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Rocky Mountain Chocolate Factory’s sweet success Essay

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The major competing sweet producers Rocky Mountain Chocolate Factory and Hershey’s company have different business strategies, which give them distinct status in the market of the USA. RMCF is concerned in its perspectives and long-term goals to make the company more profitable and successful in the sphere of chocolate business. Hershey’s company deals with the short-term objectives and tries to obtain profit in an abridged period of time. The business strategy of profit-making Rocky Mountain Chocolate Factory has the competitive advantage over prosperous Hershey’s company in corporate governance, organizational structure and confection distribution in the USA.

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The first difference between the companies is that the corporate governance of RMCF is structured more efficiently than Hershey’s. Corporate governance of RMCF consists of directors who have equal rights. RMCF administers its main rules with three to nine directors (Wheelen and Hunger, 2012, p263). Despite the main principals, the specific board of directors operates as a head of the whole organization and it is able to elect directors itself. This condition is likely to motivate the directors, so they try to accomplish their part of business as accurate as possible. Shareholders have a right to vote in yearly meetings and they can have an influence on the election of the potential directors by giving the additional number of votes (Wheelen and Hunger, 2012, p264). In consequence, the shareholders who have invested money into the company can be confident in the liability of the people to whom they give the opportunity to control the business. Unlike RMCF the Hershey’s company has different types of directors who have their special responsibilities in conducting the business.

The governance of the company consists of three types of directors, namely independent, informed and engaged, also a board of directors, which perform various functions in management. Such a bureaucratic structure makes the decision-making process more complicated and creates difficulties with the overall performance of the company. Board members of the company can easily intervene into the tasks of the workers and they can hire new employees without any restrictions (The Hershey Company, 2013). This action may disrupt employees from work and directors can have another option that will not be considered due to their limited liability. Corporate governance of Hershey’s company does not include the participation of shareholders in arranging managers for the firm, so the shareholders are not aware of the financial environment of the company. Thus, the exact number of directors and the role of the Board of directors make the RMCF’s governance organized in a beneficial form, whereas Hershey’s faces several difficulties with it.

The second privilege of RMCF is an adept and profit-seeking organizational structure. RMCF has its own shops and franchises which are situated in the regional malls, tourist-oriented retail areas, ski resort, specialty retail centers, airports, neighborhood centers, and factory outlet malls (Harrison, 2003, p240). This location of the chocolate shops creates positive selling opportunities by attracting customers and promoting the product as well. According to the Success Magazine, in 1995-96 the Rocky Mountain was in the seventh position of the 100 top franchisers (cited in Harrison, 2013, p420). Spreading its name recognition through company-owned stores and franchisers, RMCF had gained such a high result in determining its market force and competitive advantage over a majority of companies working in the same field. Crail (1996) states ‘We find the location, negotiate the lease, design the store, coordinate the build-out, bring the franchise here for training, send a distinct manager to the store opening, and have ongoing field support and regional and national convention’ (cited in Harrison, 2003, p420). Taking into consideration all the aspects of organizing the structure of the whole business helps RMCF achieve success without any inadvertences. For example, the total revenue of the company in 1995 was 13,616, 134 USD and up to 1998, it had a tremendous increase showing 23,763,82 USD (Harrison, 2003, pp.423-424).

In contrast to RMCF’s organizational structure, Hershey’s company decided to form special commercial groups in order to obtain the significant part of the market share (New Organizational Structure to Leverage U.S. Scale and Accelerate Global Growth, 2005). They were aimed to spread the producing companies all around the world. Hershey’s has its selling premises in 50 countries of the world (Keidel et al., 2010). The company was not concerned in the thorough organization of its structure; that is why it had to fund its company in other countries too. To summarize, RMCF establishes its franchises around the USA and increases the sales by allocating stores in the places with target audience while Hershey’s fail in organizing the right structure, consequently the company has to move into the market of foreign countries.

The third quality that makes the business strategy of RMCF more valuable rather than Hershey’s is product distribution. RMCF delivers its products through shipments to distribution outlets from the premise of manufacturing Durango, Colorado. Franchisees are not provided with the immense space to hold the goods, so they ask the company to give them the quantities that they are able to sell during 14 to 28 days (Wheelen and Hunger, 2012, p.26-10). By following this strategy, RMCF chocolate can be a reliable product in terms of freshness. ‘RMCF believed that it should control the manufacturing of its own products in order to better maintain its high product quality standards, offer unique proprietary products, manage costs, control production and shipment schedules, and pursue new or underutilized distribution channels’ (Wheelen and Hunger, 2012, p.26-10).

At the same time, the Hershey’s company distributes its products through “grocery stores, mass merchandisers and drug stores and functions as a single entity”. More than the half of total sales is received from “merchandisers” and “supermarkets” (Keidel, et al., 2010). In case the Hershey’s has a delayed delivery; it needs to pay fine for the customers who will not promote Hershey’s products, so losses in sales and credibility will probably occur (Zsidisin, 2006). Hershey’s company faces losses of capital in the period of distribution process; the borders of the time that the delivery of the products should last are not clearly stated. That can be harmful for the customers as the chocolate products are likely to spoil through time. Taking all the aspects into consideration, RMCF is dominating in distribution by saving the quality of chocolates, whereas Hershey’s company is not able to protect freshness without decreasing the budget of the Company in its business strategy.

To conclude, Rocky Mountain Chocolate Factory has more productive venture planning than Hershey’s company in controlling authority, confirmation scheme and product distribution. Controlling authorities in the RMCF have equal opportunities and reliabilities in business, while Hershey’s company is regulated mostly by a board of directors who can set the rules and hire the new employees without discussing with other directors. Conformation scheme of the companies differs from each other by allocating the stores and establishing the outlets. RMCF spreads its products to the places where many people can purchase them; in contrast, Hershey’s company delivers its products to particular stores. As RMCF is worried about its future goals, it achieves lucrative results, so Hershey’s company should also concentrate on its remote future aims.

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