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Transcript of Rogers'
PREPARED AND SUBMITTED BY GROUP 2
ROSLAN ABD KARIM (MR081075)
MEHDI ABBASNIA (MR081182)
JIANG HONG (MR081082)
NIMA KHODAKARAMI (MR081189)
MUHAMMAD ZULFAKAR AHMAD (MR081062)
GROUP LEADER: ARASH VOSSOUGHI (MR071108)
NOTE: Appendixes have been attached to the hard copy of this document
Based on the strategic decision‐making approach, in the first step, we evaluated
Rogers’ Chocolates current performance. A summary of financial ratios has
been presented as Appendix 1. We had a review over the company’s current
mission, objectives, strategies, and policies (Appendix 2). In the second step,
based on the case information, performance of the firm’s Top Management has
been reviewed. Later, we have scanned external environment of the firm in
order to determine the strategic factors that pose opportunities and threats.
Then the internal environment of Rogers’ Chocolates has been scanned to
determine the strategic factors that are Strengths and Weaknesses and we did
an in depth SWOT analysis to pinpoint problem areas (Appendix 3). In the light
of the analysis, we have tried to follow the strategic decision‐making approach
in case analysis and decision based on the exclusive framework of Dr. Lai.
Foreword
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 1
Rogers’ Chocolates
1. STRATEGIC MATTERS:
Two different types of strategic matters that need strategic decisions have been identified:
2. ISSUES: In order to address each of the strategic matters, the most important things to do are:
3. ALTERNATIVES: Generated alternatives for each of the identified issues are:
Issue 4: Whether to expand retail sales system
A 1: No expansion
A 2: More emphasize on retail rather than wholesales
A 3: Expanding retail system within the region
A 4: Expanding retail system to other parts of the country
Issue 3: Whether to expand online selling system
A 1: No. Current system is good enough
A 2: Yes. Expanding online selling system and e-marketing
Issue 2: Whether to develop new concepts of product and packaging
A 1: No new product development and retaining on traditional concept products of packaging.
A 2: Yes. Introducing new concepts of products with more customizable and fashionable packaging
Issue 1: Whether to implement integrated production planning and operation control system.
A 1: No. Coping with the current situation
A 2: Yes. Implementing integrated system for production plan and controlling operation
Issue 2: Whether to develop a new concept of product and packaging
Issue 3: Whether to expand online selling system
Issue 4: Whether to expand retail sales system
Issue 1: Whether to implement integrated production planning and operation control systems.
ACHIEVING ORGANIZATIONAL OBJECTIVE “Achieving 200% - 300% growth rate within 10 years”
SOLVING ORGANIZATIONAL PROBLEM “Overcoming production and operation problems”
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 2
4. CRITICAL FACTORS
Issue 1: Whether to implement integrated production planning and operation control systems.
C. FACTORS CURRENT SITUATION FUTURE SITUATION LOGICAL ASSUMPTION
Productivity and efficiency measurement
There are no meaningful measures of productivity or efficiency existed.
Measuring performances to recognize efficient versus inefficient activities
Ability to recognize value added activities from inefficient activities.
Inventory Management
Out-of-stock issue
Over stock items Shortage / surplus avoidance
Deals with ups and downs of sales pattern through healthy inventory management
Cost of operation
Long change over-times, repetitive shipments, opportunity cost due to shortage, and discount over surplus items
Control over the operation cost and efficient utilization of resources result in gaining competitive advantage
Cost is controlled by wastage reduction, value analysis, inventory control, on-time delivery and efficient utilization of all resources.
Communication between functions
Weak internal communication
Mutual understanding of the capabilities, competencies and constraints of each organizational function
It establishes vertical and horizontal channels for a better communication
Issue 2: Whether to develop new concepts of products and packaging
C. FACTORS CURRENT SITUATION FUTURE SITUATION LOGICAL ASSUMPTION
Change in consumer preferences
One line of trans-fat-free products and some no sugar added items
Differentiation from the rivals
Satisfying increasing number of health conscience consumers will distinguish the firm from its rivals.
Packaging and customizability
Traditional, old fashion Attracting diverse group of customers
New generation of customers want more glitzy, fashionable and more customizable products and packaging
Issue 3: Whether to expand online selling system
C. FACTORS CURRENT SITUATION FUTURE SITUATION LOGICAL ASSUMPTION
Global sales Mostly within Canada and US.
Capturing a broader market
Online selling system enable firms to capture a broader market
Capturing a new customer segment
Mostly loyal customers from rural areas (60% are regular customers)
Attracting younger and new customers
Younger generation tend to do everything online!
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 3
Giving gift/discount
Only a “thank you” letter along with catalogue
Giving gift/discount after a certain amount of buying
It encourages customers to buy more
Aggressive e-Marketing
NO Higher brand image due to aggressive e-Marketing activities
Aggressive e-Marketing is a branding tool that keeps you on customers' minds.
Customer loyalty program
NO Loyal online customers Giving gift, bonus, discount, and free delivery keep the customers loyal
Issue 4: Whether to expand retail sales system
C. FACTORS CURRENT SITUATION FUTURE SITUATION LOGICAL ASSUMPTION
Increase Sales 50% of sales Increase in sales It seems that retail shops are able to sell more chocolate (p. c-182)
Brand awareness
Unknown brand outside the Victoria. Also, some reps cannot present the brand adequately.
More brand awareness outside the region via well trained and more committed employees
Well trained and more dedicated employees enable to present the brand adequately and appropriately sell it outside the region.
Taking advantage of the growing market
No growth Higher growth rate Presence in a wider market along with more brand awareness enables the firm to gain a higher growth rate.
Selling in a broader market
Niche market Presence in a wider market
Expanding retail sales to
5. EVALUATION OF ALTERNATIVES
5.1, Issue 1: Whether to implement integrated production planning and operation control systems.
CRITICAL FACTORS BASED ON FUTURE SCENARIO
ALTERNATIVES
Coping with the current situation
Implementing integrated production planning and operation control systems
Recognizing efficient versus inefficient activities NO YES
Shortage / surplus avoidance NO YES
Control over the operation cost and efficient utilization of resources result in gaining competitive advantage
NO YES
Mutual understanding of the capabilities, competencies and constraints of each organizational function
NO YES
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 4
5.2, Issue 2: Whether to develop a new concept of product and packaging.
CRITICAL FACTORS BASED ON
FUTURE SCENARIO
ALTERNATIVES
No new product development and retaining on traditional concept products of packaging
Introducing new concepts of products with more customizable and fashionable packaging
Differentiation from the rivals NO YES
Attracting diverse group of customers NO YES
5.3, Issue 3: Whether to expand online selling system
CRITICAL FACTORS BASED ON FUTURE
SCENARIO
ALTERNATIVES
No. Current system is good enough
Expanding online selling system and e-marketing
Capturing a broader market NO YES
Attracting younger and new customers NO YES
Giving gift/discount after a certain amount of buying NO YES
Higher brand image due to aggressive e-marketing NO YES
Loyal online customers NO YES
5.4, Issue 4: Whether to expand retail sales system.
CRITICAL FACTORS
BASED ON FUTURE
SCENARIO
ALTERNATIVES
No
expansion
More emphasize on
retail rather than
wholesales
Expanding retail
system within the
region
Expanding retail
system to other parts
of the country
Increase sales NO NO YES, but less than the next alternative YES
More brand awareness outside the region via well trained and more committed employees
NO MODERATE YES, but less than the next alternative YES
Higher growth rate NO YES, but less than the next alternative
YES, but less than the next alternative YES
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 5
6. STRATEGIC DECISION
Rogers’ Chocolates will be able to address both of its aforementioned strategic matters through the following stepwise decision process:
7. IMPLEMENTATION ACTION PLAN
• Regarding to numerous internal problems that Rogers’ is currently facing, prior to any other strategy implementation, Parkhill should address these problems by implementing integrated production planning and operation control systems as soon as possible. It needs a watchful eye to analyze each and every function in order to find out the best way of doing the job. This is a teamwork job under direct supervision of the CEO.
• Rogers’ can take advantage of change in consumer preferences for organic and healthier chocolate. At the other hand, Rogers’ old fashion way of packaging products seems to be one of the main causes of the firm’s slowdown. Therefore, new concepts of products and packaging need to be developed in order to differentiate the firm from its rivals and to attract diverse group of customers. Marketing research and consumer preferences survey should be conducted in order to find out what exactly consumers need. This strategy should be implemented right after finishing the previous one.
• Currently, Rogers’ is confronting with “customers aging” issue. At the other hand, today people tend to do everything Online! Therefore, expanding online selling system and e-marketing will help the firm to capture a broader market as well as younger generation. Rogers’ is to develop an easy to navigate, multi lingual website and doing aggressive e-Marketing activities as well as to try to take the highest rank in pioneer search engines. Parkhill can implement this strategy simultaneously with the previous with the help of Marketing VP and a reliable IT counselor.
4. After the three aforementioned steps, Roger’s will be ready for expanding. Expanding retail sales for the Roger’s will take place in two steps as followed:
3. The third step will be to develop and expand the firm’s online selling system. This will be a platform for the firm to capture a broader market and attract younger and new customers.
2. In the next step, he should develop new concepts of products and packaging in order to attract diverse group of customers.
1. First and foremost, Parkhill is to address the firm’s production and operation problems by implementing integrated production planning and operation control system. This will help him to gain a proper control over the business.
3.2 Expanding retail sales within the region.
3.1 Expanding retail sales within the region.
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 6
• After successfully implementing all mentioned strategies, Rogers’ will be ready for expanding its retail sales system. Analysis and records prove that this is the best strategy to take advantage of the growing market. Expanding retail sales for the Roger’s will take place in two steps. In the first phase, Parkhill should acquire 3 retail shops in downtown Victoria with long term lease agreement. Marketing VP should help him in finding the most appropriate location. After two years, positive results of the previous implemented strategies and after gaining the projected ROI will be ready for more expansion. To presence in a wider market and taking more advantage of the growing market, Rogers’ will continue its expansion through acquiring high-end retailers in Vancouver, Ontario, and Whistler. CEO, with assistance of Marketing VP are responsible for implementing expanding retail sales strategy.
Rogers’ implementation action plan has been summarized in the following table:
Implementation Actions
STRATEGIC DECISION MADE
1. Production planning and operation control systems
2. New concepts of products 3. Expanding online selling system and e-marketing
4. Expanding retail system
4.1 Within the region 4.2 Outside the region
WHAT
to implement?Production planning and operation control systems
New concepts of products and packaging
Expanding online selling system and e-marketing
Expanding retail sales Expanding retail sales
WHY
to implement? To gain a control over the business
To differentiate and attract diverse group of customers
To capture a broader market & attract younger customers
To presence in a wider market & higher growth rate
To presence in a wider market & higher growth rate
HOW
to implement?
Engineering all functions to find out how resources are to be utilized
Based on consumers preferences survey, producing organic products with more contemporary packaging
Easy to navigate, multi lingual website and aggressive e-Marketing
3 retail shops with long term lease agreement
Through acquiring high-end retailers
WHERE
to implement? Inside the organization Inside the organization Rogers’ website Downtown Victoria
Vancouver, Ontario, Whistler
WHEN
to implement? ASAP, and should be finished at the end of 2009
Right after the 1st strategy Simultaneously with the previous strategy
After finishing the 2nd strategy
After finishing the 4th strategy
WHO
to implement? CEO, with assistance of VPs of all functions
CEO + Marketing VP CEO + Marketing VP + reliable IT counselor
CEO + Mktg. VP CEO + Mktg. VP
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 7
8. POTENTIAL PROBLEM ANALYSIS
Implementation Actions
STRATEGIC DECISION MADE
1. Production planning and operation control systems
2. New concepts of products 3. Expanding online selling
system and e-marketing
4. Expanding retail system
4.1 Within the region 4.2 Outside the region
Potential Problem
Negative reactions and resistances
Shift in consumers preferences a. Threat of entry
b. Cost of shipments Not gaining the projected return
Intense competition
Contingency Plan
Frequently informative and persuasive speeches and meetings
Continuous marketing research
a1. Customer loyalty program
a2. Aggressive e-Marketing
b. Free or discounted delivery
Strong marketing campaign and branding activities
a. Brand awareness activities
b. New product development (NPD)
WHAT
to implement?
A series of informative and persuasive speeches and meetings to manage resistances
Continuous marketing research
a1. Customer loyalty program
a2. Aggressive e-Marketing
b. Free or discounted delivery
Gradually implementation along with marketing campaign
a. Brand awareness activities
b. New product development (NPD)
WHY
to implement?
To prevent and reduce resistances and encourage employees to participate
To make the firm up to date in terms of consumer preferences
a1. To keep customers loyal
a2. To reach to as much as possible customers
b. To increase online sales
To back to the projected growth rate and minimize loss
To prevent of losing market share
HOW
to implement?
Showing befits and positive outcomes to employees through frequent meetings
Continuous marketing research and online surveying
Cutting cost of inefficient activities to offer more free or with discount delivery
a. Well trained staff should adequately present the brand
b. Strong marketing campaign
c. Well trained staff should adequately present the brand
d. Intensively NPD
WHERE
to implement? Inside the organization
Online survey and throughout the market
Throughout the WWW In stores & inside the organization
In stores & inside the organization
WHEN
to implement? Starts before implementation and will be continued
Starts before implementation and will be continued
Proactive strategy Proactive strategy Proactive strategy
WHO
to implement? Roger Parkhill, CEO CEO + Marketing VP CEO + Marketing VP CEO + Mktg. VP
CEO + Mktg. VP + Retail staff
IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009
Page | 8
9. CONCLUSION
In this case, we deal with two different types of strategic matters: a series of organizational problems as
well as an organizational objective desired by the Board.
With regards to the plentiful organizational problems of the Rogers’, first and foremost, CEO should
address these problems by implementing integrated production planning and operation control systems to
gain a proper control over the business.
While projected growth rate for the premium chocolate industry is 20%, Rogers’ was not successful to
proportionately grow. Analysis shows that Rogers’ suffers from old fashion way of packaging that seems to
be one of the main causes of the firm’s slowdown. Also, there is a change in consumer’s preferences for
organic and healthier chocolate. Rogers’ can take advantage of this opportunity by introducing new
concepts of products and packaging in order to differentiate the firm from its rivals and to attract diverse
group of customers.
In addition, Rogers’ is confronting with “customers aging” issue. At the other hand, today people tend to
do everything Online! Therefore, expanding online selling system and e-marketing will help the firm to
capture a broader market as well as younger generation.
Rogers’ will be ready for expanding its retail sales system. Analysis and records prove that this is the
best strategy to take advantage of the growing market. It has been suggested to Rogers’ to divide its
retail expanding strategy into two steps:
• Expanding retail sales system within the region (Victoria and British Colombia), and then
• Expanding retail sales system to other parts of the country
As we have learned, there will be definitely some issues that may prevent of successfully implementing
any strategy. A table consists of detailed implementation plan for managing the potential problems has
been provided in page 7.
Appendix 1. Quick Overview on Financial Performance of Rogers’ Chocolate (2005‐06)
LIQUIDITY RATIOS
This series of ratios reveal Rogers’ Chocolates ability to pay off its short‐
terms debts obligations. Although, having a current ratio over 1 is normally
acceptable, however, current ratio would overestimate a company's short‐
term financial strength. Therefore, quick ratio that excludes inventories has
been calculated. It tells us that most part of the assumed liquidity of Rogers’
belongs to inventory. As we know, most of times it is difficult to turn
inventories to cash.
Ratio 2005 2006
Current Ratio 1.24 1.36
Quick Ratio 0.57 0.46
ASSET MANAGEMENT RATIOS
In order to measure how effectively Rogers’ is managing its assets, assets
management ratios have been calculated. As can be seen, Rogers’ low
turnover implies poor sales and, therefore, excess inventory.
High inventory levels are unhealthy because they represent an investment
with a rate of return of zero. In addition, low asset turnover of Rogers’ shows
inefficient using of assets in generating sales.
Inventory
Turnover 7.73 7.67
Total Assets
Turnover 1.40 1.41
DEBT MANAGEMENT RATIOS
Rogers’ very low level of debt management ratios indicates that the firm
has much more assets than debt. Used in conjunction with other
measures of financial health, very low level of debt ratio can be translated
as the firm’s high degree of being risk adverse. In other words, it shows
the extent to which Rogers’ Chocolates uses debt financing or the firm’s
ability to meet financial obligations
Debt Ratio 43% 32%
Debt to
Equity Ratio 78% 48%
PROFITABILITY RATIOS
Analyzing Rogers’ profitability ratios revealed:
• Sales has declined in 2006
• Profit Margin has declined in 2006
• Rogers’ has a very good gross profit margin, but suffers from very
high cost of operation
Gross Profit
Margin 54.55% 55.15%
Net Profit
Margin 8.9% 7.5%
Appendix 2. Mission, Objectives, Strategies
HISTORY
Rogers' Chocolates is steeped in tradition and a rich history that has earned the company its current reputation as one of Canada's premiere chocolate makers.
The first Rogers' chocolates were made in 1885 by Charles "Candy" Rogers in the back of his grocery store in Victoria, B.C. He quickly became a popular man. In 1891, Rogers expanded his chocolate operation to the company's current heritage storefront on Government Street in Victoria and the rest, as they say, is history.
Today, Rogers' Chocolates is owned by a small group of shareholders located primarily in B.C. The Victoria-based company now has 10 retail stores, several hundred wholesale outlets, and a 20,000-square-foot factory.
MISSION STATEMENT
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.
PHILOSOPHY
Rogers' Chocolates honors its time-tested brand by:
• making only premium products • packaging them elegantly • and choosing our retail partners carefully
We also believe that the quality of our products starts with the procurement and mixing of fine ingredients but extends to the high level of customer service you can expect from all facets of our organization.
Eliminating the use of hydrogenated fats and oils, and using natural ingredients whenever possible, has positioned Rogers' as a leader in the confections industry, providing healthy alternatives to consumers.
As quality chocolate continues to gain popularity among health-conscious, educated consumers, Rogers' products are becoming increasingly revered for their aesthetic appeal, wholesome ingredients, and overall exceptional taste.
STRATEGY
Reviewing the case and visiting the firm’s website reveal that Rogers’ strategy is to produce premium quality chocolates which are handmade, hand packed and highly customizable. It seems that Rogers’ is trying to differentiate itself from the rivals
APPENDIX 3. ROGERS’ CHOCOLATES SWOT ANALYSIS
STRENGTHS
Premium Quality Products Knowledgeable and Dedicated Management & Personnel Loyal Customers in the Region Superior Brand Image and Perception in Victoria First‐rate Internet Website Several Key Retail Locations & Excellent In Store Experience Outstanding Market Leadership (Award Winning) Innovative Customer and Employee Relations (Award Winning)
SInternal Factors External Factors
OPPORTUNITIES
High Industry Growth Rate Change in Consumer’s Preferences for Organic Chocolate Public Demand for buying Products mostly from Social & Environmental Responsible companies
Expanding Online Sales Expansion Outside the Region Olympics 2010
THREATS
Economy Slowdown Entry of Giants such as Cadburys & Hershey’s to the Industry Loyal Customers are Aging Public Health Consciousness & Threat of Shifting to Healthier Substitutes
T
O
WEAKNESSES
No Measurement for Productivity & Efficiency Weak Production Planning High Cost of Operation Poor Logistics, Weak Sales Network & Incapable Sales Reps Old Fashion Packaging Poor Inventory Management Unknown Brand Outside the Region Limited Financial Resources & Poor Cash Flow Management
W
• Lai, Y. C. (Director) (2009, July 12). Case Analysis and Decision. Strategic Management
(MRB 3012), IBS, UTM City Campus, Kuala Lumpur.
• David, F. (1986). Fundamentals of Strategic Management. New York: Macmillan Pub Co.
• Gamble, J., J., A., Thompson, A., & Strickland, I. (2009). Crafting & Executing Strategy:
The Quest for Competitive Advantage: Concepts and Cases. Boston: Mcgraw-Hill College.
• Rogers' Chocolates. (n.d.). Retrieved July 18, 2009, from http://www.rogerschocolates.com/
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