Strategic Analysis fo Rogers’ Chocolates
Mr. Steve Parkhill, president of Rogers’ Chocolate, has been faced with the challenge to double or triple the size of the company within 10 years. Ideas for growth have already been presented by the board, and these include franchising, online business, corporate gift market, and focusing on the 2010 Winter Olympics in Vancouver, British Columbia. It was suggested to focus its efforts outside of British Columbia, but there is no guarantee that they would have the same success elsewhere.
The three alternatives that have been presented include developing growth strategies focused on (1) sales, (2) structure, and (3) e-commerce. Upon evaluating each of these alternatives, the one that has been presented to Mr. Parkhill is to develop a growth strategy focused on e-commerce. E-commerce is increasing in popularity each day. Most businesses have an online shopping component which is always convenient. By offering shipping in Canada and the United States, Rogers’ could reach a whole new market.
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INTRODUCTION In March of 2007, Mr.
Steve Parkhill had just started his new job as president of Rogers’ Chocolate. He spent two months training with the former president, and is now considering his options for growing the company. The following outlines the problem he is facing, some company background information, alternatives, recommendation, and a brief plan for implementation. PROBLEM The issue that the president of Rogers’ Chocolates (Rogers’), Mr. Steve Parkhill, is facing is how to double or triple the size of the company within 10 years, at the request of the board of directors.
Each of the board members and members of the management team had a different idea of what Rogers’ needed to do to achieve such growth. Mr. Parkhill needs to develop a strategy that would fit with the company’s culture, and then gain the support of the board, the management team, and the employees. BACKGROUND Rogers’ Chocolate was founded by Charles Rogers in 1885 in Victoria, British Columbia. It was Canada’s oldest chocolate company, and British Columbia’s second oldest company.
For the past two decades, the company has been owned by a private group comprised mainly of two financial executives and partners with Connor, Clark & Lunn, a Vancouver-based investment firm; an art dealer and private investor; and a former owner of Pacific Coach Lines, a Victoria-based bus company. These four and a past president of Rogers’ made up the board of directors. During these twenty years, the company had grown sales by more than 900 percent. ALTERNATIVES & ANALYSIS There are several alternatives that are available to Mr.
Parkhill to assist in increasing the size of the company. In his first few months on the job, Mr. Parkhill had been seeking the opinions of managers and board members on various growth options. Ideas that had already been discussed, though not necessarily fully researched, included franchising, online business, the corporate gift market, and focusing its efforts outside of British Columbia. Develop a growth strategy that focuses on sales There are four way to increase sales: market concentration, innovation, penetration, and diversification.
The following outlines each of these areas. Market Concentration In terms of market concentration, each business has possible customers that it has not yet reached, customers that also purchase from other businesses, and customers it has lost. This leads to great potential in discovering ways to increase sales in existing markets. To get customers to purchase more, there are three ways to do so: (1) more frequent use, (2) larger quantities, and (3) new uses. When it comes to more frequent use, the organization shall produce the feeling of becoming a habit.
By changing displays or special offers frequently, offering novelties or events, or even advertising the benefits of regular use, customers may be drawn in. Also, Rogers’ could offer a frequent-buyer program, and/or improve convenience. Such things as longer hours, faster preparation, greater availability, and easy payment options could easily attract the market they’ve been missing. Some consumers prefer purchasing products in bulk. It may be for a party, an office meeting, or to save time. Whatever the reason, Rogers’ could offer incentives for bulk purchases or combination buys.
They could also encourage stockpiling, which would present packages in larger-than-needed quantities, or perhaps increase the size of servings. There may not be many “new” uses for chocolate, but there are a variety of ideas. Personal consumption, gifting, prizes, etc. are all ways to use the Rogers’ Chocolates product line. Innovation By actively listening to what customers, employees, and suppliers say, Rogers’ can find ideas for new products, features, or related services. There are several tactics for introducing new products with existing markets, which may be of interest to Mr.
Parkhill. The first of these would be introducing replacement products. Simple changes such as the (1) appearance (new colors, packaging, or styling) can revamp a tired product line, (2) message can emphasize econconsciousness or multiculturalism, and (3) technology, which could mean introducing ecommerce, or offer organic ingredients. Some additional features Rogers’ could incorporate would include optional extras, customization, or highlighting special occasions. The option to include complementary items is also available, as well as introducing new items altogether.
To do this, Rogers’ would need to extend its brand and capitalize on goodwill, or cross-sell, where they would offer a wider variety of services either supplied by the company under a license from others, or supplied by others who would pay a commission to them. Penetration If Rogers’ has flooded the local market already, the most obvious thing to do to increase sales is to reach out to new buyers. The risk associated with this is that you move before you are profitable in your first market and cannot financially withstand the learning curve a company will face with new customers, or the new competition.
It is important to note the ways of penetrating new markets. The first would be segmentation, where Rogers’ would use market research to find new segments that could use their product, or they could re-focus their current segment, and find new uses or applications to capture new customers. Secondly, Rogers’ could focus on geographic outreach, where they could advertise or go for catalogue sales. This would then tie in with developing more locations; open new stores, warehouses or factories, but centralize head office functions at the “old” location.
Rogers’ could also utilize temporary locations, such as kiosks. Diversification Diversification is considered to be the most radical and risky of sales growth strategies, especially for smaller business. It requires new capital investment, new product development, and a new business plan. If it levels out seasonal or cyclical ups and down, it is attractive, and may provide some relief from having all of a company’s attention focused on one point. Rogers’ is not a seasonal operation, but it has its’ peak sales at certain times of the year (i. e. : Christmas, Easter). Finding ideas for the off-season does not directly apply to Rogers’. Develop a growth strategy that focuses on structure Rather than adding or altering products or entering new markets, structural strategies aim to increase sales by changing the way you do business, specifically by developing relationships with other businesses. This is done through franchising, licensing, and strategic alliance. Franchising Franchising sells the right to copy your business in another location, so rather than hiring new employees and opening new outlets, Rogers’ could take on other businesses to reproduce their operation under its’ guidance.
The idea of franchising had already been discussed, but not researched. The board was concerned about relinquishing control of the brand and pricing, so this is not a viable option. Licensing Licensing sells the right to manufacture or distribute a product or service or use a technology or trademark. This is a great way to expand without capital investment. As the licensor, Rogers’ would build their business through royalties or commissions while the licensees would grow through product line extension. It is important to consider uniqueness, potential, and adaptability when taking this route.
Strategic Alliance A strategic alliance establishes a network or interrelated businesses, with each one performing a separate function. Rogers’ would focus on the core of their business, and expand that aspect while outsourcing other aspects. This would grow the market share and the business, but not necessarily the size. Types of strategic alliances include partnerships, joint ventures, outsourcing, and virtual organizations, and it is important to keep network presence, common goals, and structure in mind.
Develop a growth strategy that focuses on e-commerce Technology is a strategic tool for growth, and e-commerce is no exception. While ecommerce has generally produced only marginal revenue gains for existing businesses, it is still very valuable as a virtual display window, shopping source, collaborative site, service depot, transaction centre, and customer gateway to your business. Success with e-commerce greatly depends on obtaining expert technical assistance, and not straying from strategic goals that caused the company to introduce it in the first place.
Some strategic goals that e-commerce can assist you in accomplishing are improving efficiency in systems, promoting innovation, creating information systems to improve bottom lines, extending marketing reach and range, and integrating Web presence with your business plan. Once Rogers’ has identified its strategic goals, the next step is to evaluate the kinds of ecommerce activities that can help accomplish their objectives. Typical components of B2B and B2C e-commerce strategies include goods/services trading, online catalogues, sales promotion/advertising, and transaction processing.
Most small businesses focus on product promotion through online catalogues, transaction processing, and customer support. Online shopping is becoming an everyday activity for individuals worldwide. By offering products through an online shop, customers have access to the same products, even if there is no physical Rogers’ location in their area. Also, by adding a Web component, Rogers’ would need an IT team, which would increase the employee portion of the company as well. RECOMMENDATION Upon completing a thorough analysis of Rogers’ Chocolates, the recommendation presented to Mr.
Parkhill will be to develop a growth strategy that focuses on e-commerce. With online shopping becoming more popular, as well as its convenience, it is guaranteed to increase overall sales, broaden the customer base, and attract a completely new market. We live in a world where online shopping has become a staple, and it is something that customers actually look for now. IMPLEMENTATION In order to get an online shopping component off the ground for Rogers’, Mr. Parkhill would first need to get the board members and management team on board with the idea. Then they would need to develop an IT team.
There may be some restructuring involved, and deciding which products to offer online, etc. , but in the long run, it would certainly be worth it. If Rogers’ does not keep up with the modern world, there is a chance that they would be missing out on a great opportunity, and a whole new market they would have never reached otherwise. An online store has the convenience of opening new locations, but without the cost of up keeping them. Also, there is less risk involved. Just because Rogers’ is successful in British Columbia does not mean they would have the same success with a physical location elsewhere. CONCLUSION
Upon researching Rogers’ Chocolate, it seems that they have added an online shopping feature to its website. They offer gift baskets, party and wedding favours, truffles, etc. and offer shipping across Canada and the United States. Their mission statement says: Rogers’ Chocolates is committed to producing and marketing fine products which reflect and maintain our reputation of quality and excellence established for over a century. All aspects of our business will be conducted with honesty and integrity, upholding our proud Canadian tradition. After more than 100 years together, Rogers’ is still in business, and doing better than ever.