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Rustia Jr., Teresito B.

Business Strategy (10AM-1PM(SAT.))

Rogers Chocolates
Time Context

The recession started in March 2007.

Viewpoint

Steve Parkhill as President of Rogers Chocolates

Statement of the Problem

Low brand awareness


Value Chain Management and Inventory Management
Small market niche and low market shares
Obsolete technology

Objectives

Global expansion (to increase brand awareness and increase market shares)
Join the trend of advance technology (acquire new machines and equipment)
Focus on controlling the inventory management of the product (out of stock problem).

Areas of Consideration/Analysis
Porters 5 Forces

Industry Rivalry of Existing Competitors (LOW)

20% industry growth in premium chocolates indicates less intense rivalry.


High levels of product differentiation equate to brand loyalty.
Price competition

Threat of new entrants (LOW)

Entry into premium chocolate market requires large capital investment for branding and
production facilities.
There are already both major international players and regional, high quality brands with loyal
followers.

Bargaining Powers of the suppliers (LOW)

The main ingredients of cocoa beans, sugar, and milk are so common that they can cheaply
acquire.
There are limited of supplier of chocolate in the premium market which makes the suppliers of
chocolate very important to the industry.
The buyers of chocolates in the market today are becoming more health conscious.

Bargaining Power of Buyers (LOW)

Rogers has unique price points and quality that are not easily obtainable by customers.
Distinctive and exclusive taste.

Threat of substitute products (RATHER HIGH)

Numerous brands of higher and lower quality/ price points, even similar premium regional
products.
There are many substitutes and a wide variety of choices available for the customers to
choose.
The premium chocolates are the ordinary chocolates that you can find in groceries, desserts,
and other sweets that satisfies customers cravings.

SWOT Analysis
The SWOT analysis of Rogers Chocolates reveals important strengths, some weaknesses and
threats, and many opportunities for growing. This analysis shows that the company has a tremendous
opportunity to improve and expand its business.

Strengths:

Customers at Rogers Chocolates have a high index of loyalty and repeat purchase. People
who has taste the quality of the product have experimented the chocolate experience that
Rogers offers
The premium chocolate segment is experiencing a 20% annual growth rate. This segment is
where Rogers is targeting its product
Rogers has a strict control of the quality of the raw materials; in addition, most chocolates are
handmade, then hand-packed and assorted in fine art tins.
Award winning recognition
Devoted & passionate employees

Weaknesses:

Issues in Inventory Management- Out of stock and over stock


Difficulties on forecasting the demand due to seasonality of sales
Poor management
Poor online sales or attracting web
Small market niche
Old fashioned packaging
Unknown brand in many areas in Canada
Lack of brand image and customer awareness

Opportunities:

New product development


The emerging of new generations requires effort to attract these new customers. The
current increase in demanding of natural, sugarless products offer new opportunities
to the premium chocolate market

The targeted segments have a huge rate of internet use and on-line purchases. Rogers has
an opportunity to expand its online sales by improving and promoting its web site. This could
help Rogers to attract new and young customers.
Franchising and joint partnerships
Development of special line of chocolates
Re-engineering of processes, and the improvement of the brand image

Threats:
Competition
The business is shared with big players with different strategies. For example Godiva
(Nestle) achieves price higher than Rogers with lower quality products, Callebaut
products have a huge penetration in Western Canada as well as Cadbury and
Hershey.
Redefinition of the word Chocolate
The EU has redefined the word Chocolate allowing low quality products to receive
this denomination. The USDFA is following the same trend
Environmental concerns and human rights concern
Economy and demand fluctuations

PESTEL ANALYSIS
Demographic/Environmental

Consumers are finding new ways to go green, decrease their environmental footprint and to
have a healthier lifestyle. Thus, consumers are demanding more dark chocolates, organic
products and expect manufacturers to be as environmentally friendly as possible.

Economic

The Canadian market size for chocolates was US$167 million in 2006 and it was projected to
grow at 2% annually. The premium chocolate segment was experiencing a 20% annual growth
rate (Thompson et al., 2008). Economic growth has been declining worldwide. Nevertheless,
the premium chocolate segment has not received a huge impact of the crises and the growth
expectation is maintained at the same level.
The Great Recession also affecting Canada, consumers have less disposable income.

Political/Legal

Larger chocolate manufacturers are asking to the US Food and Drug Administration to change
the definition of the term chocolate. If this requisition is validated cheaper and lower quality
products can still be labelled as chocolate.
Varying laws outside of Canada for expanding business practice.

Social-cultural

Trend for healthier diets, organics products and with no trans fats.(Aging baby boomers desiring
higher quality)
Higher demand in dark chocolates, in part because of heart healthy and anti- oxidant traits.

Technological

May want to focus on technology that other larger competitors utilize, such as forecasting models
for sales so that they dont short out on inventory.
Increase internet shopping of younger demographic is a huge opportunity.

Alternative Course of Action


Business Level Strategy
Rogers should make people aware of their chocolates offered by developing creative strategies
like for example, in the advertisement through online marketing, magazines and televisions. Rogers
should focused more on differentiation by serving the niche market of wealthy consumers, people who are
willing to spend extra amount of money for the premium chocolates.
High Quality Products
To retain loyal customers, Rogers should continuously produce high quality chocolates thus
maintaining quality ingredients would help a lot.
Brand Awareness
Usually a consumer buy a premium chocolate base on its brand. Rogers should create a strong
brand name to have an advantage to the industry.
Multi-product lines
The ability to innovate and invent new product is one of the important key success factors such
that they must retain their old customers and gain new customers. Rogers Chocolate should do
this.
Value Chain Analysis
Rogers' Chocolates needs to employ a forward integration model for getting closer to their
customer base.
Production
- Labor intensive
- Handmade and hand-packed
- Batch processing
Distributors
- 50% in 11 retail stores
- 30% in wholesale accounts(gift/souvenir shops, large retail chains, tourist
retailers, corporate accounts, high end food retailers
- 10% online and mail order business and Sams Deli
Marketing and Sales
- Magazines, flyers, radios, TV, donations and online marketing
End Users
- Customers

Functional Level
Marketing Department: must be knowledgeable in segmentation, targeting and positioning of their
products.
Human Resource Department: must have quality sets of skills with knowledge of chocolates to continue
product innovation.

Finance Department: must focus on the alignment of financial management within an organization with
its business and corporate strategies to gain strategic advantage.

VRIO Analysis

Growth and Expansion Opportunities


As per observation on the case study, Rogers have more opportunities to gain competitive
advantage, increase sales and revenues and to compete the competitors. To be well known and to be
one of the leading companies in the industry.
1. Expanding the Online Sales of Chocolates Products

PROS
Low Cost of Sales
No intermediaries
High reorder rate
High chance of gaining loyal
customers
Easy ordering facility

CONS
Shipping fee is parallel to the amount of
chocolates bought
Sales agent are not prompt in responding

requests to provide links for their


top accounts
High shipping charges to isolated area
Additional costs for insulated container and

ice packs during summer


2. Franchising Rogers Outlet
-

PROS
Creates another source of income

CONS
Brand image might be spoiled

through payment of franchise fees


Reduce operating, distribution,
and advertising costs
Faster network expansion

No quality control
Disclose confidential information to
franchisees

3. Take advantage to the upcoming Olympics


-

PROS
There are 2 stores in Vancouver
and 1 in Whistler, all of them are
within the area of Olympics
Less cost for advertising to the
crowd/people attending the
Olympics

CONS
-

Roger's company is not big enough


to gain official Olympic status

4. Concentrate efforts outside British Columbia


-

PROS
Can create economies of scale
Sale of excess production capacity

CONS
-

Deflation of money due to exchange rates


Needs more people accountable outside
British Columbia
Product modification

5. Acquisition of another niche company


-

PROS
Helps block competitive threat
Easy stretch of geographic reach
Creates more cost effective production

CONS
-

Leadership issue
Resistance from rank and file employees

6. Joint venture with another Firms

PROS
Stronger brand image
Increase stability
Help increase core competencies
Easy geographical expansion
Gain access to technology, expertise
and
capabilities

CONS
-

Sharing of information
The other firm may eat up your identity
Diverging objectives of partners
Cultural barriers

7. Pairing Rogers to another high end products / brand


PROS
-

Can enhance firm's competitiveness


Can impose stronger image of
sophistication to customers

CONS
Not all customers are into the superior
type/
high-end product

8. Image Rebranding

PROS
Brings fresh look to the business
Consumers prefer edgy brands

CONS
-

Bring confusion and loss of customers


Break off the traditional classic feel
Expensive

9. Increase production capacity in Victoria

PROS
Decrease out stock in retail stores
Increase capacity

CONS
-

High labor cost


Expensive real estate
High shipping costs to customers(online,
wholesale and retail)

10.Build a new production area

PROS
New production area can be placed near
the biggest area that accumulates
highest
shipping quantity to reduce shipping
costs
Easier access to market

Better market visibility

CONS
-

Documents and government requirements

Cultural differences

Recommendation
Rogers specializes in a wide variety of premium chocolates that are enjoyed by all who
experience the products. Whether looking for a truffle, nut and chews or premium ice cream, consumers
can always expect high quality, handcrafted products. But the strategies they build, is not yet competitive
as compare with its competitors. This recommendation, could really help to Rogers to excel in the
industry:

Unionize their retail outlets, as well as the other stores that carry their products and provide a
written contract to them. It will be easier for Rogers to forecast if they have the power and control
on each and every product that they offer.
Rogers must allot a budget for acquiring machines for the production of their packaging and for
wrapping their chocolates as well. It may cost a lot but it is more economical in the long run. It will
prevent shortage of packaging from their Chinese supplier and lessen the production time of
hand-wrapping the chocolates which leads to out-of-stock issues.
To lessen costs of production plants and shipping, Rogers must acquire a new area for
production that have easier access and distribution since, Victoria has expensive real estates and
shipping fee. Plus, having a new location for production can give Rogers a better visibility to
possible market.
Rogers must apply the think global and act global in order to catch its target preferences, not only
in the taste of chocolates but also in the packaging and advertisement as well. Another, that think
global should apply not only in British Columbia but also outside the vicinity like for example in
some part of Canada and USA and also to increase the brand image and awareness on the
product offered, this is done through business expansion.
In order to adopt with the rising trend on healthy conscious market, Rogers must research
where they can find a supplier that offers high quality cocoa and organic cocoa. They can build a
partnership to make both their company stronger not only within the sales department but also
within the access and knowledge that can be shared by both.

Conclusions
Rogers has many options to strategize their business. My recommendations could help you
where Rogers to go through. But my conclusion is just a one part of my recommendations that could help
a lot to Rogers Chocolates to minimize the problems. For this, I would rather chose to expand its
business (Global Expansion) retail and wholesale outside British Columbia particularly USA and some
part of Canada, it could be costly, more time to invests but for sure, it could help a lot in the long run.
But before Rogers expand its business there should be an improvements to be made: brand
image renovation while still maintaining the steady balance tradition and modernization, increase internal
capacity through improving production processes and adding technology to the packaging step,
innovation and etc. Forward integration model could also be apply.
Benefits of expanding globally:

Increase brand awareness


Large customer base (improve value chain)
Increase market share
Increase in production
To compete the leading companies in such industry
Can gain competitive advantage and etc.

Why USA and some part of Canada?

Well functioning countries


Low cultural distance
Large customer base

To penetrate USA and some Canadian countries, Rogers should do the following:

Build partnership with some souvenir stores, wholesale or retail outlets and high food retailer.

Build partnership on Airport Souvenir Management like for example DUTY FREE, as we all
know almost tourists people are the one who always buy homecoming gift in their love ones.
Build partnership with some supermarkets (even though some competitors would do this also)
Brand management

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