CASE 9
Rogers¶ Chocolates
ASSIGNMENT QUESTIONS
 1. What is competition like in the premium chocolate industry? Which of the five competitive
forces is strongest? Which is weakest? What competitive forces seem to have the greatest effect
on industry attractiveness and the potential profitability of new entrants?
2. How is the premium chocolate industry changing? What are the under lying drivers of change
and how might those driving forces individually or collectively change competition in the
industry?3. What key factors determine success for producers of premium chocolates?
4. What does a SWOT analysis of Rogers¶ Chocolates reveal about the prospects for company¶s
future success? What are its key resources strengths and competitive capabilities? its resource
weaknesses and competitive liabilities? its external opportunities and threats?
5. How would you describe Rogers¶ Chocolates¶ competitive strategy? How isit positioned in
the industry? What specific steps has management taken to implement this strategy? Do the
company¶s functional strategies and tactics appear to be consistent with its competitive strategy?
6. How well is Rogers¶ Chocolates¶ strategy working in terms of the financial performance it is
delivering? What is your assessment of its level of profitability, its degree of liquidity, and the
extent of its leverage?
7. Which of the strategic options available to Rogers¶ Chocolates should begiven the highest
priority? Which of the growth options is the most attractive? Why?
8. What specific actions should Steve Parkhill undertake to improve Rogers¶competitiveness in
the Canadian Premium Chocolate Industry? How will the culture of the organization impact
Parkhill¶s decision? As a relatively new CEO, how would you suggest that Parkhill reconcile the
competing growth suggestions championed by various members of the Board of Directors?

 
PAPER 1
Executive Summary Success of any businesses organization is determined by factors such as
financial, management & operational. Financial factors address use of capital in business and
flow of cash through various processes within the organization. Management factors are linked
to organizational structure of the enterprise. Whereas operational factors address how available
resources are used to achieve objective of the organization. Apart from these three factors,
environmental factors like competition also determine success of any business organization. This
paper explores transformation that Rogers Chocolate Company has undergone since its
establishment. The paper alsoinvestigates competitive strategy of the company against its
close competitors. Question 1  What is competition like in the premium chocolate industry?
Which of the five competitive forces is strongest? Which is weakest? What competitive forces
seem to have the greatest effect on industry attractiveness and the potential profitability of
new entrants? Competition in premium chocolate industries is based on regional brands
(Zietsma, 2008; Ellis, M. et al, 2007).Forces that accelerate competition among premium
chocolate industries include variation in quality of products and other services offered to
customers. Various premium companies have individual techniques that ensure delivery of high
quality product in the market. In addition to product quality, price of the product is another are a
where competition arises. Depending on the production cost, different premium industries offer
different prices in the market. Packaging and physical presentation of the products is another
avenue for competition in premium chocolate industries (Harcourt-Cooze, 2009). Company that
offers attractive products especially targeting younger generation dominates the market.
Furthermore, advertisement methods and geographical distribution is also a potential area for
competition (Siedel, 2002). A high sale is realized in company whose product is mostly spread
and common. From these forces, geographical distribution emerges to contribute much in
hastening competition among chocolate companies. Even though all forces stated above hastens
competition among these chocolate companies, product quality surface to have least impact
on extent of competition (Zietsma, 2008). Attractiveness and profitability of chocolate products
is determined by how the product is molded, colored, and packed (Ellis, M. et al, 2007).
Packaging therefore, plays a role in ensuring manufactured product appears attractive in the
market. To a customer, nature of wrapping materials tells more about quality of the item
delivered. High profit is thus realized if the product is attractive to the customer. Advertisement
methods used in promoting the product also determine how attractive the product would be in the
market (Dahl, and Blake, 2007). In chocolate companies targeted consumers are youths,
therefore, sexy advertisements incorporated with modern technology lures most young people to
purchase more chocolate. Geographical distribution of newly launched product also determines
profit received from that particular product. To ensure high attractiveness and profitability, a
company ensures wide distribution of its new entrant. Question 2  How is the premium
chocolate industry changing? What are the underlying drivers of change and how might those
driving forces individually or collectively change competition in the industry?
he company has undergone change in ownership (Zietsma, 2008). Ownership of Rogers
Company has changed since the death of its founder Charles Candy Rogers. From family
ownership, the firm was sold to one of the customers after Charles death. Another prominent
area of change is in production planning. One aspect of improved production planning is in
packaging of manufactured chocolates. Rogers Chocolate Company initially used manual way
of wrapping chocolates. Although the chocolates were of high quality, the process was however
very slow. Related to mechanism of production was labor required in the whole production
process. The company relied on human labor in carrying out its operations. Even though hand-
wrapping is still being used, the company has acquired many efficient machines that assist in
carrying out production process. More skilled labor force therefore, has been recruited unlike
initially where most of employees were unskilled. Consequently, production process has
increased a lot, thus making the company to adjust according to fluctuating market demands.
Apart from production planning, there has been a change in structure and leadership system of
the company (Zietsma, 2008). Steve Parkhill took leadership role from Jim Ralph who had been
the president and manager of Rodgers firm from 1989 to 2007. Since then, Parkhill has
changed focus from wholesale production to retail production. Consequently, there has been a
change in the source of revenue for the company. Retail production currently contributes an average
of 50 percent of total revenues realized by the company. While undergoing transformation, various
factors have and are still accelerating metamorphic process of the company (Victoria Times
Colonist, 2010). Need for improved efficiency is one of the factors that have accelerated change
within the firm. Company’s efficiency determines how fast production process is. Efficient
company not only improves quality of its products but also is important in quality of services
delivery. Effectiveness of labor in a company also constitutes company’s efficiency. In
an efficient company all programs and production processes run as per stipulated time. The firm
thus, will be on forefront in identifying potential market points and utilize them appropriately.
Various strategies are easily generated in an efficient company, thus, overcoming problem of
price fluctuation becomes easy for such a company. Another force that has contributed in transition
of Rogers company is the need to increase geographical distribution of their products (Zietsma,
2008). Behavior of any product in the market is determined by how familiar the product is in the
existing market. Familiarity is further dependent on geographical distribution of the product.
Only well distributed products fetches much sales. Organizations therefore who are experiencing
stiff competition from other companies should expand distribution of their products and services.
Finally, leadership wrangles as well as poor inventory management call for change in any
production firm. Instability in any department in a company foreshadows failure of the company.
In addition, problems within a company tamper with the production process of the company.
Such like company, thus, has limited chances of survival in a competitive market. Question 3 
What key factors determine success for producers of premium chocolates? Success of premium chocolate
producing companies depends on a number of factors (La Rocco, 2010). Available capital within
production firm and inventory level is an independent factor that determines growth of chocolate
producing company (Kennon, 2010). Company with high inventory level has high chances of
succeeding especially during times of scarcity of raw materials. From the study, Rogers
Company has high net annual revenues and consequently emerges above its competitors in the
market. Production firm with high-income runs its processes smoothly and hence a sign of success.
 
Price of chocolate product also affects success of producing firm. Company’s Price of the
product(s) determines consumption rate of the product. Whether price is regulated by the
organization itself or state-based decision, it affects demand of the product. Demand and price of
any product are inversely related. Low market demand implies low net sales, which makes
success of the company to be uncertain. Another aspect of price factor is indetermination of
production cost. Lower prices than other producers of the same type of commodity make
production cost expensive. On the other hand, high price reduces market demand of any product.
In a case where different companies sell similar product at different prices, companies using extreme prices are
at risk of failing. Company`s geographical area of operation is another pivotal point in
determination of success of a company. Distribution and concentration of a company and/or its
branches determines how well consumers will familiarize themselves with a product from this
company. In addition, consumers purchase products, which they have enough information on in
large quantities. A company is likely to succeed if it has large geographical coverage compared
to its close competitors. Another factor that determines success of chocolate producing
companies is product quality and product diversification. High quality product sells more in the
market compared to that of low quality. Although price and product quality are in most cases
directly related, consumers who value quality will go for expensive chocolates. Product
diversification is applied in cases where stiff competition exists in the market. Instead of
maintaining production of only one type of chocolate product, modification in shape, color, and
different composition ensures further success of a company. In conjunction with product
diversification, advertisement methods chosen in promoting any chocolate product is another
success-determining factor. As the targeted group is youths, sexy and provoking advertisements
are preferred to boring and old traditional advertisements. Company, therefore, that uses sexy
modern advertisement methods like through internet is more likely to succeed. Question 4 
What does a SWOT analysis of Rogers Chocolates reveal about the prospects for the
company’s future success? What are its key resources strengths and competitive capabilities? Its
resource weaknesses and competitive liabilities? Its external opportunities and threats? Rogers
chocolate company has variety of strengths (Zietsma, 2008). Its brand, for instance, is a strength
point for the company. Based on coloration, the brand appeared attractive to buyers, thus, acting
as an advertising item. Financial position of the company is another point of strength for the
company (La Rocco, 2010; Kennon, 2010).Rogers company had high annual earnings
compared to other chocolate manufacturing companies. Brand of the company, contrary to
strengths acts as a weakness point to the company. Rogers brand is not widely known to
consumers thus, it lowers performance of the company. In addition, the brand is old, making it
not recognized by youths who are the targeted group. Opportunity on the other hand exists in the
company`s room for geographical expansion as well as improving advertisement methods. Major
threat facing the company is stiff competition from companies, which also produced similar
products. From this analysis, Rogers Chocolate Company is more likely to succeed if proper
strategies are laid down to overcome its weaknesses and threats. Changing the company’s brand
and improving its geographical distribution is a way of converting its weaknesses into
opportunities. Product diversification, proper pricing, and good organization of available
resources are possible solutions to threats facing the company. Rogers chocolate company is
likely to expand more if these strategies are used
 
Resource weakness for Rogers chocolate company is in inventory maintenance (Zietsma,
2008). Rogers company experiences frequent problem of under stocking or out-of stock
situations. Competitors of Rogers company take advantage this weakness to compete it in the
market. Competitive liabilities of Rogers company include advance revenues collected from
customers before actual delivery of the product. In case of obtaining loan, mortgages are
competitive liabilities for Rogers company (Economy Watch, par 4 & 5). Rogers company
has external opportunity in expanding its branches and concentration in order to dominate the
market. While expanding its distribution, the company should concentrate their new branches
close to tourist attraction sites to capture visiting tourists. In addition, the company should also
consider time of the year, like Christmas, summer, or winter while carrying on expansion. Online
business communication is another potential external opportunity that needs to be utilized fully.
Improvement therefore, of internet services by the company, is a sure positive outcome to the
company. Through high quality of Rogers chocolates, loyalty of customers has improved. This
acts as an opportunity to the company, which needs to be exploited fully. The company,
however, faces external threats that can lower its performance. Change in diet of consumers is
currently posing a serious threat to the company. Gradual change of preference from milk
chocolate to dark chocolate has a negative effect to Rogers company that manufactures milk
chocolate. Pressure from customers, employees, and human rights organization is another
external threat that faces the company. Pressure is however high if social responsibility practices
of the company is poor or unethical practices in the firm. Question 5  How would you describe
Rogers Chocolates competitive strategy? How is it positioned in the industry? What specific
steps has management taken to implement this strategy? Do the company`s functional strategies
and tactics appear to be consistent with its competitive strategy? A number of strategies are laid
down by Steve Parkhill to fight competition in the market. Rogers close competitors are almost
equal in quality and diversification of their products. In fighting competition, the company has
formulated other plans apart from quality assurance and product diversification. Some of the
strategies planned by the company include improving online business to capture buyers who
purchase through internet. Changing or modifying Rogers brand is another strategy planned by
the company. In addition, producing other forms and types of chocolates is another potential
action that fights competition for the company. Moreover, the company plans to expand its
operational region to ensure widespread distribution of its products (Siedel, 2002). To ensure
high attractiveness of its products, Rogers company has improved its packaging techniques.
Collective application of all these strategies could place Rogers chocolate company in a better
position in a competitive market. Compared with functional strategies and tactics, these
strategies were consistent with competitive strategies. ReferencesDahl, Roald and Blake, Quentin
(2007) Charlie and the Chocolate Factory. Puffin.Economy Watch (2010) Liabilities. Stanley St Labs.
Accessed June 23, 2010 fromhttp://www.economywatch.com/budget/india/liabilities.htmlEllis,
M. et al. (2007) The Hershey Company Introducing the World of Chocolate. San Francisco:
Brass Knuckles Publications.
 
Ellis, M. et al. 2007. The Hershey Company Introducing the World of Chocolate. San Francisco:
Brass KnucklesPublications.Harcourt-Cooze, W. (2009) Willie's Chocolate Factory Cookbook. Hodder &
StoughtonKennon, Joshua (2010) Chase Candy Company  A Business Profile of a Regional
Chocolate Maker. CompanyProfiles and Analysis.La Rocco, C. (2010) Keeping It Small at the Chocolate
Factory. The New York Times, Tuesday May 25, 2010, p.1Siedel, J., G. (2002) Using the Law for Competitive
Advantage: J-B-UMBS Series. Jossey-Bass.Victoria Times Colonist (2010) Rogers' Chocolates sweet
on Canadian Navy's 100th anniversary celebrations.Canwest Publishing Inc.
PAPER 2
Rogers Chocolates Introduction Premium Chocolates are like Imported Roses which not
consider necessities for one life. People love to have or get one of those products. However, if
there isnt a special occasion or surplus cash, some people will not buy thatunnecessary stuff.In
Canada, premium chocolates were growing at 20 percent annually and the Canadian market size
for Chocolateswas US$ 167 million in 2006. An attractive growth from premium chocolates
makes the current player like RogersChocolates, Purdys and others are thinking new strategies to
expand market. In addition, some big traditionalmanufacturers like Hersheys and Cadbury are also very
interested and keen to enter this segment (Zietsma 2007).Rogers Chocolates is a king in Victoria and well
known in British Colombia. However, outside this area the brandawareness is still low. The new
appointed CEO is being targeted to double or triple Sales in ten years. The keysuccesses in
premium chocolates are: understand the consumers needs, brand awareness, diversified
productsand enhanced competitiveness.There are many challenges for Rogerss chocolates to
grow in this ever-growing competition, and there are manyold and new strategies that havent
been proven effectively. Moreover, Rogers is small/medium Company that haslimited resources
to apply all those strategies. The management decision-making will be very crucial to manage
itsstrength and weakness while at the same time; they have to overcome the threat and
opportunities in theindustry.1. Competitive driving forces in the premium chocolate industryPorters Five
Forces Mode
orters five forces model uses five competitive forces that determine a particular firms
capability to compete(Thompson, Strickland, Gamble 2010). The chocolate and cocoa industry
can use the five forces model as ananalytical tool to determine the competitive market.
[pic]Figure 1: Five competitive forces by Michael Porter1. Competitive RivalryThe intensity of
rivalry among competitors in an industry can create price wars, advertising battles, new
productlines, and higher quality of customer service. There are many circumstances that
intensify rivalry which some of them are as follows: many balanced competitors, a slow growing
industry, demands falls, high fixed or storagecosts, little switching costs, aggressive competitors
and many other circumstances (Thompson, Strickland, andGamble 2010).Premium Chocolate
competition in Canada involves strong regional brands and few global players such as
Godiva,Lindt, Callebaut, and Purdys. Even though The Canadian market size of chocolates
industry as a whole had beenfalling (2 % grow projected). However, the premium chocolate
market was growing at 20 percent annually(Zietsma 2007). That situation considers less intense
rivalry among competitors; moreover every area has theirown local king like Rogers in
Victoria.Nevertheless, in 2008, Global economy was severely hit by the crisis that originated
from the United States andquickly spread to the whole world including Canada. Premium
chocolate majority consumers in Canada come fromtourists especially Americans as bordering
neighbour. When the tourists number drops and the demand forpremium chocolate also falls,
the fierce rivalry will increase2. Threat of new entrantsFrequently, existing industry members
are often strong candidates to enter market segments or geographic areaswhere they currently
do not have a market presence (Thompson, Strickland, Gamble 2010). Apparently,
Hersheysand Cadburys have been moving into the premium chocolate market through
acquisitions or up market launchessince this segment still posses high percentage of growth
(Zietsma 2007).The market is only control by few large and old players which occupy significant
market shares. The chocolateindustry has a significant economy of scale entry barrier because
large companies exist in the industry that hashigh production output and it reduces the threat
of entrants.In addition to economy of scale, product differentiation is another entry barrier in
the chocolate. There are manycompetitors in the industry that have remarkably identifiable
brand names and customer loyalty like RogersChocolate itself. New company must increase its
spending to overcome the reputation and large customer base of the existing companies

.  Threat of SubstitutesRogerss chocolate is often used as gift during numerous seasons and
celebrations including Christmas, Easter,Halloween, Valentines Day, anniversaries and
birthdays. Other types of gifts during these seasons are viewed assubstitute products. These
products are flowers, jewelry and stuffed animals. All of these products can bepurchased
instead of Rogerss chocolate unless they just want only Chocolate as gifts

Many chocolate brands and a wide variety of seasonal gifts make the threat of substitute
products is consideredlow to moderate in this industry. However, if Rogers Chocolates can
maintain its local heritage especially in itstraditional area like Victoria and British Colombia
then the threat for Rogers can be minimized.4.  Power of BuyersIf a buyer represents a large
percentage of the suppliers sales, the buyer has more bargaining power over thesupplier.
Rogerss chocolate 50% of sales is contributed from its 11 retail stores which is a strong one.
However,since the previous president Mr. Jim Ralph had grown its wholesale market up to 30%
thus, they have to take agood care of its big wholesale buyer.Another condition that affects the
power of buyers is product differentiation. If the product is undifferentiated, thebuyer has the
power to play competitors against each other and reduce the cost. The premium chocolate has
adifferentiated product, which reduces the power of buyers. Rogers have brand identification
and customer loyalty,which makes it hard for buyers especially the loyal ones not to consume
Rogers for their premium chocolateconsumptionToday, buyers demanding chocolate more than
just a taste, they becoming more health conscious therefore thedemand for organic chocolate
and dark chocolate are growing.5. Power of SuppliersThe bargaining power of suppliers is a
competitive force that can diminish a firms profitability by raising prices orreducing the quality
of the suppliers product.The suppliers of the chocolate industry have significant bargaining
power over the industry because of the limitedsuppliers.  In addition the supplier groups
bargaining power increases if there are no substitute products. Becausethe cocoa bean is a
required ingredient in chocolate the suppliers do not have any substitute products for
whichthey must compete. This lack of substitutes increases the bargaining power of the
chocolate industryThe strongest Competitive ForcesFrom the five competitive forces, they are
relatively low to moderate in affecting premium chocolate industryespecially Rogers Chocolate.
However, the presence of Hersheys and Cadburys in the premium chocolate marketwill cause
the strongest threat as they have enormous resources and experiences. The weakest forces
should bethe supplier as they can only affect the cost thus as long as people still love chocolates
then the market is still big.The potential profitability of new entrants from outside industry is
low since the barrier of entry for this industry isvery high. However, it will be a different story if
those big guys in the chocolate industry like Hersheys are veryserious entering this premium
chocolate market as happening lately.2. Drivers of ChangeThose competitive forces as
explained above can be a driver of change either individually or collectively. Anotherunique
driver of change is consumer behavior towards health consciousness. Today, the demand for
organicproducts and dark chocolate are growing worldwide. Rogers has responded well to this
healthy lifestyle by offeringnon-sugar added chocolate. People also put strong image to the
company that practice good corporate social andenvironment responsibilit

Therefore, the premium chocolate players that will remain in the market are only those who
could ride thechanges and rise above the expectation of consumers because brand and
quality play a significant role in customerpurchase decision.3. Key Success Factor in the
premium Chocolates Industry3.1 Understanding the Consumers NeedsThe company must
understand that they must have the features required by the consumers.For premium
chocolate consumers, their reasons in buying are for themselves or for gifts.  The first thing in
theconsumer mind for the products is the taste, and then packaging, shopping experiences, and
the price.Rogers Chocolates has earned a reputation as one of Canadas premiere chocolate
makers and many consumersstating that Rogers is one of the best chocolate they have ever
tasted (Customer Review 2010). The retail storescreate a unique costumer experience with the
aromas and image of the store and one of the friendliest staff. Sincethe premium chocolates
serve as a gift either individually or as corporate gifts in special occasion then theirpackaging
need to be unique and attractive. The Rogers packaging are appealing and other competitors
are tryingvery hard to improve theirs.Another 30 percent of Rogerss costumers are wholesale
distributors and stores. The relationship that Rogersmaintains with these customers has been
essential to the growing success of the company. They have to strive toprovide competitive
price, great customer service and inventory in a timely manner.3.2 Brand Awareness Rogers
Chocolates had a brand share of approximately 6% out of $167 million Canadian Chocolates
market in2006. Consumer pay premium price for premium chocolates and this fact can be
looked intimidating to the retailand wholesale customers who are unaware of the brand and
unwilling to try it.  Therefore, the chocolatescompanies need to have a strong brand name and
brand image.Rogers Chocolates brand is iconic and local heritage in Victoria but less known in
the rest of Canada. Eithercustomers love the brand or completely unknown.3.3 Diversified
ProductsWe bought raspberry filling dark chocolate, pistachio and fruits in milk chocolate, a
white chocolate bar and alemon meringues and couple of truffle bars. Did we buy too much
chocolate between the 2 of us? Nonsense, onecan never have too much chocolate. The review
above came from Tom, California who visited Rogers Shop inVancouver on October 3, 2009
(Customer Review 2010).People love to choose their own selection and favourites. The
company has to strive to provide innovative anddelicious products to meet the market demand.
Rogers also has addressed the health conscious consumer byprovide non-sugar chocolates.
Rogers can offer a great breadth of products that enables the company to reach alarge
customer segment3.4 Enhanced Competitivenes

Increased marketplace competition has significantly given an impact in Rogerss business and
as a result, Rogersmust continuously seek for areas for improvement in order to enhance
competitiveness against other competitorin the market. Improving weakness could be done
in terms of product innovation, operational and manufacturing,marketing, advertising and
promotion, inventory and distribution, and customer relationship. The company has toobserve
their capabilities and make the most of them in order to stay and win in the competition.4.
SWOT analysis|Strengths                                                             |Opportunities
||Product                                                               |Market                                                                ||
Established brand                                                     |Tourist approach in cruise ship
||Quality & taste                                                       |Growing Markets 20% annually
||Award-winning                                                         |Young people market
||Variety                                                               |USA and International Market
||Consumer Loyalty in Victoria                                          |2010 Olympics
||Human Resources                                                       |Licensing, Franchising and partnership
||Employee pride and loyalty                                            |Products:
||Skilled and experienced management                                    |Ice cream
||Rogers own retail stores                                              |Health conscious products
||Sams Deli Performance                                                |Consumer Trends
||Strong financial position                                             |Affordable luxury products
||                                                                      |Healthy lifestyles                                                    ||
|Technology                                                            ||                                                                      |Mobile
marketing                                                      ||                                                                      |Production
capabilities                                               ||                                                                      |Internet
||Weaknesses                                                            |Threats                                                               ||
Product/Brand                                                         |Intense competition and new entrants
||Little awareness outside Victoria                                     |Economic Downturn/ Drop tourists
||Production                                                            |Change consumer traffic to Vancouver
||Planning, Documentation and Forecasting                               |Private label Chocolate

Suppliers                                                             |Fluctuating demand                                                    ||

Capacity                                                              |Environmental and human concerns
||Equipment and processes                                               |
||Human Resources                                                       |                                                                      ||
Resistance to change                                                  |                                                                      ||
Conflict management                                                   |                                                                      ||
Multiple responsibility                                               |                                                                      ||Sales
force                                                           |                                                                      ||Distribution
|                                                                      ||Location                                                              |
||Market Coverage                                                       |                                                                      ||
Inventory management                                                  |                                                                      ||
Financial                                                             |                                                                      ||Sales
growth                                                          |                                                                      | The BOLD/
Italic and BIG SIZE fonts are the key factor for each categoryThe company has a strong set of
strength. Rogers Chocolate is small/medium business thus its weaknesses still notvery
damaging and the company situated in fairly strong position. However, looking at the threats,
the companyneeds to repair its weakness especially in Branding, Production and Inventory in
order to sustain in the business.The opportunity table shows great opportunity for Rogers to
grow and expand. However, Rogers needs to expandits strength beyond outside Victoria
especially towards young people and definitely repair the weaknesses to caterthe growing
market.5. Strategies and positioningRogers Chocolates positioned as High quality  premium
price ChocolateAs stated in the company website, Rogerss philosophy is making only premium
products and packaging elegantly.In the premium Chocolate market, Rogerss chocolates
control only 6% and price the products in high price pointbut still competitive and even slightly
lower then Godiva and Callebaut

High Quality Roger

 Callebaut Purdys              Godiva Lindt Low Price          Cadbury      Hersheys         High Price Low

QualityRogers brand is well respected among those who want high quality chocolate. Rogerss
products have no additivesand use high quality ingredients. The brand is very well-established
in Victoria and has loyal consumersMission Statement: Rogers' Chocolates is committed in
producing and marketing fine products which reflect and maintain ourreputation of quality and
excellence established for over a century.  All aspects of our business will be conductedwith
honesty and integrity, upholding our proud Canadian tradition. (Rogers Chocolates
2010)GOAL:To double or triple total sales within 10 yearsManagements Strategy
SelectionBased on Rogers goal of doubling or tripling total sales within 10 years, then the main
strategy will be increasingbrand awareness. Rogerss products are already proven superior
despite their distribution which circulates mainlyin British Colombia area, thus company has to
expand its market range to greater area and to East Canada oroverseas. Rogers has already won
the 2010 Olympics Official Chocolates together with Purdys (Lazarus 2008)which is a
tremendous opportunity to create awareness nationally and internationally. To grow a market,
factorssuch as Licensing, franchise and partnership is being considered. One idea under
consideration for developing thewholesale network was the creation of a turnkey store-within-
a-store setup that would allow wholesale clientswith a retail presence  such as department
stores to add a mini-Rogers store in their shop. Rogerss managementalso aim to increase the
number of online shopping.Those strategies are consistent with Rogerss goal to increase the
sales by double and triple in ten years. However,being a small/medium company, Rogerss
management can only choose to act on several options while not puttinga risk on its culture and
tradition.

Licensing, franchising and create store-within-a-store is a cheaper options to expand the market
compare to openits own retail stores in the new areas however does it really appropriate
to Rogers excellent retail experiences?(source)s together with PurdysConclusionIn early 2009,
Parkhill and Rogers management chose to focus on expanding the companys retail
network.Parkhill says that Rogers will also continue to develop its wholesale channel, but will
be selective in choosingpartners who fit the companys brand. Our foundation is retail, he
says. Its the Wow! experience thatcustomers get when they walk into our stores, are
greeted and are handed a free sample of our chocolates. Fromthis customer experience,
success comes in other things that we do such as wholesale and online sales.Roger is high
quality premium chocolate thus the experiences for shop and consumes Rogers chocolate has
to beexcellent as well. If the Brand is being franchised or create a small shop at the corner of
somebody else store thenthe quality of service and the store ambiances can not be controlled.
People not only say about how good RogersChocolate was but also their great experiences in
Rogers Store. Therefore, the decision of developing Rogers ownretail is good decision and
consistent with its goal and philosophy.References:

Customer Review 2010, Rogers Chocolate, Available http://www.yelp.ca/biz/rogers-chocolates-

vancouver [Accessed 5 June 2010]  

Lazarus 2008, Sweet deal for Purdys and Rogers Chocolates, August edn, Marketing
Magazine  

Morrissete 2008, On the case: How sweet is this, really?, Financial Post Magazine  

Rogers Chocolate 2010, History, Available: http://www.rogerschocolates.com/history [Accessed

5June 2010]  

Thompson, Strckland, Gamble 2010, Crafting and Executing Strategy: The Quest
for CompetitiveAdvantage. Concepts and Cases, 17th edn, McGraw-Hill Irwin, United States  

Zietsma 2007,Case: Rogers Chocolates, Ivey Management Service

PAPER 3

EXECUTIVE SUMMARY & RECOMMENDATIONS



Rogers Chocolates is one of Canadas premiere chocolate makers.  In 2006 the Canadian
market size was$167 million annually

Growth rate of the Canadian Premium Chocolate market is expected to rise 20% annually
vs.TraditionalChocolates growth rate of 2% annually

Sales in the 8 weeks prior to Christmas roughly equaled 25% of chocolate sales and 20% of
heavy usersaccounted for 54% of the pre-Christmas sales in 2006.  Focus on appropriate
target market to achieve maximumawareness and brand recognition

Continue to fulfill its commitment by participating in recycling and reducing emissions as part of
acommitment to sustainability.

Rogers good corporate social practices will also focus on human rights, packaging,
procurement andoperational decisions.

Rogers performance over the last two years confirms that sales have remained stagnant and
had a betterROI in 2006 than it does now..

Rogers will seek out partnerships or collaborators such as the 2010 Vancouver Olympics and
reachconsumers on a global level.

Rogers will re- structure its management team to a more efficient & cohesive team

Rebrand their traditional images to inspire new client base to try their products.



Restructure retail shops with lower contribution margins

Create retail experience around rich tradition and history, production and quality.

Deliver unique retail experience

Generate sales of  at least $17,000,000 by 2017

Increase brand awareness in Canada by 50% and retail locations by 2017

Increase online sales to $1.1 million by 2017

Keep existing and loyal customers satsifeid with customer rewards and promotions

Promote, Promote, Promote: Chocolate of the month clubs, special occasion gifts
(graduation,Fathers/Mothers Day, Anniversaries, Teacher gifts, etc).MISSION STATEMENT &
OBJECTIVESRogers Chocolates is committed to producing and marketing fine products which
reflect and maintain ourreputation of quality and excellence established for over a
century.TARGET MARKET & STRATEGYRogers target market is both end users and consumers
who buy chocolates to indulge themselves or to give as agift.  Rogers target buyers are new
and existing chocolate buyers that love quality chocolates.Demographics tend to be mainly
women ages 25-55 years old with middle to high household income of $50,000upward.  They
generally have college education and are professionals, white collar workers, managers, or
owners.The majority will be frequent travelers and internet users.

A niche differentiator strategy will be employed to differentiate the new Rogers brand image
in Eastern Canadaand US.  To drive internet sales, Rogers will promote the website benefits of
convenience and fast delivery.  Moreattention to Rogers retail shops will be pursued in order
to get that exclusivity feel.  Sams Deli willThe key to this strategy and marketing plan will
revolve around raising brand awareness.  Partnership andcollaborations are a critical way to
raise awareness such as sponsoring an Olympic event/athlete (ice skating) asthe Olympics are
scheduled to be in Vancouver in 2010.BUILDING AWARENESSThe most productive and efficient
way to build awareness is to increase online sales which will increase marketexposure.
In addition, corporate sales and partnership will generate much needed awareness in
these sectors thatwill compliment the online campaign.Rogers will position itself as a company
that values their customers both online and in their retail shops.  A neweasy to use and
interactive website will be introduced to establish the new and improved Rogers Chocolate
line.Samples will always be available in the retail shops and stores will feel like your in
chocolate heaven.BUDGETA generous budget of approximately $2 million will be provided and
supplemented by a price increase of about5%.  Small wholesalers will be reduced and scaled
back while Sales Agents will be re-trained to focus on the bigpicture (corporate events,
sponsorship).50% of the budget will be directed toward Brand Awareness;25% of the budget
will be directed toward rebranding the new face of Rogers Premium Chocolates;15% of the
budget will be utilized to update the website10% of the budget will be spent on
promotionsSWOTSTRENGTHS

Well established and reputable Brand

Experienced Management Team

Rich history and tradition in Canada

Award winning recognition

Revenues

Loyal customers


Devoted Employees and Passionate Employees

Quality products & hand wrapped

WEAKNESSES

Production process  not efficient and no measuring capabilities

Demand forecasting  difficult due to seasonality of sales

Managements and Employees resistance to change

Management team conflicts

Packaging

Lack of brand image and customer awareness

Cost of setting up and cleaning equipment

Inventory Management  Out of Stock and Over stock  production planning issues


Wholesale

Online Sales only 4%OPPORTUNITIES

Growth in European and Asian markets

Retail and Online expansion

Increased production capacity

Trends and shifts in consumer confectionary market

2010 Olympics

Joint partnerships  NHL, MLB, NBA, etc.

Kiosks in airports

Second shift possibilities

Organic and/or Fair Trade LineTHREATS

Economy and demand fluctuations


Competitors

Consumer Traffic  decrease in tourism

Environmental concerns and human rights concerns expressed by some consumers

Governmental or FDA rules redefining chocolate

PORTERS FIVE FORCES ANALYSISBargaining Power of BuyersThe chocolate and cocoa industry
has several large volume retailers, like Wal-Mart, that have significant bargainingpower. These
large volume retailers can bargain for lower prices and reduce the industrys profits.Another
condition that affects the power of buyers is product differentiation. If the product is
undifferentiated, thebuyer has the power to play competitors against each other and reduce
the cost. The chocolate and cocoa industryhas a differentiated product, which reduces the
power of buyers. The industry has several large players that havebrand identification and
customer loyalty, which makes it hard for buyers not to use a particular supplier.As far as retail
sales go, chocolate is an extremely accessible commodity that has a multitude of purposes for
itsbuyers and end users.  The buyer may not always be the end user and therefore chocolate
may be and often arepurchased as gifts for family, friends and/or corporate
occasions.Generally, there is strong competition among the premium chocolate manufacturers
to gain buyers/end users of fine chocolates especially in a down economy.  Premium chocolate
manufacturers such as Rogers will becompeting against lower quality chocolates in some cases
as consumers are more budget conscious.  Therefore,consumers may have some leverage in
negotiating favorable terms of sale or purchasing premium chocolates at adiscount than when
market conditions are favorable. However, the buyer must be willing to accept taste changesin
the product, which restricts their bargaining power.Threat of New Entrants - BarriersThe
chocolate and cocoa industries do have a significant economy of scale entry barrier because
large companiesexist in this industry.  This is significant because the large established
companies would most likely have highproduction output, which reduces the cost to produce
chocolate and cocoa. If a new competitor wanted to enterthe market, the company would have
to enter the market producing a large quantity at the same low price ascompetitors or the
company would have to compete with a cost disadvantage. Because economies of scale exist
inthe industry, it deters smaller competitors from entering into the market and reduces the
threat of entrants.  Also,capital requirements may act as a barrier.Bargaining Power of
SuppliersThe suppliers of the chocolate and cocoa industry have significant bargaining power
over the industry because of the limited number of these suppliers. Because the cacao tree is
grown in areas that have a tropical climate, manyplayers in the industry are forced to import
the product.The chocolate and cocoa industry relies on suppliers to deliver high quality
products that meet food regulationsand consumer taste tests. If the suppliers product is not
available or does not meet the quality expected, theindustry will suffer greatly. This
dependency on the suppliers product increases the suppliers bargaining power.It is
important for the suppliers product to be a certain quality or grade; however, if the product
meets gradeguidelines, it is relatively undifferentiated. This is true of all suppliers of the
industry including cocoa bean, milk,and sugar suppliers.Threat of Substitute Products and
Services

The chocolate and cocoa industry must compete with numerous substitute products that can
threaten theindustrys profitability. Alternate cooking flavors are a substitute product to
chocolate and cocoa. These flavorsinclude vanilla, lemon, butter, or mint flavoring. These
flavors can be used by the industrys customers that usechocolate and cocoa products for
industrial and cooking use.Another significant category of substitutes is snacks. Many non-
chocolate snacks are available, such as peanutbutter, fruits, potato chips, ice cream, etc. There
is no need to stick with a specific snack other than personalpreference. Further, many
consumers consider chocolate unhealthy and are willing to substitute it readily. Rivalry -
CompetitorsAn industrys competitor rivalry is increased if there are numerous competitors or
if the competitors are equallybalanced. This condition can create a strain on raw materials and
consumer groups. The chocolate and cocoaindustry has numerous industry leaders that are
similar in size and product offerings. Many of the leaders createnew product lines and actively
participate in advertising wars. Because there are numerous competitors that areequally
balanced, competitor rivalry is increased.Another condition that increases the intensity of
rivalry among competitors is if the industry has high fixed orstorage costs. If fixed costs are
high, firms in an industry are under pressure to increase capacity.  The chocolateand cocoa
industry has both high fixed costs and high storage costs. The industrys fixed costs consist of
largeamounts of equipment and huge facilities to house manufacturing operations. Although
the industry consists of perishable foods and ingredients, which typically have a short shelf-life,
the storage costs are high due to theprecise storage environment needed. For example, both
milk and chocolate must be kept at a proper temperatureand humidity.

PAPER 4
CASE 9: Rogers' ChocolatesStrategic ManagementINTRODUCTIONRogers' Chocolates is the
oldest chocolate company in Canada based in Victoria, British Columbia. Rogers'Chocolates
focuses on the premium chocolate market and differentiates itself by delivering award winning
qualityproducts at a fair price; this combination creates a good value for its customers. They
also have expertise atcreating an outstanding customer experience within their Victorian
themed retail locations that have also wonawards. The company is privately held and currently
focuses its business in four market areas, direct retail ,online/mail order , wholesale, and sales
from a restaurant in Victoria. The company also produces and sells a lineof premium ice cream.
The company employes 130 people, the majority of which are in retail. Sales from
thecompany's retail establishments account for 50% of revenue. Production takes place on a
one-shift operation in a24,000 square foot facility and is labor intensive. There are currently no
measurements in gauge productivity andefficiency in the plant.

The past president focused a growth strategy in the wholesale market and current order
fulfillment strategy is togive priority to online and mail-order business, followed by wholesale
accounts, leaving the retail locations last tobe serviced internally. Sales have seasonal swells
during the holidays and demand forecasting has been an issue;they have increased inventory to
deal with these sales patterns but still encounter out of stock situations. The newpresident has
been given a goal by the board of directors to double or triple the size of the company within
10years.PROBLEM STATEMENTThe focus on the wholesale market does not inline with the
strengths of the company. Furthermore, the issues inoperational efficiency with regard to
production capabilities and demand forecasting are hindering the companyfrom increased
growth potential.ALTERNATIVESFocus on strengthening current retail operations.Focus growing
the retail business into new geographic markets.Continue to grow complementary business
lines (ie. Ice Cream)Develop core competence in operations management to drive efficiencies
and reduce inventories.Upgrade technology in production to increase capacityCreate new
product lines and packaging to broaden the customer base.Franchise Sam's Deli.Franchise retail
chocolate stores.ANALYSISIn 2006, the chocolate market size for Canada was US$167 million
with the premium chocolate market growing ata rate of 20% annually. Competition within the
premium market is a broad mix of small local niche players to largemultinational corporations
and is growing as larger traditional manufacturers enter the market via acquisitions ornew
product launches. Product differentiation is healthy and there are no indications of a price war
startingbetween rivals. Product innovation appears limited, mostly focusing on new flavor
introductions and variations inmolding and coloring. Seasonal demands, especially the eight
weeks prior to Christmas, can create demand thatcan challenge small companies with low
production capacity and/or inadequate forecasting and inventorymanagement. Competitors
vary in the level of vertical integration and companies with large-scale operations
anddistribution networks enjoy a competitive advantage through economies of scale.Rivalry
among competing sellers is active and fairly strong due to the following conditions:There is little
to no cost for buyers to switch brand.There is a fair amount of product standardization in the
industry.The products in the chocolate market have large seasonal swells and are perishable
causing some pricecompetition. Higher fixed production costs adds to this pressure

The addition of new competition by established companies such as Hershey's and

Cadburys.Competitive pressure from potential new entrants is medium as most of the major
players in the industry arealready in the premium chocolate market; the projected growth rate
in the market will strongly attract newupstarts but they will have challenges developing
distribution and retail penetration with little to no brandawareness. Firms in other industries
will have little impact in this market as there aren't any strong substitutions topremium
chocolate. Competitive pressures stemming from supplier bargaining is mixed; large-scale
manufacturerswill enjoy less pressure from suppliers due to economies of scale while smaller
niche companies will not have asmuch influence, especially in the area of organic and fair trade
raw materials. Pressure from the buyer communityis fair; demand is high but so is the ability to
switch brands. Growing demand for socially responsible products,such as fair-trade and organic
will increase pressure from the buyers.The current driving forces in the market are the high
growth rate in the premium market and the entrance of newmajor firms; consumers' emerging
interest in fair-trade and organic products is also a force to be considered. Keysuccess factors in
this market include a well known and respected brand and strong direct sales and/or
wholesaledistribution; quality and efficient production capabilities are also key success
factors.Although profit margins are down, Rogers' Chocolates is in a strong financial position.
Retail accounts for 50% of the company's revenues although the two new stores in the
company's portfolio are not performing toexpectations. Ice cream sales, although small
compared to retail, show a strong contribution to overall sales. Thekey financial indicators are
shown below; one area of concern is the major increase in the days of inventory andthe
accompanying decrease in inventory turnaround. This is a concern due to the perishable
nature of theproduct and the negative affect on customer quality perception when product is
sold past the expiration datewhich has occurred with some sales via wholesale accounts.
{draw:frame}A SWOT analysis of the company has turned up the following points:STRENGTHS:a
distinctive competence in retail, specifically the customer experiencea strong financial base
to grow the businessa strong regional brand and company reputation to build uponbetter
product quality relative to rivalsgood customer service capabilities in retail and online
sales.WEAKNESSES:weak wholesale networkbrand/company awareness is poor outside of the
regionweak supply chain competences in forecastingproblems with operational efficiencies
with old technology and high cost changeovers
OPPORTUNITIES:expansion into new areasentering into alliances or joint ventures to expand
market coveragecontinued expansion of complementary products (premium ice cream)explore
new technology within production THREATS increased competition by new entrants in the
marketslowdown in market growthshift in buyer needs and tastes RECOMMENDATIONSI
believe that Rogers' Chocolates should implement a combination of the following
alternatives:Focus on strengthening current retail operations.Focus growing the retail business
into new geographic markets.Continue to grow complementary business lines (ie. Ice
Cream)Develop core competence in operations management to drive efficiencies and optimize
inventories.The Rogers' Chocolates brand has been built based on a high quality product and
the retail experience of theirVictorian themed shops and packaging. This is their core
competence and strength and it should be the focus of their growth. By solidifying the
performance of the current locations and then opening additional stores in newareas the will
expand their brand recognition while preserving the quality of their product. There ice cream
line iscomplementary to the business and should be further developed and sold in the stores.
Internally, and operationalstrategy to improve efficiencies in production and demand
forecasting will reduce costs, preserve product qualityand optimize production and inventory
capabilities