Rogers Chocolates Formulation and Implementation in Single Business Firms 1.

Strategic issue or problem statement With the mission of committing towards the production and marketing of fine products that reflect/maintain excellence and quality, Rogers chocolate company has an opportunity to attain this in the premium chocolate market which has been growing annually at a rate of 20%. The success determinant of the premium market is quality and brand market, prerequisites (excellence, quality and brand) which Rogers has the ability to meet this criterion. 2. Explanation of the Strategic issue or problem statement Identification of opportunities has been considered by various scholars, Shane & Venkatraman (2000), Gaglio & Katz (2001) and Ardichvili, Cardozo & Ray (2003) as a fundamental component in business formulation and implementation strategy. In addition, opportunity is identified in form of unsolved problems, creation of opportunities via ingenuity and creativity, inefficient processes or unmet needs. In Rodgers Chocolates case, opportunity exists in form of unmet needs. As indicated, even though premium chocolates are more like the imported roses in the sense that they are not considered as lifes necessities, more people still want them. Such is the case of Canada,( the major Rogers market share) where more people appreciate chocolates hence increasing the premium chocolate market share by 20% each year with a market size amounting to millions (US$ 167) in year 2006. This attractive growth makes the premium chocolate an outstanding opportunity for Rodgers Chocolates. The major potential customers for this market are aging baby boomers who emphasize brand and quality. Considering that Rodgers Chocolate is a well established band (second oldest brand that has managed to cut a niche in the Chocolate industry) and produces high quality product including in

its premium line, it would be advantageous for Rogers to realize the opportunity and work on strategies for maximizing its premium line. This will increase the companys sales and will go hand in hand with the companys mission, to triple or double the companys size within 10 years. To design a successful plan of action Ferrell & Hartline (2008) indicates that strategists need to clearly understand critical ingredients such as mission. Grnfeldt & Strother (2006) refer to mission as a business strategy that answers the question in regard to what business is or a culture glue. Rogers mission is not clearly stated but one can tell from its operation that they do not compromise on quality, brand and excellence. Rogers also has concrete goals or rather strategic objectives (Srinivasan et al, 2007) doubling or tripling the company in ten years time. When it comes to business strategy, Rogers uses differentiation as a business strategy (handmade, high quality chocolates with assortments that differentiate the company from its competitors making it acquire a loyal customer base) (Hitt et al, 2008). 3. Alternative strategies Even though Rogers company has managed to receive considerable success with the differentiation strategy, the strategy cannot fully help Rodgers increase market share (triple or double the company within 10 years) with unaddressed issues such as stiff competition from premium chocolate brands that have other competitive advantages such as in the case of Godiver, a brand that has much better advertising, distribution and advertisement, Lindt company that produces and broadly distributes variety of chocolates and Belgium producers selling chocolates in Canada. Additionally, the brand image is not well recognized beyond Victoria, American tourists (major customers) had seized coming to Canada due to American dollar decline, lack of internal systems capacity to meet sales increases and lack of an

organizational culture that addresses the goals and mission of the company. With this in mind, three competitive strategies had to be formulated. A. Expansion/distribution of Rogers premium chocolates in more Canadian retail shops Advantages Most competitors are also expanding their business (widespread distribution) and this will also act as a counter attack strategy that will leverage competition by providing Rogers with equal expansion opportunities with the competitors. Considering that the major target market of the premium chocolates in Canada is childless couples who are of middle age, established families and nesters having high income (persons who have not time for walking long distances in search of chocolates, love staying at home yet want enjoy the taste of chocolates), expanding in retail stores is ideal as this will help rogers reach the target market (create customer convenience). Retail shops are already well known for what they do (specialization) and hence, it will be much cheaper or cost saving than Rodgers trying to run an individual distribution channel. Retailers are reseller and usually tend to use persuasive techniques that persuade client to purchase products. Therefore, this will boost Rodgers sales. Additionally, retailers are able to interact with customers and get useful feedback (packaging, branding, tastes and quality) that can help Rodgers improve the premium chocolates as a product and have a competitive advantage over the competitors. Disadvantages Rogers will have to sell the product at a lower cost to the retailers (who want to make profits) than the price they sell to their middlemen and hence risk revenue loss.

 Just like losing revenue, Rogers will also lose communication control in the sense that the company will not know the message that is conveyed to final customer. This can lead to tarnishing of the brand image that Rogers has struggled so much to maintain. Rogers also risks losing the product importance in the sense that the importance given to the premium chocolates by the retailers or distribution channel not be under the companys control. For instance, transportation delays might result to loss of the product and its importance. Retailers are more likely to sell goods (chocolate boxes) on credit and this can tighten Rogers company cash flow and causes (overstocking) as retailers are subjected to buy good once paid by the customers. B. Snack vending machines Advantages The machines can be located in special places or events such as truck shops, Caesarland, Disney land and weddings venues where they can generate more profits. Rogers can have an opportunity to work with the untapped market that other competitors are not thinking of such as 5 stars and 4 stars hotels where the machines can be placed to target the high-end customers who value quality, brand and excellence. They can be used to target clients across all regions as they can be placed along roadsides and parks (frequently visited by all kinds of people) and in different towns, beyond Victoria. This can be used to increase brand awareness which culminates to increased market share and sales. Snack vending machines operate on a 24 hour cycle, do not require staff or specialize attention, are fast, no marketing or any advertisement costs, no risks of credit or bad

checks and are redeemable as earnings start as coins enter the machines. Basically, they have low risks. Disadvantages Vending machines are at risk of vandalism and hence can result to financial losses. There is difficulty in getting authorization to mount vending machines especially in certain locations. Some towns charge much higher taxes for mounting the vending machines and this can be an added expense to the Rogers premium chocolate business Requires technical expertise for maintaining them and keeping them running to prevent malfunctioning. Rogers might have difficulty getting the right expert required for the job. C. Concentrating on special lines ( such as candy boxes for wedding gifts or birthday parties in collaboration with even organizers) Has the ability to offer customized premium chocolates and this places the Rodgers at a competitive advantage over the competitors as it creates a niche in the premium chocolates market Rodgers will be able to determine the profit margins (increase sales) because the services offered are customized, a clear indication that they are not measured against other premium chocolates produced by the competitors. Customized products are convenient for customers as they do not have to spend time shopping for the customized chocolates. Simply stated, they will know that they can only get what they want at Rodgers and this will make the company secure a loyal clientele base that will culminate into increased market share and generous profit margins.

 This will mitigate overstocking (storing chocolates that have no market and that can easily expire) as Rogers will only have to make the customized chocolates only when clients makes orders. This will mitigate losses associated with overstocking. Disadvantages There are not so many people requiring customized chocolate (most do so when having special occasions or surprising their mates) and hence, securing orders might be quite difficult. Considering that Rogers will have to make the chocolates upon requests, the production plant and the staff will be idle incase no orders or few orders are placed and hence there will be no performance/production maximization (exploitation of the full potential of employees and the plant production capacity. This will hinder Rodgers efforts of tripling/doubling the company in ten years time. Customized orders are not evenly placed (placed only during special occasion) and hence Rodgers will not be able to project the future revenues/profits, a prerequisite needed for planning so as to achieve the goal. Customized business success depends on meeting the clients demand (creativity, packaging and quality). Hence, the Rodgers will have to train/higher employees who are artistic in chocolate making so as to fully meet the clients need (customization). This will be an added cost that has minimal of chances of being recouped. 4. Strategic Choice From the choices, my strategic choice is strategy B (snack vending machines). 5. Explanation of the Strategic Choice I choose strategy B (snack vending machine) because is better than choices A and C.

As we can see, there is predictability of Rogers success (targeting untapped market where competition is low and there are growth chances, targeting premium chocolate target market, expanding; targeting different regions, high ended persons in high ended hotels and Disney world, providing convenience to clients and low risk). This is likely to enhance Rodgers premium chocolate brand in the country, cut a niche in the market and earn enormous sales. Additionally, vending snacks machines has disadvantages that can be mitigated (the snack vending machines can be secured via security systems to prevent vandalizing, the company can still have authorization due to its credibility and can opt to avoid cities with hefty taxes). More so, However, A disadvantages (selling products at a low cost, losing control over the product importance and image, and limited cash flows) pose heavy risks that can result to loss of brand image, huge losses and collapse of the business. Likewise, option C offers less profit margins and cannot be relied upon (no constant placement of orders) (Alkhafaji, 2003). More so, strategy B is aligned to the companys mission, strategic objective and financial goals. Mounting snack machine vendors will not compromise on the cost, brand or quality of the chocolates (mission). Instead, there will create more brand awareness as more people will be able to know and test Rodgers premium chocolates and Rodgers will have to produce quality product so as to target the high ended market. Additionally, Rodgers will be able to increase sales (financial objective) and this will help the company triple/double in a span of 10 years (strategic objectives). The M. Porter strategy used will be based on a focus strategy that will emphasizes on narrow segment) so as to achieve the differentiations. This implies that Rogers will concentrate on delivering premium chocolate to high ended clients via accessible and 24/7 vending machines so as to achieve differentiation in the premium chocolate market (set its services apart from its

competitors). This will create heightened customer loyalty that will discourage competitors from direct competition (Porter, 1980). 6. Implementation and evaluation A. Increasing the organizations capability According to Porter (1985), the first step towards the implementation process is building a capable organization. This requires staff/management with capabilities and competencies and also requires that the company has the resources needed. In Rodgers case, there is a need for knowledgeable staff (experts needed to maintain/maintaining the snack vending machines), strong finances (to buy the vending machines, mount them and produce chocolate stock that can fill/refill the vending machines) and plant and machinery for production of more chocolates . B. Organizational Structure The organization will also require a strong structure and hence, it has to be structured to accommodate the vending machines. Considering that there will be no marketing required, marketing department will be eliminated. Vending machine (VM) maintenance and technology maintenance is the key role to the success of the business and therefore, maintenance will be a major department (will check that VM machines and other technology; sales automation and restock refill alerts) are functioning. The production department will work hand in hand with the administration (purchase, HRM and finance) to ensure that enough chocolates that can restock the VM are produces, the finance department will monitor the sales, purchase department procure production and maintenance resource while the HRM will get involved in training and building up the personal (besides technical team) to maximize production ( Pearce & Robinson, 2009).

BOARD OF DIRECTORS GENERAL MANAGER

Budget Item 1. 2. 3. 4. Vending Machines repair Staff salaries Advertisement cost Administrative costs (electricity and telephone etc) 5. Security system charges for the vending machines As Rumelt & Teece (1994) puts across, increased expenses can either be a sign of business deterioration or business improvement. The more the business will continue to grow $40,000 $45,000 $50,000 Year 1 $40,000 $140,000 $80,000 $360,000 Year 2 $50,000 $150,000 $80,000 $400,000 Year 3 $60,000 $160,000 $100,000 $450,000

and increase profits, the more expenses there will be. The increase in profits is expected to be as shown in the graph below:

profit increase in percentage

40% 30% 20% 10% 0% Year 1 Year 2 Year 3

C. Policies and Procedures Strategies and procedures that will be enacted will facilitate rather than impede the strategy. They will include: High standards (cleanliness, quality and wrapping) while producing the premium chocolates should be maintained. No discrimination of any form or favoritism (disabled) will be allowed. Only special needs for special persons will be provided. Privacy of the companys confidential information (vending machine mounting, chocolate recipes and finances among others) should be highly safeguarded. D. Benchmarking The bench marking process helps companies push for continuous improvement. In Rogers Case, this will be done via process benchmarking whereby the firm will focus on investigating and observing best practices in similar companies so as to increase efficiency. Foodstuffs Company located in Ontario, ecole chocolat in Vancouver and Chocolat-Chocolat in Montreal are amongst chocolate companies offering chocolate through vending machines.

Foodstuffs Company does not specialize on selling chocolate alone (offers other products such as candies through the same machines), ecole chocolat sells chocolates via vending machines but has experienced difficulty expanding beyond Vancouver. Chocolat-Chocolat specializes exclusively on selling high quality chocolate (though much lower quality than Rogers) and has been successful in the implementation and running of the chocolate vending machine processes (expanding in various Canada cities). This makes it ideal for the bench marking purposes. E. Designing Support system To install the operating system or to diffuse installation information, the company will have to come up with a support design team that will enable the personnel integrate into the implementation and perform their role with proficiency (Wit & Meyer, 2010). This will help create a support system which is as follows: The maintenance system will help in creating alerts of any malfunctions. The accounting system will also be changed so as to automatically record sales made from the vending machines. The HRM system will also be changed so as to receive alerts as chocolates become less in the vending machines and requests for refill. F. Designing Reward System As Thompson, Gamble & Strickland (2004) state, a well structured reward system will help improve performance at Rodgers workplace. Individual and the groups effort will be evaluated, the system will be fair and extend to workers and managers, the rewards given should motivate employees to perform, monetary reward and non- monetary rewards will be included. Managers will be rewarded according to how successfully they have been in managing employees and steering them towards the completion of the process

 Maintenance employees will be rewarded according to how well they have managed to carry out maintenance and ensure that the vending machines are compensated promptly. Persons in the production department (other employees) will be rewarded according to how well they have performed in making the process a success (individually and group wise) Motivations keep changing and therefore, there are not set rewards. Rewards will be formulated and reviewed from time to time. G. Culture Most employees enjoy working at Rodgers because they feel more at home. This is because Rodgers has adapted a family culture where employees are encouraged to care for each other. However, the culture makes employees resistant to changes and anything new caused concern that the company comprised its values and its heritage. This makes it impossible for Rodgers to implement the vending machine strategy. Therefore, a new culture (adhocracy) will be adapted. As Daft & Marcic (2010) puts across, adhocracy culture is entrepreneurial, creative and dynamic. It encourages innovation, change, risk taking and is welcomed by all workers. This will best serve Rodgers strategy implementation. This kind of culture develops, encourages, and maintains the bond between the employees with one another and between them and the company. H. Leadership Thompson & Strickland (1992) elaborates that a leader is expected to lead in social responsibilities and display ethical integrity, push corrective actions that can improve the execution of strategy and help achieve the targeted results, constructively pressurize organization so that operation excellence and good results can be achieved and monitor progress, reveal issues

and identify obstacles that can hinder execution of the process. Steve Parkhill exhibits personal integrity and empowering leadership style. These are skills that will help him display ethical integrity and get involved in social responsibilities. Additionally, he has worked in sales, marketing and operation where leadership is of essence and will therefore be able to pressurize organization so that operation excellence and good result. He will also use his empowering skills to convince the board to change the companys culture, an obstacle that can hinder the execution process (Williams, 2002). 7. Standards to measure the Implementation The implementation process will be measured through a matrix Year 1 ROI Net income sales 10% $1,229,724.9 (15%) Year 2 20% $1,336,657.5 (25%) Year 3 30% $1,443,590.1 (35%)

$13,790,291.7(15%) $14,989,447.5(25%) $16,188,603.3(35%)

ROI will be expected increased at a rate of 10% each year so that the Returns on investment so that the companys value can double up in a period of ten years. While the rest will increase at a much higher rate so as to cater for the expenses that will be incurred along the years and ensure that the ROI is constant (increases at 10% annually). Failure to meet the percentages set implies that the implementation processes had to be reviewed and adjustments made. 8. Timeline Expectations Designing support system Designing the reward system Changing the organizational culture X X X Year 1 Year 2 X Year 3 X

Benchmarking Increasing organizations capability Policies and procedures Measuring implementation process X X X X

9. Conclusion on the implementation. Rodgers has a competitive strategy in the sense that the focus will be on producing high quality premium chocolates for the high ended clients using the snack vending machines. Competitive advantages for implementing Vending machines will be: Rogers will cover wide regions as specific places/occasions where the chocolates will be placed within reach of the targeted customers. The machines can be located in special places or events such as truck shops, Caesarland, Disney land and weddings venues where they can generate more profits. Rogers will have an opportunity to work with the untapped market that other competitors are not thinking of such as all regions as they can be placed along roadsides and parks (frequently visited by all kinds of people) and in different towns, beyond Victoria. Implementing of Snack vending machines is going to be less risky for Rogers because they operate on a 24 hour cycle, do not require staff or specialize attention, are fast, no marketing or any advertisement costs and they will be one step ahead than their competitors. This will act as marks for the Rodgers company hence placing the company at a more competitive advantage in terms of brand awareness and increased sales over its competitors.

However, for the implementation process to be sustainable in a 3 year frame, the company has to produce more chocolates (employ more employees or let automated machines to do the work), secure a well qualified maintenance and IT team, and also functional vending machines with attractive displays (company logo, TV and Newspapers/ magazines advertisements quality, chocolates displayed in a slide and descriptions of the uses, and ingredients). However, the company faces the problem of system collapse due to hefty IT setup required that carry the hefty malfunction risks. Additionally, the vending machines are prone to fraudsters who can hack into the system, get the products for free or channel cash t their accounts instead of getting channeled to the companys sales account. However, the company has a great opportunity of attracting clients and meeting its two objectives; increased sales and doubling/tripling the company thus making the process worth the risk (Hoskisson, Hitt & Ireland, 2010). Also, Rogers company has external opportunity of expanding its branches not only in Canada, but also in US. While expanding its distribution, the company should concentrate their new branches close to tourist attraction sites in order to capture visiting tourists. References Alkhafaji, A. F. (2003). Strategic management: formulation, implementation, and control in a dynamic environment. London: Routledge. Ardichvili, A., R. Cardozo S. & Ray. (2003) A theory of entrepreneurial opportunity identification and development. Journal of Business Venturing. Vol.18(1) 105123. Daft, R. L. & Marcic, D. (2010).Understanding Management. London: Cengage Learning. Ferrell, O. C. & Hartline, M. D.(2008).Marketing Strategy. London: Cengage Learning. Gaglio, C.M. and J. A. Katz (2001) The psychological basis of opportunity identification: Entrepreneurial alertness. Journal of Small Business Economics. Vol. 16, 95111.

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