Charles Chocolates Case

In March of 2012 Steve Parkland was hired as the new president at Charles Chocolates. He was right away faced with various decisions about the future of the business. The board of directors had actually charged Parkland with doubling or tripling the size of the company over the next years, however the board and the senior management group had different viewpoints about the strategy that would accomplish this objective. The primary problems that Parkland dealt with were how to increase the company's operations while keeping the conventional culture and support of the board.

The premium chocolate industry is a big market in the United States and continues to grow around 10% annually. It is also populated with really strong competitors both globally, with business like Godiva (Nestle), and regional companies like Delice. Both rivals are priced higher than Charles and have higher sales.

This is most likely due to the fact that Godiva and Delice have contemporary trendy packaging for their products. The number and strength of competitors indicates that buyers have really high bargaining power, but it likewise implies that the risk of brand-new entrants is low due to the fact that it is tough to get a piece of a market filled with such effective gamers.

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Most of the suppliers to the chocolate market sell commodity items whose price is set by the market and their power and impact is low.

There are many alternative products for upscale clients', confections and pastries being the most substantial, however chocolate will constantly be a stable item so it is a medium level risk.

To contend in such a tough market Parkland requires to rejuvenate the business's product packaging and its marketing campaign. New packing is a perfect way to start because it shows the modifications that will be occurring in following years without compromising the company's heritage or corporate culture. Charles' present marketing technique strongly targets the regional community which it already has a strong existence in.

Charles needs to increase its marketing to the tourist community. The advertisements should follow industry trends for use of ethically responsible ingredients to produce the highest quality chocolates. In order to attract and keep the new, non-local, customer base Parkland needs to increase Charles online presences and sales channels.

This is a low risk, low cost opportunity with the potential for large growth in new geographical areas. If Parkland wants to achieve the aggressive growth that the board desires his ability to improve the capabilities and the operations of the company will be one of his greatest barriers. Due to the affluent nature of the customers and the possible variety in the product Parkland should focus on improving the company’s organizational capabilities. A new plant will eventually be needed but that decision can be delayed if Charles can streamline its operations.

Parkland needs to institute policies that will measure productivity and develop an accurate method of forecasting sales. This will result in lower inventory carrying costs, fewer out of stock issues, and fewer backorders that need to be filled. If Charles can reduce the number of back orders and out-of-stock products it can focus on a single product line at a time which will reduce the frequency of expensive switching costs.

There are many other growth opportunities that Parkland may pursue in the future. He may wish to grow the Sandwich Heaven segment of the business, growing the corporate connections of the company, and expanding into other physical locations in the states. These are all viable options for the future but the ones listed above are the best for Charles’ current situation. By improving packaging, marketing, online sales, and internal organizational capabilities the company can grow significantly without large changes to the tradition of the company and without taking on too much additional risk.