Rogers'

PREPARED AND SUBMITTED BY GROUP 2

ROSLAN ABD KARIM (MR081075)

MEHDI ABBASNIA (MR081182)

JIANG HONG (MR081082)

NIMA KHODAKARAMI (MR081189)

MUHAMMAD ZULFAKAR AHMAD (MR081062)

GROUP LEADER: ARASH VOSSOUGHI (MR071108)

NOTE: Appendixes have been attached to the hard copy of this document

Based on the strategic decision‐making approach, in the first step, we evaluated

Rogers’ Chocolates current performance. A summary of financial ratios has

been presented as Appendix 1. We had a review over the company’s current

mission, objectives, strategies, and policies (Appendix 2). In the second step,

based on the case information, performance of the firm’s Top Management has

been reviewed. Later, we have scanned external environment of the firm in

order to determine the strategic factors that pose opportunities and threats.

Then the internal environment of Rogers’ Chocolates has been scanned to

determine the strategic factors that are Strengths and Weaknesses and we did

an in depth SWOT analysis to pinpoint problem areas (Appendix 3). In the light

of the analysis, we have tried to follow the strategic decision‐making approach

in case analysis and decision based on the exclusive framework of Dr. Lai.

Foreword

IBS, UTM CITY CAMPUS, STRATEGIC MANAGEMENT, MRB 3012, CASE ANALYSIS & DECISION, ROGERS’ CHOCOLATES, GROUP 2, JULY 2009

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Rogers’ Chocolates

1. STRATEGIC MATTERS:

Two different types of strategic matters that need strategic decisions have been identified:

2. ISSUES: In order to address each of the strategic matters, the most important things to do are:

3. ALTERNATIVES: Generated alternatives for each of the identified issues are:

Issue 4: Whether to expand retail sales system

A 1: No expansion

A 2: More emphasize on retail rather than wholesales

A 3: Expanding retail system within the region

A 4: Expanding retail system to other parts of the country

Issue 3: Whether to expand online selling system

A 1: No. Current system is good enough

A 2: Yes. Expanding online selling system and e-marketing

Issue 2: Whether to develop new concepts of product and packaging

A 1: No new product development and retaining on traditional concept products of packaging.

A 2: Yes. Introducing new concepts of products with more customizable and fashionable packaging

Issue 1: Whether to implement integrated production planning and operation control system.

A 1: No. Coping with the current situation

A 2: Yes. Implementing integrated system for production plan and controlling operation

Issue 2: Whether to develop a new concept of product and packaging



Issue 1: Whether to implement integrated production planning and operation control systems.

ACHIEVING ORGANIZATIONAL OBJECTIVE “Achieving 200% - 300% growth rate within 10 years”

SOLVING ORGANIZATIONAL PROBLEM “Overcoming production and operation problems”


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4. CRITICAL FACTORS

Issue 1: Whether to implement integrated production planning and operation control systems.

C. FACTORS CURRENT SITUATION FUTURE SITUATION LOGICAL ASSUMPTION

Productivity and efficiency measurement

There are no meaningful measures of productivity or efficiency existed.

Measuring performances to recognize efficient versus inefficient activities

Ability to recognize value added activities from inefficient activities.

Inventory Management

Out-of-stock issue

Over stock items Shortage / surplus avoidance

Deals with ups and downs of sales pattern through healthy inventory management

Cost of operation

Long change over-times, repetitive shipments, opportunity cost due to shortage, and discount over surplus items

Control over the operation cost and efficient utilization of resources result in gaining competitive advantage

Cost is controlled by wastage reduction, value analysis, inventory control, on-time delivery and efficient utilization of all resources.

Communication between functions

Weak internal communication

Mutual understanding of the capabilities, competencies and constraints of each organizational function

It establishes vertical and horizontal channels for a better communication

Issue 2: Whether to develop new concepts of products and packaging


Change in consumer preferences

One line of trans-fat-free products and some no sugar added items

Differentiation from the rivals

Satisfying increasing number of health conscience consumers will distinguish the firm from its rivals.

Packaging and customizability

Traditional, old fashion Attracting diverse group of customers

New generation of customers want more glitzy, fashionable and more customizable products and packaging



Global sales Mostly within Canada and US.

Capturing a broader market

Online selling system enable firms to capture a broader market

Capturing a new customer segment

Mostly loyal customers from rural areas (60% are regular customers)

Attracting younger and new customers

Younger generation tend to do everything online!


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Giving gift/discount

Only a “thank you” letter along with catalogue

Giving gift/discount after a certain amount of buying

It encourages customers to buy more

Aggressive e-Marketing

NO Higher brand image due to aggressive e-Marketing activities

Aggressive e-Marketing is a branding tool that keeps you on customers' minds.

Customer loyalty program

NO Loyal online customers Giving gift, bonus, discount, and free delivery keep the customers loyal



Increase Sales 50% of sales Increase in sales It seems that retail shops are able to sell more chocolate (p. c-182)

Brand awareness

Unknown brand outside the Victoria. Also, some reps cannot present the brand adequately.

More brand awareness outside the region via well trained and more committed employees

Well trained and more dedicated employees enable to present the brand adequately and appropriately sell it outside the region.

Taking advantage of the growing market

No growth Higher growth rate Presence in a wider market along with more brand awareness enables the firm to gain a higher growth rate.

Selling in a broader market

Niche market Presence in a wider market

Expanding retail sales to

5. EVALUATION OF ALTERNATIVES

5.1, Issue 1: Whether to implement integrated production planning and operation control systems.

CRITICAL FACTORS BASED ON FUTURE SCENARIO

ALTERNATIVES

Coping with the current situation

Implementing integrated production planning and operation control systems

Recognizing efficient versus inefficient activities NO YES

Shortage / surplus avoidance NO YES

Control over the operation cost and efficient utilization of resources result in gaining competitive advantage

NO YES

Mutual understanding of the capabilities, competencies and constraints of each organizational function

NO YES


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5.2, Issue 2: Whether to develop a new concept of product and packaging.

CRITICAL FACTORS BASED ON

FUTURE SCENARIO

ALTERNATIVES

No new product development and retaining on traditional concept products of packaging

Introducing new concepts of products with more customizable and fashionable packaging

Differentiation from the rivals NO YES

Attracting diverse group of customers NO YES

5.3, Issue 3: Whether to expand online selling system

CRITICAL FACTORS BASED ON FUTURE

SCENARIO

ALTERNATIVES

No. Current system is good enough

Expanding online selling system and e-marketing

Capturing a broader market NO YES

Attracting younger and new customers NO YES

Giving gift/discount after a certain amount of buying NO YES

Higher brand image due to aggressive e-marketing NO YES

Loyal online customers NO YES

5.4, Issue 4: Whether to expand retail sales system.

CRITICAL FACTORS

BASED ON FUTURE

SCENARIO

ALTERNATIVES

No

expansion

More emphasize on

retail rather than

wholesales

Expanding retail

system within the

region

Expanding retail

system to other parts

of the country

Increase sales NO NO YES, but less than the next alternative YES

More brand awareness outside the region via well trained and more committed employees

NO MODERATE YES, but less than the next alternative YES

Higher growth rate NO YES, but less than the next alternative

YES, but less than the next alternative YES


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6. STRATEGIC DECISION

Rogers’ Chocolates will be able to address both of its aforementioned strategic matters through the following stepwise decision process:

7. IMPLEMENTATION ACTION PLAN

• Regarding to numerous internal problems that Rogers’ is currently facing, prior to any other strategy implementation, Parkhill should address these problems by implementing integrated production planning and operation control systems as soon as possible. It needs a watchful eye to analyze each and every function in order to find out the best way of doing the job. This is a teamwork job under direct supervision of the CEO.

• Rogers’ can take advantage of change in consumer preferences for organic and healthier chocolate. At the other hand, Rogers’ old fashion way of packaging products seems to be one of the main causes of the firm’s slowdown. Therefore, new concepts of products and packaging need to be developed in order to differentiate the firm from its rivals and to attract diverse group of customers. Marketing research and consumer preferences survey should be conducted in order to find out what exactly consumers need. This strategy should be implemented right after finishing the previous one.

• Currently, Rogers’ is confronting with “customers aging” issue. At the other hand, today people tend to do everything Online! Therefore, expanding online selling system and e-marketing will help the firm to capture a broader market as well as younger generation. Rogers’ is to develop an easy to navigate, multi lingual website and doing aggressive e-Marketing activities as well as to try to take the highest rank in pioneer search engines. Parkhill can implement this strategy simultaneously with the previous with the help of Marketing VP and a reliable IT counselor.

4. After the three aforementioned steps, Roger’s will be ready for expanding. Expanding retail sales for the Roger’s will take place in two steps as followed:

3. The third step will be to develop and expand the firm’s online selling system. This will be a platform for the firm to capture a broader market and attract younger and new customers.

2. In the next step, he should develop new concepts of products and packaging in order to attract diverse group of customers.

1. First and foremost, Parkhill is to address the firm’s production and operation problems by implementing integrated production planning and operation control system. This will help him to gain a proper control over the business.

3.2 Expanding retail sales within the region.

3.1 Expanding retail sales within the region.

Arash

Text Box

4.1

Arash

Text Box

4.2


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• After successfully implementing all mentioned strategies, Rogers’ will be ready for expanding its retail sales system. Analysis and records prove that this is the best strategy to take advantage of the growing market. Expanding retail sales for the Roger’s will take place in two steps. In the first phase, Parkhill should acquire 3 retail shops in downtown Victoria with long term lease agreement. Marketing VP should help him in finding the most appropriate location. After two years, positive results of the previous implemented strategies and after gaining the projected ROI will be ready for more expansion. To presence in a wider market and taking more advantage of the growing market, Rogers’ will continue its expansion through acquiring high-end retailers in Vancouver, Ontario, and Whistler. CEO, with assistance of Marketing VP are responsible for implementing expanding retail sales strategy.

Rogers’ implementation action plan has been summarized in the following table:

Implementation Actions

STRATEGIC DECISION MADE

1. Production planning and operation control systems

2. New concepts of products 3. Expanding online selling system and e-marketing

4. Expanding retail system

4.1 Within the region 4.2 Outside the region

WHAT

to implement?Production planning and operation control systems

New concepts of products and packaging

Expanding online selling system and e-marketing

Expanding retail sales Expanding retail sales

WHY

to implement? To gain a control over the business

To differentiate and attract diverse group of customers

To capture a broader market & attract younger customers

To presence in a wider market & higher growth rate

To presence in a wider market & higher growth rate

HOW

to implement?

Engineering all functions to find out how resources are to be utilized

Based on consumers preferences survey, producing organic products with more contemporary packaging

Easy to navigate, multi lingual website and aggressive e-Marketing

3 retail shops with long term lease agreement

Through acquiring high-end retailers

WHERE

to implement? Inside the organization Inside the organization Rogers’ website Downtown Victoria

Vancouver, Ontario, Whistler

WHEN

to implement? ASAP, and should be finished at the end of 2009

Right after the 1st strategy Simultaneously with the previous strategy

After finishing the 2nd strategy

After finishing the 4th strategy

WHO

to implement? CEO, with assistance of VPs of all functions

CEO + Marketing VP CEO + Marketing VP + reliable IT counselor

CEO + Mktg. VP CEO + Mktg. VP


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8. POTENTIAL PROBLEM ANALYSIS

Implementation Actions

STRATEGIC DECISION MADE

1. Production planning and operation control systems

2. New concepts of products 3. Expanding online selling

system and e-marketing

4. Expanding retail system

4.1 Within the region 4.2 Outside the region

Potential Problem

Negative reactions and resistances

Shift in consumers preferences a. Threat of entry

b. Cost of shipments Not gaining the projected return

Intense competition

Contingency Plan

Frequently informative and persuasive speeches and meetings

Continuous marketing research

a1. Customer loyalty program

a2. Aggressive e-Marketing

b. Free or discounted delivery

Strong marketing campaign and branding activities

a. Brand awareness activities

b. New product development (NPD)

WHAT

to implement?

A series of informative and persuasive speeches and meetings to manage resistances

Continuous marketing research

a1. Customer loyalty program

a2. Aggressive e-Marketing

b. Free or discounted delivery

Gradually implementation along with marketing campaign

a. Brand awareness activities

b. New product development (NPD)

WHY

to implement?

To prevent and reduce resistances and encourage employees to participate

To make the firm up to date in terms of consumer preferences

a1. To keep customers loyal

a2. To reach to as much as possible customers

b. To increase online sales

To back to the projected growth rate and minimize loss

To prevent of losing market share

HOW

to implement?

Showing befits and positive outcomes to employees through frequent meetings

Continuous marketing research and online surveying

Cutting cost of inefficient activities to offer more free or with discount delivery

a. Well trained staff should adequately present the brand

b. Strong marketing campaign

c. Well trained staff should adequately present the brand

d. Intensively NPD

WHERE

to implement? Inside the organization

Online survey and throughout the market

Throughout the WWW In stores & inside the organization

In stores & inside the organization

WHEN

to implement? Starts before implementation and will be continued

Starts before implementation and will be continued

Proactive strategy Proactive strategy Proactive strategy

WHO

to implement? Roger Parkhill, CEO CEO + Marketing VP CEO + Marketing VP CEO + Mktg. VP

CEO + Mktg. VP + Retail staff


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9. CONCLUSION

In this case, we deal with two different types of strategic matters: a series of organizational problems as

well as an organizational objective desired by the Board.

With regards to the plentiful organizational problems of the Rogers’, first and foremost, CEO should

address these problems by implementing integrated production planning and operation control systems to

gain a proper control over the business.

While projected growth rate for the premium chocolate industry is 20%, Rogers’ was not successful to

proportionately grow. Analysis shows that Rogers’ suffers from old fashion way of packaging that seems to

be one of the main causes of the firm’s slowdown. Also, there is a change in consumer’s preferences for

organic and healthier chocolate. Rogers’ can take advantage of this opportunity by introducing new

concepts of products and packaging in order to differentiate the firm from its rivals and to attract diverse

group of customers.

In addition, Rogers’ is confronting with “customers aging” issue. At the other hand, today people tend to

do everything Online! Therefore, expanding online selling system and e-marketing will help the firm to

capture a broader market as well as younger generation.

Rogers’ will be ready for expanding its retail sales system. Analysis and records prove that this is the

best strategy to take advantage of the growing market. It has been suggested to Rogers’ to divide its

retail expanding strategy into two steps:

• Expanding retail sales system within the region (Victoria and British Colombia), and then

• Expanding retail sales system to other parts of the country

As we have learned, there will be definitely some issues that may prevent of successfully implementing

any strategy. A table consists of detailed implementation plan for managing the potential problems has

been provided in page 7.

Appendix 1. Quick Overview on Financial Performance of Rogers’ Chocolate (2005‐06)

LIQUIDITY RATIOS

This series of ratios reveal Rogers’ Chocolates ability to pay off its short‐

terms debts obligations. Although, having a current ratio over 1 is normally

acceptable, however, current ratio would overestimate a company's short‐

term financial strength. Therefore, quick ratio that excludes inventories has

been calculated. It tells us that most part of the assumed liquidity of Rogers’

belongs to inventory. As we know, most of times it is difficult to turn

inventories to cash.

Ratio 2005 2006

Current Ratio 1.24 1.36

Quick Ratio 0.57 0.46

ASSET MANAGEMENT RATIOS

In order to measure how effectively Rogers’ is managing its assets, assets

management ratios have been calculated. As can be seen, Rogers’ low

turnover implies poor sales and, therefore, excess inventory.

High inventory levels are unhealthy because they represent an investment

with a rate of return of zero. In addition, low asset turnover of Rogers’ shows

inefficient using of assets in generating sales.

Inventory

Turnover 7.73 7.67

Total Assets

Turnover 1.40 1.41

DEBT MANAGEMENT RATIOS

Rogers’ very low level of debt management ratios indicates that the firm

has much more assets than debt. Used in conjunction with other

measures of financial health, very low level of debt ratio can be translated

as the firm’s high degree of being risk adverse. In other words, it shows

the extent to which Rogers’ Chocolates uses debt financing or the firm’s

ability to meet financial obligations

Debt Ratio 43% 32%

Debt to

Equity Ratio 78% 48%

PROFITABILITY RATIOS

Analyzing Rogers’ profitability ratios revealed:

• Sales has declined in 2006

• Profit Margin has declined in 2006

• Rogers’ has a very good gross profit margin, but suffers from very

high cost of operation

Gross Profit

Margin 54.55% 55.15%

Net Profit

Margin 8.9% 7.5%

Appendix 2. Mission, Objectives, Strategies

HISTORY

Rogers' Chocolates is steeped in tradition and a rich history that has earned the company its current reputation as one of Canada's premiere chocolate makers.

The first Rogers' chocolates were made in 1885 by Charles "Candy" Rogers in the back of his grocery store in Victoria, B.C. He quickly became a popular man. In 1891, Rogers expanded his chocolate operation to the company's current heritage storefront on Government Street in Victoria and the rest, as they say, is history.

Today, Rogers' Chocolates is owned by a small group of shareholders located primarily in B.C. The Victoria-based company now has 10 retail stores, several hundred wholesale outlets, and a 20,000-square-foot factory.

MISSION STATEMENT

Rogers' Chocolates is committed to producing and marketing fine products which reflect and maintain our reputation of quality and excellence established for over a century. All aspects of our business will be conducted with honesty and integrity, upholding our proud Canadian tradition.

PHILOSOPHY

Rogers' Chocolates honors its time-tested brand by:

• making only premium products • packaging them elegantly • and choosing our retail partners carefully

We also believe that the quality of our products starts with the procurement and mixing of fine ingredients but extends to the high level of customer service you can expect from all facets of our organization.

Eliminating the use of hydrogenated fats and oils, and using natural ingredients whenever possible, has positioned Rogers' as a leader in the confections industry, providing healthy alternatives to consumers.

As quality chocolate continues to gain popularity among health-conscious, educated consumers, Rogers' products are becoming increasingly revered for their aesthetic appeal, wholesome ingredients, and overall exceptional taste.

STRATEGY

Reviewing the case and visiting the firm’s website reveal that Rogers’ strategy is to produce premium quality chocolates which are handmade, hand packed and highly customizable. It seems that Rogers’ is trying to differentiate itself from the rivals

APPENDIX 3. ROGERS’ CHOCOLATES SWOT ANALYSIS

STRENGTHS

Premium Quality Products Knowledgeable and Dedicated Management & Personnel Loyal Customers in the Region Superior Brand Image and Perception in Victoria First‐rate Internet Website Several Key Retail Locations & Excellent In Store Experience Outstanding Market Leadership (Award Winning) Innovative Customer and Employee Relations (Award Winning)

SInternal Factors External Factors

OPPORTUNITIES

High Industry Growth Rate Change in Consumer’s Preferences for Organic Chocolate Public Demand for buying Products mostly from Social & Environmental Responsible companies

Expanding Online Sales Expansion Outside the Region Olympics 2010

THREATS

Economy Slowdown Entry of Giants such as Cadburys & Hershey’s to the Industry Loyal Customers are Aging Public Health Consciousness & Threat of Shifting to Healthier Substitutes

T

O

WEAKNESSES

No Measurement for Productivity & Efficiency Weak Production Planning High Cost of Operation Poor Logistics, Weak Sales Network & Incapable Sales Reps Old Fashion Packaging Poor Inventory Management Unknown Brand Outside the Region Limited Financial Resources & Poor Cash Flow Management

W

• Lai, Y. C. (Director) (2009, July 12). Case Analysis and Decision. Strategic Management

(MRB 3012), IBS, UTM City Campus, Kuala Lumpur.

• David, F. (1986). Fundamentals of Strategic Management. New York: Macmillan Pub Co.

• Gamble, J., J., A., Thompson, A., & Strickland, I. (2009). Crafting & Executing Strategy:

The Quest for Competitive Advantage: Concepts and Cases. Boston: Mcgraw-Hill College.

• Rogers' Chocolates. (n.d.). Retrieved July 18, 2009, from http://www.rogerschocolates.com/

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current system

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integrated system

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