The establishment of Rocky Mountain Chocolate Factory Ico. (RMCF), was in 1982 as a public offering business. It had a global focus and was able to insert itself within the Canadian society and the United Arab Emirates community. Its main activity is within the confectionery industry. The Board of Directors (BoD) has kept its vision and contributed to the success of the business and has carried it to higher levels of efficiency. The innovative capacity of its personnel has given new stands to the business. Its master who design and develops the chocolate mix has been able to continue its fascinating creativity. As the discussion is taken we shall understand the success and also the needs of RMCF.
a. Statement problem
The Rocky Mountain Chocolate Factory Inc. to address in its continued expansionary growth needs to attend the following as its problem: “impact primary franchisees within continental USA and rest of the world, imminent product patenting, employees’ union agreement and increasing one impact product every year to increase customers’ satisfaction”.
As the case study for RMCF is analyzed; a business engrossed in the confectionery industry, where from year to year there are new entrants to challenge market share and embed in an industry which is proving vibrant and demanding. Based on such facts lets analyze it through a SWOT study. First let’s analyze two factors (Strengths and Weaknesses):
1. “The candy maker’s chocolate beat out See’s Candies, Perugina, Teuscher, Godiva, and Fanny May for the richest chocolate, with intense natural flavor.” 2. Governed through its functional by-laws, key to company internal operations, 3. Capacity to produce 5.3M pounds of chocolate per year,
4. Experts and experienced management team – gives competitive strengths, 5. Approval of selected franchisees site – approved by senior management, 6. Produced over 300 products, 7. In offering unique proprietary products, company’s philosophy was embedded, and 8. RMCF had a functional fleet of 12 truck for distribution of products and collection of products and raw materials Strengths: the internal capacity of RMCF, through its ability to have secured over 320 established franchisees within 30 years, proves strong internal management capacity. Its dedication to its governing by-laws, is a strong showcase of decisive actions; they are the strength of its activities and the guiding standards, procedures and principles of the business.
In this case Frazer states: “A key feature of franchising is the Operations Manual which outlines the day-to-day operations of running a franchise unit” (https://www.franchise.edu.au/). RMCF, submits all its administrative processes and governing bodies, structures and franchisees in this participative embedding of attitude and business face. The company’s strength, dependability and consistency engrains a way forward in capable trades, utilizing the company’s philosophy to boost its quality of end products which networks uniformity and capacity.
As it engrains all of these strengths it has the ability to increment its local production to 5.3M pounds of chocolate per year. The assurance why this will be achieved and continued to strengthen the company is based on the ability of its candy maker to introduce flavor and mixt to the end products. This is a window which strengths its volume to expand in franchise numbers. It also provides a main focuses in reduction of costs with its fleet of trucks.
1. The policy and procedures of the company stated that directors could be elected by cumulative votes,
2. Sundays a traditional family day stores only opened from 12 to 6 pm,
3. Stated in the contractual agreement Franchisee could purchase products from approved third-party,
4. Company’s recipes and products developed by Master Candy Maker not patented,
5. Reliability on trust and confidentiality for product recipes,
6. Franchisees were encouraged to order from the company only the quantities they could reasonably expect to sell within two to four weeks, since Most franchisees do not have storage space for extra inventory, and
7. Had no future trading and hedging contracts.
we have seen the strengths of the company – nonetheless as much as there are these positive factors there are also weaknesses within the company which needs to be understood to be able to revert these situations. These weaknesses need to be attended as not to suffer in the short or long-term a negatively impact. Even thou the company has a stronghold with its franchisees it’s still vulnerable. An issue which needs to be addressed is the accumulative voting rights. Since if shareholders come together and purchase a significant of stock both at the secondary or primary markets the administration of the company can change hands. Since these shares approve the voting capacity of the shareholders. Therefore the administration of RMCF needs to protect itself from this possible action. Another vulnerability which the administration has deal with the international commodity market. RMCF does not hedge prices.
This is a detrimental factor for future competitive prices in the local market. Since if the commodity prices increases then it’s a fact that RMCF will have to increase its retail products, causing discomfort within its clientele. Therefore is a call to the BOD to engage in future purchases. Since the global economic conditions are in itself vulnerable. Patenting of products: this a huge vulnerability to RMCF. It’s a careless act by the BOD of RMCF to have permitted that their consumable products are without a patent. As stated by World Intellectual Property Organization: “Somebody else might patent them – In most countries…the first person or enterprise to apply for a patent for an invention will have the right to the patent.
This may in fact mean that, if you do not patent your inventions or inventions of the employees of your SME, somebody else – who may have developed the same or an equivalent invention later – may do so and legitimately exclude your enterprise from the market, limit its activities to the continuation of prior use, where the patent legislation provides for such exception, or ask your SME to pay a licensing fee for using the invention” (http://www.wipo.int/). RMCF runs the risk to fall in this condition. Therefore it’s imperative for them to proceed and patent their end products.
1. Establishing a family atmosphere with fun and inviting conditions in all of its locations,
2. Focused on expanding in key areas where tourist and passing buyers were abundant,
3. Entrenching international franchise commitments: with Canada through Immaculate Confections Ltd. Of Vancouver, BC., and United Arab Emirates
4. Strongly promoted special packaging for special days and events,
5. Had reduced cost with the fleet of trucks it has,
6. Based on experts studies the gourmet chocolate would be experiencing an expansion within the confectionery industry, and
7. Project for the organic chocolate niche a 65% growth.
Opportunities: as companies continue their expansion programs, goals and objectives, it necessary to focus on the market structure and niche the opportunities embedded in it. Thus RMCF headquarters is strategically positioned. Since Colorado is a net center for tourism. Taking opportunity of those conditions Mr, Crail, set up his family business to become public by floating shares on the stock market. This continues giving the company open doors to future development. This brave action, de-linking himself from a family business setting forth the company to the public investment. This has action and taking opportunity at such a time today it has opened over 325 franchisees, across the length and breadth of continental USA. Even crossing national borders and immersing into the Canadian and United Arab Emirates Market. The present opportunities are not unachievable better said it’s vital in the development of the company.
Throughout the 325 plus franchisees the establishments enjoy of a warmest welcoming and family owned atmosphere. Clientele focus is pivotal for RMCF. Its constant appealing presentation is an invitation to partake of the chocolate varieties. This marketing strategy is well understood by RMCF and continues to take customers advantage in this process. RMCF needs to focus more on brand labelling – since it’s vulnerable due to none patent factor. Needs to establish a new product – to cement quality standards. Ilya Leybovich in her article The Quality Imperative gives the following advice: “Industrial quality control and assurance are vital processes that not only ensure that products and services function properly, but can also improve a company’s production methods and standards for efficiency” (http://news.thomasnet.com/).
This opportunity is highly being taken into consideration and applied by RMCF. Much now that the organic chocolate has high demand. Added to its quality is the continuous capacity of its administration and continuous support program to the franchisees. The impact on economic and social development continues to be opportune for RMCF.
1. Seven days training to potential franchisees, 2. NETZSCH’s ChocoEasy™, in 2005 introduced a new cost-effective technology to manufacture chocolate of any size and variety in which businesses could create their own chocolate recipes and develop their own proprietary chocolate brands, 3. As generation evolve there are changes in consumer tastes to end products, 4. Impact of global macroeconomic conditions and raw material volatility 5. Competitors (Mars, Nestle, Cadbury etc.) 6. Healthier chocolate (lower fat products), and 7. Competitors market. Global conglomerates acquire small to medium size companies Threats: threats to business can be seen in so many forms and manners in which employee employer relations are at risk in so many instances, therefore when the concept of threats is analyzed, there are external factors which need to be taken into consideration and availed to understand the condition in which the company is working. RMCF is not a business which is foreign to this situation. But on the contrary it needs to be cognizant that this condition exists and is of consideration for its management.
The vulnerable condition in which the company is are: a new development technology which can open the doors to any present small business in acquiring and developing its own brand or propriety products. “Most small to medium-sized business owners understand the power of technology to transform their business. Making the right investments in technology at the right time can radically change the face, nature and character of your business” (http://www.checkpnt.com/).
If this in not done or taken advantage of it can affect the tremendous achievement which has been attained during the past 30 years in service to the general public. All this situation embeds the competitive disadvantage to major conglomerates in the business – such as Mar´s, Nestle, and Cadbury to mention a few. This business are continually purchasing smaller businesses in the industry. This strengthen them and becomes a threat to smaller businesses. They would have the ability to enfranchise the market with the demands of the clientele, healthier foods within the confectionery industry.
3. Strategic Factors
Many times the planning conditions and strategic visions are not well engrained into the overall vision and mission of the business. Therefore it’s critical to be cognizant of the structured planning of the business. There are strategic factors within RMCF:
1. Linked to NASDAQ with acronyms RMCF.
It was one of the most interesting actions but of vital impact what Mr. Crail did to offer stocks to achieve investors funding to see RMCF establish it’s self into the franchise market. This action determined the value which the company today in the market, through its stock value and demand. This strategic action prevailed and has paid great in NASDAQ, where it’s imperative to have a gaining and developing business to form part of it. 2. Advertisement impact – franchise and franchisor possibilities.
As a franchise company – the question would be – who takes on the franchising marketing? As we know and have seen in the marketing – the advertisements are created in general when there is franchise. All of these are rated from one center in which the company has a special team which looks at the needs and promotions of the business. Therefore it’s a joint strategy to benefit both the franchisee and the franchisor.
3. Adhere to norms and standards of the Federal agencies to regulate the packaging and distribution processes. For the strategic success of a business it is critical that all requirements stated by the federal government or state agencies regarding packaging and distribution is in line with the expected standards. This action is labeled in the package and used as a marketing tool to bring consciousness to customers and appreciate that the company is a follower of standards and regulations. This strategic process embeds the philosophy of the company.
4. RMCF, administrative capacity.
One of the main strategies which RMCF has is to carefully manage its Public Relations to attract new investors to their franchise. Much more being able to sustain and retain these franchisees in adhering to the focus of RMCF. Being able to incorporate in its contract the philosophy of the business solidifying its franchise quality. 5. Decrease in depreciation and amortization of assets.
For a company to be successful it needs to manage its finance to be financially sustainable and achieve the market recognition it needs to perform in the stock market. RMCF thorough its capable and experienced administrators continues to impregnate shareholder confidence in its financial management. By reducing and utilizing its assets in a most acceptable manner it proves that the shareholders benefits are in best interest.
4. Core Competencies.
What is core competency? “The concept of core competency states that firms must play to their strengths or those areas or functions in which they have competencies” (http://www.managementstudyguide.com/). Based on the concept – these are considered the core competencies of RMCF: 1. And enlightened and competent and experienced Board of Directors. Whose vision and mission is to see the company develop on a daily basis and continues its local, regional and global growth. Have a continuous excellence in customer’s service and compliance.
2. During 1995 RMCF was named as the entrepreneur of the year. This action clearly denotes the capacity and devotion which they have to customers and their franchisees. 3. A very important and crucial factor in this business is the capability to understand the level of finances used and transacted on a daily, weekly, monthly and yearly basis and RMCF to be able to keep those standards at hand and comply with all the legal requirements has a team of expertise in auditing franchisee. This opens to them the loyalty and ethics which the franchise has to the franchisees and vis – a – vis.
5. Distinctive Competencies:
Based on a document from Creative Advantage it states: “Distinctive competencies, the basis for competitive advantage, can come from technology, industry position, market relations, cost, business processes, manufacturing processes, people, customer satisfaction, or just being first” (http://createadvantage.com/). RMCF, distinctive competency: 1. The BOD thought that its stock were not given the best value in the market – to create shareholder confidence and reliability the BOD repurchased 391,600 shares of its common stock at a value of $11.94. This brought to a total of 3,909,000 common shares to the company.
In this manner the administration would be able to sustain confidence from their investors. Would be in accord to deliver the appropriate share value to their investors. 2. A well-managed and trained pool of employees would be the highest possible asset that the company would be able to have. RMCF was able to pool over 190 capable and knowledgeable employees within its realms. These were individuals who are with the business from its inception. Have been the backbone of the company and its achievements.
3. The managing of its sales is a core competency. There was an increase from $21.1M in 2004 to $31.87M in 2008. This shows a well-established and managed marketing and promotion programs. A well-established working conditions with its franchisees, since they are the strength of the franchise. Its factory sales went from $16.6 thousand in 2004 to $23.75 thousand in 2008. Confirming once more the capacity and vision of the company in achieving its goals and objectives.
6. Sustainable Strategy:
Based on a PWC concept it defines sustainable strategy in the following manner “Management now need to balance increased regulations, protecting the brand and ensuring stable supply chains with seeking opportunity for enhanced performance and using the sustainability agenda for strategic advantage” (http://www.pwc.com/). 1. As RMCF continues its establishment of strategic sustainability, customers take center stage and have the opportunity to observe store personnel making fudge from start to finish, 2. The headquarters is the has the ability to supply all the material needed with its fleet of trucks which can carry the product in fresh condition to the franchisee who in turn would sell to the customers watching how its employees have been trained to prepare in-house products,
3. Every franchisee had to engage in the new requirements both those in the system or those new ones coming into the files of the company in by incorporating the revised store design, 4. One of the major successes of RMCF was the careful selection of store sites. This was and continues to be a critical strategy for the company. It’s an icon for forward success, and 5. Noted in the study was an interesting listing of primary environments which formed part and can be classified as strategic action for the company, these are: 1) inserting in regional centers, 2) opening tourists areas, 3) street fronts and 4) airports and malls where there was strong “feet action” people walking by. 7. Keys to Success: every company has a determinant factors which would lead to success or failure of a business.
In the case of RMCF, these can be considered its success factors: 1. RMCF had design a new store concept – which was highly accepted by administration and customers, 2. Introduced and furnished a new idea “Kiosk concept”. It gave RMCF a new vision and highlighted the excellent capacity of its research and marketing personnel. This was launched in March 31, 2008, 3. In its 325 franchise all had the same view and capacity since “ALL” of its franchisees staff had to do the standard operating policies and procedures,
4. A major success of the company was that it pursue growth opportunities where it had been successful, 5. Had a positive international franchisee working relationship with Canada and United Arab Emirates, and 6. The companies policy was that all products which were sold on a daily basis had to be freshly prepared, this enhanced consumer choice and demand.
a. Continue lobbying for internationalization of RMCF,
b. Should permit that its employees enter a collective bargaining agreement,
c. Must categorically patent its products
d. Enter the hedging process to ensure supply of commodity products needed in its business,
e. Revise it policy on cumulative voting right, and
f. Produce one new product once a year to sustain clientele.
Working on this case study has developed my capacity to understand why a SWOT study creates such a vision of the present condition of the business. Making an analysis of the SWOT and then of the strategic conditions was interesting since its entrenched and meshed the whole concept of the case study. Its cumbersome, it’s challenging but interesting and I have been able to develop an appreciation for this course. As I close this study I recall once again that this company needs to “patent” its final products.
1. Creative Advantage; “Definitions” http://createadvantage.com/glossary/distinctive-competency 2. Frazer, L,; n.d. “Importance of a franchise head office Operations Manual” https://www.franchise.edu.au/home/topics/how-to-franchise-topics/importance-of-a-franchise-head-office-operations-manual 3. http://www.pwc.com/gx/en/sustainability/responsible-corporate-strategy.jhtml 4. Leybovich, I.; November 2009; “The Quality Imperative” http://news.thomasnet.com/imt/2009/11/10/the-quality-control-imperative 5. Management Study Guide; “Core Competency Theory of Strategy” http://www.managementstudyguide.com/core-competency-theory-of-strategy.htm 6. The Impact of Technology on the Franchise World; http://www.checkpnt.com/2015/05/30/the-impact-of-technology-on-the-franchise-world/ 7. World Intellectual Property Organization; “What happens if you do not patent your inventions?” http://www.wipo.int/sme/en/ip_business/importance/risks.htm
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