountering two major challenges in the current situation that requires corrective actions for the company to survive in the future. The first concern i.e. dissatisfaction of the customers and external stakeholders requires immediate action as the threats of taking legal action against company, many even result in cancelation of the business licence of the small scale company (Vandenbosch, 2003). Therefore, the company should immediately stop production of the chocolates using Forastero cocoa bean. Next, in order to regain the consumers’ faith, the company can spread news through social media networks and other advertising options that due to some unavoidable circumstances, the production of the company got hampered and the batch of production yielded defective products (Kumar and Reinartz, 2012). In this context, the company should try to gain sympathy from the customers on the ground that Choc Deluxe Ltd has been serving their loyal customers since long; however, they have never given them any scope for grievances or criticism. Therefore, the company also expects the support from the consumers’ side at the time of crisis (Hass, 2011). Concerning the problem of availability of Criollo cocoa beans for production continuance, corrective strategies should also be formulated by the senior management; otherwise the problem will affect the business progress of Choc Deluxe Ltd. in the long term as well. In this regard, as the company have limited source of Criollo cocoa beans from harvesting, they should opt for alternative sources of such raw materials (Buttle and Maklan, 2015). For instance, the company can institute joint ventures with some other vendors which are capable of supplying bulk of Criollo cocoa beans. In fact, the company should engage into contracts with large external suppliers that are also responsible for supplying cocoa in big companies such as Cadbury’s and Nestlé. Due to big clients, such suppliers have big harvesting firms that ensure uninterrupted supply of Criollo cocoa beans (American Bar Association, 2006). Conclusion and Recommendation Choc Deluxe Ltd. is one of the specialist small scale chocolate companies that have gained considerable success in the premium chocolate segment throughout the world. However, analysing the present business situation of Choc Deluxe Ltd., it can be inferred that the lack of forward looking ability of the senior management and faulty decision making has pushed the company towards being collapsed. When the company understood that there will be a significant gap between the production requirement and availability of raw material, rather than decreasing supply of product in the market, the business functions of the company instigated to use inferior quality of raw materials instead of Criollo cocoa beans. All such misconducts resulted in massive customer dissatisfaction, negative publicity and destruction of brand loyalty that used to be the USP of the company. Therefore, the company is required to regain the lost consumer confidence first through stop supplying of the products that contains Forastero cocoa bean and make available only those products that contain 80% Criollo cocoa beans, as per the standard product specifications provided by Choc Deluxe Ltd. Moreover, the company should engage into contracts with big suppliers in order to ensure uninterrupted supplies of the company’s most important raw material, Criollo cocoa beans. If the company continues to follow all such recommendations, it will be able to regain its lost brand awareness in the upcoming future. Reference List American Bar Association, 2006. Model Joint Venture Agreement with Commentary. New York: American Bar Association. Buttle, F. and Maklan, S., 2015. Customer Relationship Management: Concepts and Technologies. London: Routledge. Hass, K. B., 2011. The Enterprise Business Analyst: Developing Creative Solutions to Complex Business Problems: Developing Creative Solutions to Complex Business Problems. Oxford: Do Sustainability. Kayser, O. and Budinich, M. V., 2015. Scaling Up Business Solutions to Social Problems: A Practical Guide for Social and Corporate Entrepreneurs. London: Palgrave Macmillan. Kumar, V. and Reinartz, W., 2012. Customer Relationship Management: Concept, Strategy, and Tools. Berlin: Springer Science & Business Media. Mullins, J. and Komisar, R., 2013. Getting to Plan B: Breaking Through to a Better Business Model. Harvard: Harvard Business Press. Power, D. J., 2002. Decision Support Systems: Concepts and Resources for Managers. Portsmouth: Greenwood Publishing Group. Scarlett, R. H. and Koslow, L. E., 2009. Global Business. London: Routledge. Smith, N. C., 2010. Global Challenges in Responsible Business. Cambridge: Cambridge University Press. Srivastava, R. P. and Mock, T. J., 2002. Belief Functions in Business Decisions. Berlin: Springer Science & Business Media. Vandenbosch, B., 2003. Designing Solutions for Your Business Problems: A Structured Process for Managers and Consultants. New York: John Wiley & Sons. Vavra, T. G., 2007. Improving Your Measurement of Customer Satisfaction: A Guide to Creating, Conducting, Analyzing, and Reporting Customer Satisfaction Measurement Programs. New York: ASQ Quality Press. Read More