CBME 2

STRATEGIC MANAGEMENT

INDIVIDUAL ASSIGNMENT

CASE STUDY

“ROCKY MOUNTAIN CHOCOLATE FACTORY INC. “

PREPARED BY:

KENNETH DIABORDO BSA 2

PREPARED FOR:

MR. DANIEL AMIDA JR.

 I. INTRODUCTION

Rocky Mountain Chocolate Factory Inc. (RMFC), 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. Its establishment was in 1982 as a
public offering business. The Board of Directors (BoD) has kept its vision and
contributed to the success of the business and has carried it to the 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 RMFC.

II. THE 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 the rest of the world, imminent
product patenting, employees’ union agreement and increasing one impact product every
year to increase customers’ satisfaction

III. ANALYSIS

As the case study for RMCF is analyzed; a business involved in the confectionary
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 analysis. First let’s analyze the two factors (strength and
Weaknesses)

A. STRENGTHS
1. The candy maker’s chocolate beat out See’s Candies, Perugina, Teuscher, Godiva,
and Fanny May for the richest chocolate, and 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 – it 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
8. They had a functional fleet of 12 truck for distribution of products and collection
of products and raw materials
 The internal capacity of Rocky Mountain Chocolate Factory Inc, 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.
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 end products. This is a window
which strengths its volume to expand in franchise numbers. It also provides a
main focuses in reduction of cost with its fleet of trucks.

B. WEAKNESSES
1. The policy and procedures of the company stated that the directors could be
elected by cumulative votes
2. Sundays which is a traditional family day stores only opened from 12-6pm
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 products recipes
6. Franchisees were encouraged to order from the company only the quantities they
could reasonably expect to sell within 2-4 weeks, since most franchisees do not
have storage space for extra inventory
7. They had no future and hedging contracts.

` I have seen the strengths of the company – nonetheless as much as there

are these positive factors there 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 though 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.

C. OPPORTUNITIES
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 UAE
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

As companies continue their expansion programs, goals and objectives, it is

necessary to focus on the market structure and niche the opportunities embedded in it.
Thus RMCF headquarters are 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. Throughout the 325 plus franchisees the
establishments enjoy 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 the process. They need to focus more on brand
labeling, since it’s vulnerable due to none patent factor.

D. THREATS
1. 7 days training to potential franchisees
2. NETZSCH’s ChocoEasy™, In 2005 introduced a new cost-effective technology
to manufacture chocolate of any size an c=variety on which business could create
their own chocolate recipes and develop their own proprietary chocolate brands
3. As generations 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)

If this is not done or taken advantage, 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.
These businesses are continually purchasing smaller businesses in the industry. This
strengthens 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
confectionary industry.

SOLUTIONS

Many times the planning conditions and strategic vision are not well engrained into the
overall vision and mission of the business. Therefore it’s critical to be cognizant of the
structure planning of the business. There are solutions within RMCF:

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 need and promotions of the business.
Therefore it’s a joint strategy to benefit both the franchisee and the franchisor

1. 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 the marketing
tool to bring consciousness to customer and appreciate that the company is a follower of
standards and regulations. This strategic process embeds the philosophy of the company

2. RMCF, administrative capacity

One of the main strategies which RMCF has is to carefully manage its public relation 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.

 RECOMMENDATIONS
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.

CONCLUSION

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.