ROCKY MOUNTAIN
CHOCOLATE FACTORY
MGMT 436 GROUP 3
Karla Schaapveld, Jeremy Smith, Mark Bourgoin, Matt Misitano, Diego Elizalde,
Jeff Stanton, and Reilly Kindred
I. CURRENT
SITUATION
JEREMY SMITH
CURRENT SITUATION
JEREMY SMITH
I. CURRENT SITUATION
A. Current Performance
• 329 Franchised and 5 Company owned stores
• Increasing revenues year to year with $16.7 Million in
2008
• Sales have slowed due to economic downturn but the
company is in an excellent financial position to
withstand the recession
CURRENT SITUATION
JEREMY SMITH
B. Strategic Posture
1. Mission
• Quality, Taste, Value, and Variety of products
• Quality of the product is the number one factor
CURRENT SITUATION
JEREMY SMITH
B. Strategic Posture
2. Objectives
• Manage money carefully during economic downturn
• Slowed expansion and elimination of debt
• Maintain a good relationship with employees as well as
franchisees
CURRENT SITUATION
JEREMY SMITH
B. Strategic Posture
3. Strategies
• Adding stores in resort, tourist, street front, and entertainmentoriented locations
• RMCF is repurchasing stock as it felt it was undervalued
• Owns 8 refrigerated trucks to move products from factory to
stores
• New line of sugar free candies for the health conscious and those
with special dietary requirements
• Each store is setup to make product where customers can view
and smell the end result
CURRENT SITUATION
JEREMY SMITH
B. Strategic Posture
4. Policies
• Trucks are sent out from the factories with product for stores but
return with ingredients to make more product making the trips
more cost effective
• Franchisees are held to a high standard of excellence
• Company ensures that store locations are spaced apart well and
offer the best probability for success
• Free samples of fresh products made in stores
II. CORPORATE
GOVERNANCE
MARK BOURGOIN
ROCKY MOUNTAIN CHOCOLATE FACTORY INC.
BOARD OF DIRECTORS
Franklin Crail
Chairman
CEO
President
Bryan Merryman
Director
Lee Mortenson
Gerald Kien
Clyde Engle
Scott Capdevielle
Director
Director
Director
Director
VP
CFO
COO
Treasurer
ROCKY MOUNTAIN CHOCOLATE FACTORY INC.
TOP MANAGEMENT
Franklin Crail
Chief Executive Officer
President
Director
Bryan Merryman
Vice President
Edward Dudley
Chief Financial Officer
Senior Vice President –
Chief Operating Officer
Sales and Marketing
Treasurer
Director
Gregory Pope
Jeremy Kinney
Jay Haws
Senior Vice President –
Vice President –
Vice President –
Franchise Development
and Operations
Finance
Creative Services
Donna Coupe
Vice President –
Willian Jobson
Virginia Perez
Franchise Support
and Training
Chief Informations Officer
Corporate Secretary
III. EXTERNAL ENVIRONMENT :
OPPORTUNITIES AND THREATS
(SWOT)
MATT MISITANO
EXTERNAL ENVIRONMENT
A. Natural Environment
B. Societal Environment
C. Task Environment
D. Summary of External Factors
NATURAL ENVIRONMENT
1. Extreme heat, Rain, Snow, Hurricanes, and Earthquakes
negatively affect foot traffic and tourism. Weather
conditions also affect crop production.
2. Severe weather conditions exist in all regions of the
world and at different times depending on the season
and geographic location.
SOCIETAL ENVIRONMENT
1. Economic
2. Technological
3. Political-Legal
4. Sociocultural
ECONOMIC FORCES
a. Unstable economic conditions locally and globally are in a recession cycle
but there are signs locally that show the economy is trending into the
recovery stage which will increase consumer spending. (O)
b. Low cost marketing strategy . (O)
c. Company owned trucks. (O)
d. Hershey and Mars allocating financial resources to increase the premium
chocolate products locally and globally. (T)
e. Experts forecast that the Gourmet and Organic Chocolate industry will
grow to become a $ 2 billion industry by 2007. (O)
f. Fixed pricing contracts with vendors for ingredients. (O)
TECHNOLOGICAL FORCES
a. Increased Internet functionality and security increasing online consumption. (O)
b. Dynamic manufacturing processes implemented using advanced planning and
scheduling systems with lean processes to reduce and quickly turn over inventory
reducing costs and storage space (O).
c. Automated machine processes eliminating work previously done by hand increasing
the speed, capacity, and efficiency of manufacturing processes. (O)
d. New manufacturing process called NETZSCH’s ChocoEasy along with purchased
automated factory equipment allowing the development of any size or variety of
candy to be cost effectively manufactured using their own proprietary brand. (O)
e. Small chocolate manufacturing companies are being bought by huge companies with
automated machinery and processes in place to mass produce gourmet chocolate (T).
f. Airport’s constructing more motorized walkways decreasing foot traffic and moving
potential consumers through terminals faster (T).
POLITICAL-LEGAL FORCES
a. Fair trade regulations and the use of child labor. (T)
b. 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. (T)
c. Trucking regulations from federal, state, and Canadian provinces.
(T)
d. Import and Export regulations (T).
e. Potential for striking labor forces like the 5 day strike by laborers on
the Ivory Coast in 2006 due to unbearable working conditions. (T)
SOCIOCULTURAL FORCES
a. Trends show consumers are supporting chocolate companies
that implement ethical practices and follow fair trade
regulations. (T)
b. Economic recovery leads to an increase in consumer’s
disposable income increasing the consumer’s ability to
purchase premium goods. (O)
c. Research indicates Dark chocolate has health benefits. (O)
d. Trends indicate consumers are willing to pay higher prices
for organic and gourmet chocolates that they feel are healthier
for them. (O)
TASK ENVIRONMENT
The task environment forces that drive industry
competition for Rocky Mountain Chocolate factory are:
ingredient pricing, geographic locations, regulatory and
licensing policies, large corporations entering the
gourmet and organic market sectors, the ability to
purchase optimal retail locations, and efficient
manufacturing and distribution processes. These forces
are broken down in the Task Environment and are rated
as High, Medium, or Low forces depending on their
impact.
TASK ENVIRONMENT FORCES
AND RATINGS
a. 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. (T)
b. Bargaining power of buyers Medium: Gourmet chocolate is a leisure product
and there are many alternate products and competitors. (T)
c. Threat of substitute products or services High: Economic strength and
consumer’s disposable income greatly affect gourmet product consumption and
lower priced chocolate is very accessible to consumers. (T)
d. Bargaining power of suppliers Low: Fixed pricing and alternative supplier
options give RMCF leverage. (O)
e. Rivalry among competing firms High: Industry growth and increasing entrants
into the market pose a threat to RMCF. (T)
f. Relative power of unions, governments, and special interest groups Medium:
Consumer demand for fair trade and good ethical practices, union demands
being met, and government regulations present challenges for RMCF. (T)
TASK ENVIRONMENT
Key factors in the immediate and future task environment for Rocky Mountain Chocolate
Factory Inc.
• Consumers demand for quality and healthy products as well as adherence to ethical labor
practices.
• Big name competitors like Mars and Hershey entering the market locally and globally.
• Supplier’s willingness to provide ingredients at a fixed cost.
• Creditors ability to provide potential franchise owners with loanable funds. Labor unions
and employers ability to work together to produce raw materials at a low cost while
operating under regulated guidelines.
•
Government and trade regulations dictate operating guidelines and entrance barriers in
the industry.
• Interest groups and local communities will support corporations that display ethical
business practices and protest against businesses that do not follow those guidelines.
• Shareholders will support and invest in profitable business activities and growth as long
as profits are realized.
SUMMARY OF EXTERNAL FACTORS
(EFAS TABLE)
IV. INTERNAL ENVIRONMENT:
STRENGTHS & WEAKNESSES
DIEGO ELIZALDE
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 3rd 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.
SUMMARY OF INTERNAL FACTORS
(IFAS TABLE)
V. ANALYSIS OF
STRATEGIC FACTORS
JEFF STANTON
SITUATIONAL ANALYSIS (SWOT)
•
•
•
•
•
Strengths
High Quality Product (won the 3 heart rating in a blind
taste test)
Highly cohesive corporate culture
Strong brand recognition
Careful selection of store sites
Strong Franchise Program (#1 in 2008, Entrepreneur
magazine)
SITUATIONAL ANALYSIS (SWOT)
Weaknesses
• Global presence
SITUATIONAL ANALYSIS (SWOT)
•
•
•
•
Opportunities
New environments for success
-Airport locations
-Sport Arenas
-Kiosks
Low cost marketing
Fixed price contracts
Company owned trucks
SITUATIONAL ANALYSIS (SWOT)
Threats
• Weather (tourist areas, crop farming)
• Competitors
-Hershey Foods
-Mars Inc.
-Godiva Chocolatier
-See’s Candies
-Fanny May
REVIEW OF MISSIONAND OBJECTIVES
• Mission
• Quality, taste, value and variety of products
• Quality of the product is the number one factor
• Objectives
• Manage money carefully during economic downturn
• Slowed expansion and elimination of debt
• Maintain a good relationship with employees as well
as franchisees
REVIEW OF MISSION AND OBJECTIVES
• Rocky Mountain Chocolate Factory has continued to
maintain its mission and objectives appropriately during
times of expansion as well as recession.
VI. STRATEGIC ALTERNATIVES
AND
RECOMMENDED STRATEGY
REILLY KINDRED
STRATEGY DEVELOPMENT FROM SWOTTOWS MATRIX
SWOT
TOWS
TOWS- USED TO CREATE
NEW STRATEGIES
Strengths:
Weaknesses:
Opportunities: SO Strategies
-Focus on future
growth.
WO Strategies
-Internal fixes &
improvement
Threats:
WT Strategies
-for Survival
ST Strategies
-External fixes
MAIN STRATEGY ALTERNATIVES:
o Corporate Strategies
• Stability, Growth and Retrenchment
o Business Strategies
• Cost Leadership and Differentiation
CORPORATE STRATEGIES
o
Growth
•
•
Concentration
Diversification
•
•
•
•
o
Stability
•
•
•
o
Vertical Growth
Horizontal Growth
Concentric
Conglomerate
Pause/Proceed with Caution
No Change
Profit
Retrenchment
•
•
•
Turnaround
Captive Company
Sell-out/Liquidation
BUSINESS STRATEGIES
o
o
Cost Leadership- lower cost competitive strategy aimed at huge
markets and requires efficient operation for general affordable
product
Differentiation- aimed at the broad mass market moving a product
perceived as unique charging a premium
ROCKY MOUNTAIN
CHOCOLATE FACTORY
A. STABILITY ALTERNATIVES
1. Growth Strategy- (horizontal growth through franchising)
Pro: Continue reaching and expanding to new markets as profits carry
forward.
Con: May not allow enough time for thorough planning.
2. Differentiation- (unique product and production process adds mystique)
Pro: Viable for above-average earnings for exceptional product resulting
in brand loyalty lowering customer’s sensitivity to price.
Con: May see losses in hard times because of it being a luxury.
3. Stability StrategyPro: Allows for proper training of new franchisees.
Con: May result in loss market share.
B. RECOMMENDED STRATEGY
Growth is the recommended strategy for the Rocky Mountain Chocolate Factory. The total U.S. candy
market approximated $29.3 billion of retail sales in 2009, with chocolate generating sales of approximately
$16.9 billion. That’s almost 60% of the candy game. RMCF as of March 31, 2010, there were 11 Companyowned, 29 franchisee/licensee owned and 305 franchised Rocky Mountain Chocolate Factory stores
operating in 36 states, Canada, and the United Arab Emirates. Franchising, licensing and exporting will help
short and long term goals of the company.
CONCLUSION
Discussion and/or Questions?
Thank you for your attention!