Rogers Chocolate Case Analysis

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Rogers Chocolates |

Case Analysis |

Table of Contents

External Analysis

A. Chief Economic Characteristics 3

B. Five Force Analysis 8

C. Driving Forces 10

D. Overall Attractiveness of Industry 13

E. Group Map 15

Internal Analysis

A. Identification of Business Strategy 15

B. Financial Analysis 17

C. SWOT Analysis 19

Test of Winning Strategy

A. Fit Test 20

B. Competitive Advantage Test 21

C. Performance Test 23

D. Identification of Strategic Issues 24

E. Recommendations 25

F. Revenues/Expenses Projections 26

G. Internet Summary 26

Appendix 26

External Analysis

A. Chief Economic Characteristics

Chief economic characteristics | Com* | PP* | Perspective of industrys insiders |

Perspective of industrys outsiders | Perspective of Company |

Market size: Medium $167 million -Rogers chocolates are expensive, mostly sold in

Canada and good for a limited clientele | (-) | (+) | | | |

Market growth rate: Medium, Slow (Stage of the product life cycle-Growth

Stage)-Although this is a food, Rogers chocolate is higher end and only caters to a few |

(+) | (-) | | | |

Scope of rivalry-Broad: Many other companies make chocolate, quality and name are

really only what changes | (+) | (-) | | | |

Number of rivalries-Moderate-Not too many higher end competitors in comparison to

overall chocolate makers | (-) | (+) | | | |

Product differentiation-Strong Medium: many types/flavors of chocolate possible-i.e. milk,

dark, white and can add jelly or bits of items to the actual chocolate like raspberries,

strawberries, almonds etc. | (+) | (-) | | | |

Buyers needs & Number of Buyers: (Many – Few) Many buyers of chocolate for fun and

for cooking. There will always be a market for chocolate; although the higher end more

expensive chocolate buyers are more limited | (-) | (+) | | | |

Product Innovation Medium: some machinery may update but they still hand wrap and

package the chocolates | (-) | (+) | | | |

Pace of Technological change-Slowsome equipment may update but they still hand wrap

and package the chocolates | (+) | (-) | With the changing of technology and equipment

more efficient ways to produce come to fruition | Others may be able to make and wrap the

chocolate cheaper | Although equipment may change they still finish the product the same |

Economies of Scale:(Moderate) | (+) | (-) | | | |

Conclusion: | (-) | (+) | | | |

Market Size-

Market size- The Canadian market size for chocolates, as of 2006, is around$167 million

-Rogers chocolates covers about 11 million in sales for 2006. They draw about 54%of their

sales from pre Christmas season alone, about 50% from Rogers 11 retail stores, 10% from

online and mail-order sales, the remaining sales were generated from Sams Deli.

Market Growth Rate-

Market growth-the premium chocolate market is growing, a projected 2% growth annually

but the overall chocolate market is slowing. To generate more sales Rogers needs to have

their name be known in a broader radius. There has been a rise for more quality chocolate

and a health craze pushing the market for chocolate production opening up an opportunity

for orders, sales and an increasing market. Even though they are a premium chocolate, they

could put specialized catalogues out and get estimates on how they could mainstream the

product into malls or grocery stores while maintaining their brands reputation and quality.

Scope of rivalry-

Many other companies make chocolate, quality, cost and name are really only what

changes There are only a few high end chocolate competitors-Godiva, Bernard Callebaut,

Lindt, Purdys, Rocky Mountain Chocolate, and Laura Secard and many other lower cost

brands, Hershey, Ghirardelli, Dove, Cadbury, Snickers, Nutella

Number of Rivalries *

The number of rivalries Rogers Chocolate is facing is only moderate, as they are

specifically in the high end, luxury chocolates. Their biggest competitors in the overall

chocolate industry are regional companies because Rogers is relatively focused in a small

area, but not all of these companies offer the high end chocolates like Rogers. There are

also only a handful of big chocolate companies, like Nestle and Ghirardelli, that they

compete with outside of their local regions. This presents a very good opportunity for

Rogers to increase market exposure and increase their sales and profit potentials.

Product Differentiation *

The possibilities for product differentiation are numerous in that there are many different

ways to make chocolate, many different items to add to chocolate, and many different

ways to use chocolate. Having so many different options to market chocolate could present

an open door for competitors, creating their own niche to draw customers. A large number

of products to choose from could also make it difficult for Rogers to draw customers to its

own products, decreasing their profit potentials.

Buyers need and number of buyers *

The premium chocolate market has been growing at 20% annually, showing that buyers

are willing to pay more for a better tasting and better quality chocolate. The declining

growth of the overall chocolate market and rapid growth of the premium chocolate market

is positive for current producers of premium chocolates in that the decline of overall

growth would potentially keep new entrants from venturing into the chocolate business. A

change in buyers needs from cheap chocolates to high quality, luxury chocolates is taking

place in the industry, putting Rogers in a very good position to produce profits.

Product Innovation-

Rogers has produced premium chocolate treats since 1885. Even though they have added

some new products along the way, not much has changed. They are one of very few

companies that still hand make and hand-wrap their chocolates. The loyal customers of

Rogers Chocolates appreciate this and it is one reason for their loyalty. However, it is very

time consuming and costly to do so. Although, the experience that comes from the

dedicated employees, makes the process go quicker than if other companies tried to

emulate this activity. Industry insiders can make their product more efficiently and less

costly. Outsiders of the industry feel as though they would have an advantage in speed and

cost as well. However, Rogers feels that the hand packaging of their specialty products

gives them an overall advantage in gaining and maintaining loyal customers.

Pace of Technology-

It is fairly slow within the industry of manufacturing premium chocolate treats. Other

companies have taken advantage of the advances that have taken place in order to speed

production and decrease costs. However, Rogers has continued to utilize batch processing

to make its chocolates. This certainly gives customers the feeling that they are purchasing

a high quality premium treat. However, by not taking advantage of certain technological

advances, Rogers may be making it difficult to make accurate forecasts and meet retail and

wholesale customer demands.

Economies of Scale-

Considering that the premium chocolate sector of the chocolate industry is growing at a

20% annual rate one could say that having a strong economy of scale could be beneficial

to some companies. Most of Rogers competitors are fairly large business, for instance,

Godiva which is owned by Nestle. Currently the tastes of consumers are changing towards

healthier options that come from fair trade organizations, especially the younger

consumers. While that may not be a problem for some companies, Rogers is not large

enough to demand its suppliers to create organic or fair trade chocolate. That may be a

reason that customers choose to substitute another product for Rogers Chocolates. So

either Rogers finds a new supplier that meets those wants or they may lose business

because, more likely than not, they wont grow to be large enough to make such demands

of suppliers.

Conclusion:

Insider Conclusion: For industry insiders, the industry is fairly attractive, unattractive

because…… With a decent $167 market size and an ok growth rate projected at 2%

annually, there is room to grow and expand their consumer reach. There arent too many

competitors in the premium chocolate market but many in the chocolate industry. Since the

premium chocolate market has been growing profit potential looks good for the future.

Outsider Conclusion: the attractiveness of the industry from an outside perspective is….can

also be attractive, with a growing market there is an option for new entry if they have

enough money to start and maintain the business there will always be a market for food for

cooking and leisure eating. However new entrants will have to work harder to make a

name for their product and more expenses on advertising.

Company Conclusion: Finally, as for Rogers Chocolates, the industry appears to be …..

Attractive since they are well developed / established in the market. They are part of a

growing market and since the baby boomers are retiring there will be more demand

coming in and there will always be a demand for chocolate.

B. Five Force Analysis

Forces | Impact on competition in the industry | Impact on the profitability of the industry |

Perspective of industrys insiders | Perspective of industrys outsiders | Perspective

ofCompany |

Rivalry Strong – Strong | (-) | (+) | | | |

Competitive force of substitute products/services: Medium | (+) | (-) | | | |

Bargaining power of suppliers: Strong | (-) | (+) | | | |

Bargaining power of buyers: Strong- Medium | (+) | (-) | | | |

The threat of potential new entry: Strong | (+) | (-) | | | |