MM 5012

Corporate and Business Strategy

Syndicate 10:

Devi Arnita 29115089

Dian Putratama Basuki 29115207
Harir Muhammad 29115218
Roja Fitridayani 29115424
 How Did Rocky Mountain Succeed In The Past?
Product and Service:
• Developed product quality, taste, value, and variety;
• Ensured the freshness of products sold in its stores with frequent shipments to distribution
outlets from its 53,000-square-foot manufacturing facility in Durango, Colorado;
• Expertise in the manufacture, merchandising and marketing of chocolate and other candy
products; and
• Commitment to customer service
Marketing:
• Brand name recognition;
• Succeed in franchising program  held to a high standard of excellence
• Established low-cost, high-return publicity opportunities through participation in local and
regional events, sponsorships, and charitable causes;
• National advertising is not a part of the firm’s marketing strategy
Location:
• Established a fun and inviting atmosphere in all of its locations  maintained its store’s
atmosphere and ambiance;
• Careful selection of sites for new stores and kiosks
What Problem Did Rocky Mountain Face At That Time?
 Analyze The External Environment of Rocky Mountain

PESTEL Tools
Political & Legal
• Fair trade regulations and the use of child labor
• Franchising Regulations and tax laws
• Patent protection i.e. Propriety rights in US and Canada
• Licensing costs and regulation compliance with health, safety, sanitation, building, and fire
agencies from each state where stores are located along with federal regulations for the
manufacturing and distribution of food products (i.e. Packaging laws, food certificates)
• Labor strikes

Economic
• Unstable economic conditions locally and globally are in a recession cycle
• Inflation: Rising prices, Rising prices and Reduces Per Capita Income
• Price fluctuations: changes in price of raw materials
• Unemployment: Reduces income of people, Lowers demand for premium-chocolates
 Analyze The External Environment of Rocky Mountain

Sociocultural
• Consumer Tastes and Trends – consumers demand for lower-fat healthier snacks and
higher quality chocolate. They show interest in the health related benefits of chocolate.
• Gourmet Chocolate and Organic Chocolate – consumers are willing to pay higher prices
for chocolate they feel are healthier products made with quality ingredients and free from
chemicals and preservatives.
• Health Consciousness of Consumers – Other manufacturers had been experimenting
with low-fat, sugar-free products and chocolates fortified with minerals, vitamins,
antioxidants, and probiotics.
• Ethical and Fair Trade Chocolate – Trends show consumers are supporting companies
that implement ethical practices and follow fair trade regulations. (i.e. exploitation of African
workers)

Technological
• Increased Internet functionality and security increasing online consumption
• Transportation network
• Change in automated machinery in manufacturing  enables small chocolate
manufacturing companies to produce themselves
 Analyze the Industrial Environment of Rocky
Mountain
Porter’s Five Forces
• Bargaining power of Buyer: MEDIUM
Gourmet chocolate is a leisure product and there are many alternate products and competitors.

• Bargaining power of Suppliers: LOW

Fixed pricing and alternative supplier options give RMCF leverage.

• Threat of new entrants: HIGH

Large corporations like Mars and Hershey have positioned themselves to enter the market
globally, and there are low entry barriers.

• Threat of substitutes: HIGH

Economic strength and consumer’s disposable income greatly affect gourmet product
consumption and lower priced chocolate is very accessible to consumers.

• Competitives rivalry within an industry: HIGH

Industry growth and increasing entrants into the market pose a threat to RMCF.
 Competitors
1. Scharffen Berger and Joseph Schimidt
• -medium-sized gourmet chocolate companies
• -$46.6 million and $61.1million

2. Principal competitors
• Alpine Confection Inc., Godiva Chocolatier Inc., See’s Candies Inc., Chocoladefabriken Lindt & Sprungli AG, Fannie May and
Ethel M’s/ethel’s

3. Godiva Chololatier
• Annual sale - $500million
• Franchised retailed stores, company owned stores and distribution
• Part of UK group, which is largest consumer goods company in Turkish food industry

4. Chocoladefabriken Lindt & Sprungli

• Multiple brand names; Lindt, Ghirardelli, Caffarel, Hofbauer and Kufferle
• Lindt & Sprungli; recognized leader in premium chocolate in more than 80 countries

5. Alpine confection Inc

• Sale $125 million
• Owned many candies company; Maxfield Candy
• Produce confections under license for Hallmark and Mrs. Fields

6. See’s Candies
• Manufactured over 100varieties of candies and over 200 retail candy shops

7. Wayne Zink and Randy Deer (new competitors)

• Endangered Species Chocolate Company
• Sale &16million
• Natural food stores
• Ganic and healthy products made with fair-traded ingredients
 SWOT Analysis (1)
Strength Weaknesses:
1. Products’ quality, variety and taste 1. Small store sizes and inventory storage
2. Store’s special ambiance  attractive 2. No patent protection for recipe
stores sizes generate strong name 3. Lack of supplies/stocks needed by other
recognition franchisees;
3. Good relationship with customers, and 4. Lack of technology;
suppliers; 5. Did not intend to engage in national
4. High quality customer service; advertising;
5. Sell franchises to motivated and energetic 6. Lack of awareness of the company;
people with careful selection of store sites
6. Strong Franchise Program (#1 in 2008,
Entrepreneur magazine)
7. RMCF’s trademarks of chocolates and
candies;
8. RMCF’s specialties/signature piece/best
selling items;
9. Marketing and promotional efforts;
10. Own trucking system
 SWOT Analysis (2)
Opportunities
1. Continued growth and success (includes
more franchises)
2. Continuous in creating and offering new
confectionary products i.e. Low-fat
healthier snacks, health-related benefits
of chocolate and (higher-priced premium
segment
3. Growing demand in new markets i.e. for
Western goods, including
chocolates/Chocolate consumption
increases;
4. Increase of sales during holiday seasons
5. Expansion of the company.
Threat
1. Monetary fluctuations and economic;
political, and weather conditions in
countries in which both nut meats and
cocoa beans were grown;
2. Consumer tastes and eating habits
includes health consciousness of
consumers
3. Traffic patterns;
4. Weather conditions that could influence
the sale of other confectionary products;
5. Recessionary and inflationary trends;
6. Consumer disposable income and
spending levels;
7. Unemployment rates;
8. Growing competitors;
9. Unethical Issue
 Corporate Strategies Suggestion

• Focus on ethical practices of the firm and emphasis on hand-made

chocolates to capture handmade chocolates trend and use existing brand
recognition to next level.

• Joint venture to increase global presence and use firm’s quality chocolates as
defense against competitors as well as to satisfy increasing demand.

• Expansion to countries such as Japan and china would be advisable

 Business Strategy Suggestion
Cost Leadership
 lower cost competitive
strategy aimed at huge
markets and requires
efficient operation for general
affordable product.
1. cost reduction from
experiences, tight cost,
overhead control
2. cost minimization in
areas like R&D, service,
sales force, advertising
and so on
Differentiation
 aimed at the broad mass
market moving a product
perceived as unique charging a
premium
 A differentiation strategy calls
for the development of a
product or service that offers
unique attributes that are
valued by customers.
Customers perceive the
product to be different and
better than that of rivals. The
value added by the uniqueness
of the product may allow the
firm to charge a premium price
for it. Differentiation can be
based on product image or
durability,after-
sales,quality,additional
features. It requires
flair,research capability and
strong marketing.
 Thank you
12
 CORPORATE STRUCTURE

 
• Incorporated company, operates franchises nationally and internationally.

• The company operates as a highly cohesive unit, even though it has an

active franchising program.

• Some decision making, such as pricing, is left to local stores. However,

more important decisions, such as store placement, have to be approved
by senior management.

• Corporate structure is clear to all company members. Training manual and

operating specifications insure that this information is divulged to everyone.

• The Corporation’s structure is instrumental to effectively manage its large

geographical footprint of franchises.
 CORPORATE culture

• The company values clear objectives and well defined goals.

• A review of the case study materials, plus a visit to their

company website revealed no considerable sustainability efforts.

• Company culture is to adapt quickly and efficiently to

challenges, such as establishing its own fleet of refrigerated
shipping trucks after finding no suitable 3 rd party provider.

• Internationalization is an important element of the corporate

culture, as evidenced by its international franchising program.
 Resources

 
Marketing
 
• Utilizes low cost marketing tactics, such as participation at local events.

• Store locations utilize existing customer bases to reduce marketing costs.

• National advertising is not a part of the firm’s marketing strategy.

• Company utilizes in-store advertising to stimulate impulse purchasing.

 resources

 Finance
 
• Company consistently making a profit.

• Operating expenses (led by fuel costs) increasing.

• Multiple income sources (sales to franchised stores, sales from company stores, and setup fees and
royalties from franchises).

• Overall financial health is strong with excellent long term prospect.

 
Research and Development
 
• Substantial R&D investment goes into store concept, market research for store placement, and developing
inviting spaces to promote sales.

• Over 300 recipes created by its Master Candy Maker.

• Utilizes company store as testing grounds for new products.

 
 resources

Operations & Logistics

• Strong areas for this firm.

• Entrepreneurship has led to extremely streamlined operations.

• Perfect blend of in-store production and external purchasing.

• Efficient transportation solution by using own truck fleet.

 
Human Resource Management

• Most employees are hourly.

• Utilizes temporary labor during peak times.

• Company emphasizes respect, commitment and professionalism.

• Company states wages and benefits are competitive and fair within the industry.
 Resources

Information Technology

• Not stated in case study.

• Stores operate independently from main corporate structure.

• Some aspects of its operation must entail a certain level of

Information Technology utilization, such as shipping, and company
sales performance, inventory control, and accounting. However,
Information technology does not appear to be a critical aspect of the
operation.