Review
Cocoa that is known to have started its business in the year 2000 is one of the youngest chocolate manufacturers in the industry. They create or develop their workforce with talented chocolatiers being picked up from different reputed schools of confectionery. Their thirstiness to be creative and innovative encourage them to go to this limit of talent hunt. The company receives ten different types of high qualities Cocoa from various parts of the world. It then processes these Cocoa to produce a large range of dark chocolates. These chocolates are tailored to meet the dietary requirements of products (Cocoa Delight 2018).
Organizational Vision
The vision could be summarized as follows (Cocoa Delight 2018):
“Putting extreme efforts on to become the leading chocolate manufacturer in Australia and to produce a large array of chocolates, so that, the need of under met in the national market is Fulfilled”
Organizational Mission/ Goals
The purpose
The company aims to follow a daring and unconventional business style. Creativity and innovation can be classed as one of their strengths, which has been helping the company to succeed. With stakeholders, they are stewardship. They adhere to moral and professional standards of conduct in every action that they make. They motivate employees to become self-directed teams.
Organizational Values
They give utter respect to fair trade practices at both domestic and international level. They value high-quality works and sustainability. They believe in running a customer-oriented management. They desire to have people as experts who are ambitious for innovation and creativity. They are a constant opportunity seeker for growth and expansion.
Targets
Situation Analysis
This section covers a situation analysis of “Cocoa Delights” in two ways such as SWOT and PEST analysis.
SWOT Analysis
|
Strengths |
Ø Creativity and innovation Ø Sustainable practices Ø Customer oriented business practices Ø Chocolates of European quality Ø Dark chocolate of variety of kinds Ø Able to meet the specific dietary requirements of foods Ø Healthy aspects of dark chocolate Ø Low prices Ø Easily accessible to customers |
|
Weakness |
Ø Brand awareness Ø Lower budgets for marketing Ø A very limited online presence Ø Unawareness in customers with health benefits of dark chocolates Ø Areas such as regional and countryside are yet covered by the company Ø The customer base has a very limited male and child population Ø It may be due to a less number of outlets as compared to its competitors |
|
Opportunities |
Ø There are some in-demand dietary requirements that are yet to be met Ø Social media such as in the form of a Facebook page can boost the customer base Ø A more spending on marketing Ø Increase the number of referrals and loyal customers Ø Promote a culture to encourage Australian based facts |
|
Threats |
Ø International brands that possess a huge market budget capacity as compared to “Cocoa” Ø Market recession Ø Advertising campaigns are not so encouraging Ø Brands that possess a wider recognition as the Green and Black |
Table 1: SWOT analysis
(Source: Cocoa Delight 2018)
PEST Analysis
|
Political Ø The government is currently working on legislation to monitor and reduce the waste Ø They are emphasizing on to use the renewable form of energy instead of existing non-renewable energy resources Ø Penalties will be imposed on for a non-compliance with these legislations |
Economic Ø The rising interest rates have impacted its disposable income Ø The shortfall should expectedly be recovered in long-term Ø It is expected that wages will outdo inflation rates by an approximate 2% Ø Unemployment rates are expected to climb steadily |
|
Social Ø Consumers are increasingly becoming conscious with a range of dark chocolates Ø This is some real opportunity for “Cocoa” to capitalize on this social trend Ø They can now promote the consumption of different varieties of dark chocolates by doing awareness campaigns on its health benefits Ø Notably, “Cocoa” offers the wide varieties of dark chocolates |
Technological Ø Broadband rollout, which was adopted by the company to pronounce its technological development has been delayed Ø The rollout is still under process and will expectedly consume three more years Ø Internet retailing is a rapidly growing practice across global retailers Ø The trend has benefitted many retailers and another more have stepped into |
Table 2: PEST Analysis
(Source: Ibisworld.com.au 2018)
Legal and Ethical Requirements
The local government is always in search of designing policies and procedures to monitor and control the waste and promote energy conservation. New laws governing the management and mitigation of environmental issues have become harsher on businesses. Business is now forced to provide the same quality features at existing rates while also not making a high electricity consumption (Katsikeas 2014). This is nothing less than but a troublesome situation for the global industry. Business policies to support the trending demands will require manpower well equipped with creative skills and modified HR policies to support new practices. Moreover, this will also attract more spending. Hence, it is important that “Cocoa Delights” has enough disposable income to bear expenses.
Government is also keen to adapt to a legislation to regulate and control the imported items. It means that the imported products must clearly denote an identification of the country of manufacture. At this point in time, there is no law passed to govern such practice as industries are allowed and encouraged to self-regulate such actions. However, the government may certainly consider passing a law if the existing self-regulate practices by firms are found as ineffective (McDONALD 2016).
Marketing Activities and Impact on the Organizational Strategic Objectives
There is a shift in focus from local to national suppliers in order to avail quality materials and produce even better chocolates for customers. It shows how critical is quality to “Cocoa Delights”.
Cocoa is able to save money for being close to geographical areas that already exports cocoa to Australia. Amazon basin is the native land for Cocoa. However, it is also hugely grown in other parts of the world like Asia and Ghana in West Africa. These regions already export a huge quantity of cocoa to Australia (Reuters.com 2018). Hence, this is also why “Cocoa Delights” has a geographic advantage.
“Cocoa Delights” uses a variety of media and other communication modes to promote products at the national level. It uses paper and electronic media to reach to the target market. It also gives discount offers occasionally to attract a mass sale. However, there are areas of scope for improvement. “Cocoa Delights” has limited stores as compared to its competitors. It means the brand is far from reach to a significant population. It is due to this children and youths are not its potential buyers. It additionally is not very active on social media such as Facebook. These initiatives must be adopted to increase the customer base and so the sales. A combination of quality and sales is all that required to “Cocoa Delights” to emerge as one of the powerful chocolate manufacturers in Australia (Hanssens and Pauwels 2016). It is also needed to produce a strong counter to international chocolate manufacturers in Australia such as Cadbury and Nestle to name a few.
Evaluation
Performance measured against strategic objectives
It can be said that growths of stores and storewide sales are increasing. However, it is far less than its competitors. There are places of improvements in management and marketing. The management at “Cocoa Delights” must show eagerness to purchase more new stores. This will be possible only if the disposable income for the company is increasing. Nevertheless, marketing can significantly impact disposable income. An increment in disposable income is in direct proportion with the profitability margin. Profitability margin will widen up with increased sales. An increased sales will happen only when three factors are effectively fulfilled such as the quality, price, and its ability to reach to a wider consumer base (Pike and Page 2014).
Gross profit margins achieved are close to 45%. It is still quite below than the set objectives of 63%. The gap can be fulfilled considering the trending consciousness for healthy chocolates. It is because “Cocoa Delights” is expertise in providing quality and healthy dark chocolates in wide varieties (Morgan et al. 2018). However, the trend needs to be addressed to produce better results for the company. The identified need can be fulfilled with enhanced involvement into marketing and increased expansion of stores.
The company claims to have delivered a quality and attractive PR (Public Relation) marketing. It was a very gutsy and wiser approach towards attaining the goal; however, it still needs to be accompanied with added marketing communication. Social media campaigning will make up the larger part of the needed marketing communication modes (Smajlovi?, Kamari? and Sinanagi? 2015). For example, Facebook can be used to create a page for the company. Children and youth, in particular, are addicts to Facebook. It means a Facebook page can be used to create awareness between target customers about a range of chocolates and its unique benefits. The same platform can also be used for promoting products and launching the new stores. YouTube and Twitter can also be helpful for uploading new videos and interacting with followers. Twitter is a good platform to answer to confusing and complaining facts raised by followers. This will help to engage the community with facts and myths surrounding a range of dark chocolates (Smajlovi?, Kamari? and Sinanagi? 2015).
Only 58% of the population in the target market is aware of the “Cocoa” brand. It means products are not accessible to many. It also indicates that marketing though has produced good results for the company still has a lot to do. The challenge will be to enter new platforms of social and digital media to increase awareness for the product. It is challenging because marketing strategies require an approval of the owner or the top management. The approval process may get suspended or delayed for many reasons such as for ineffective leadership in the company and for incompetent strategies. An effective leadership is required to let the management believe and trust the plan (Alon et al. 2016). It means that “Cocoa Delights” must not just focus on crafting marketing plans but also on improving the leadership. It is needed to ensure that change is not just designed but is realized as well from the management.
Critical Success Factors
The critical success factors for “Cocoa Delights” can be classified as the below:
Areas for improvement
There is a need to reduce the budget dedicated to a media advertisement in radio. Such steps will be required to boost the disposable income. An increased disposable income could then be utilized in other forms of marketing such as those suggested in this report. Since “Cocoa Delights” still has a long way to go to be able to reach to the entire population of the target market. The journey cannot be commenced effectively until and unless being able to utilize different marketing and social media channels (Cuadros and Domínguez 2014).
Social trends are favorable facts for chocolate manufacturers provided that manufacturers possess the business management and marketing competency (Cuadros and Domínguez 2014). “Cocoa Delights” has popularized its image as the one that provides quality and healthy dark chocolates. However, the message is yet undelivered to many specifically those from the target population. It is, therefore, must be addressed on an urgent basis to take the advantage from opportunities and to strongly compete with its competitors.
Evaluation of Cost and Benefits of Joint Venture with Haigh’s
Haigh’s chocolates are priced at midranges. The strategy is designed such a way to make it easily affordable on a frequent basis to a huge consumer base. Since Haigh’s produces chocolates at cheaper rates, the collaboration with the company should be beneficial for “Cocoa Delights”. Cheaper chocolates in combination with quality and healthy materials should be able to reach to more customers provided that Cocoa works hard to redefine its marketing strategies (Foxall 2014).
The low cost combined media due to a collaboration with Haigh’s will help to create brand awareness for the company. As already being stated in this report, only a slightly bigger than half of the total population of the target market are aware of the brand “Cocoa Delights”. The company still has a long way to travel to reach to the entire population. For this to happen, an innovative move was required to make it happen. The company has sensed the urgency and the reason why collaborated with Haigh’s.
Haigh’s already possessed a good market knowledge of three capital cities. Marketing has been identified in this report as one of the flaws in operations for “Cocoa Delights”. Hence, this should be a good combination of two companies as Haigh’s will have access to quality cocoa beans from “Cocoa Delights” and Cocoa in return could access to the marketing and cost competency of Haigh’s.
The advertisement would now be cheaper for “Cocoa Delights” as it now can use the extensive media of Haigh’s. It means Cocoa will be able to boost its disposable income. Hence, the company will grow in capability to invest more in marketing. These are some real opportunities for the company to work on social media marketing (Foxall 2014).
Market segments for Haigh’s and “Cocoa Delights” are complementary rather than competitive. This is an added bonus for Cocoa as it can now use marketing capabilities of Haigh’s without any barrier.
The rollout of stores, which is being identified as one of the weaknesses of “Cocoa Delights” will now happen with this combination between two companies goes live. It is expected that the collaboration will result in a close to rollout to 100 stores in the next 5-7 years of time. Hence, accessibility to Cocoa’s chocolates will now increase.
There will be further declination in disposable income due to increased interest rates. The disposable income should grow. However, nothing much can be done with it as interest rates are regulated and controlled by the government (Chien, Kelly and Gill 2018).
In context to Franchising
Franchisee, on the other hand, will bring capital to “Cocoa Delights”. So, this provides a readymade solution for the store’s shortage. Melbourne stores provide easy access to marketing and sales. The target of 100 stores in the next three years should easily be attained with the franchising. However, franchising can also open up doors to legal issues. This could happen because of the independence that franchises enjoy. The parental company has no interference in the franchise’s operations management. Hence, there could be a political, technological, and legal violation by the franchise client. One of the top issues of a franchising is a greater conflict between brand interests and local minds. Brands may have their opinion of marketing and operations; however, this may or may not match with the local minds of franchises. It eventually becomes very challenging to manage operations and to ensure a quality output. Hence, franchising could also result in reputational damage of “Cocoa Delights” (Baena and Cerviño 2015).
PEST Analysis
Political: Government is in a regular discussion with the concerned body regarding pieces of legislation. These legislations would cause more pressure on businesses as such to “Cocoa Delight” for its environmental impact in the form of waste and carbon footprint. On not meeting with the new standard checks of environmental impacts, there will be huge penalties being imposed by the government.
Economical: As earlier stated, the disposable income for “Cocoa Delights” gas dropped due to rising interest rates. However, it is expected to have no significant impact in long-term. The unemployment rate continues to climb even further.
Social: Cocoa Delights has opportunities for motivating the purchase between health conscious people. It can do so by promoting the health benefits of dark chocolates that the company produces. Nonetheless, the number of buyers are growing for dark chocolates. Cocoa Delights has already been successful for its quality and healthy dark chocolates of wide varieties. However, due to its adherence to the existing model of marketing, it has failed so far and not in the reach of many people those who fall under its target market. Cocoa Delights must, therefore, capitalize on opportunities with increased spending on its marketing capabilities.
Technological: Technological developments have been affected largely from its incapability to roll out broadband connection and services across Australia. The project is being delayed and will consume even more years to get completed. Cocoa Delights has no significant presence in internet retailing where other retailers are doing well. Internet retailing could help to reach to a wider consumer base in an expectedly shorter period of time. Cocoa Delights actually need to work upon its operations and marketing strategies. An improved operations strategy will ensure the mitigation of potential risks and the expansion of Cocoa Delights stores. On the other hand, an improved or more specifically a digitalized marketing will help Cocoa to be known by a larger population of its target market.
Risk Management
Risk management like to other businesses is one of the critical factors to success for Cocoa Delights. The identification of risks, and risk assessment tools and tactics are important to put in place the risk control strategies (Aven 2016). Risk control strategies must be adopted by Cocoa to successfully achieve its vision and mission.
|
Risk Impact |
Likelihood |
|
A lack of sufficient financial support can affect the opening and operations at new stores |
High to Medium |
|
Haigh’s will not utilize any advertisement separately for its chocolates |
High to Medium |
|
The negative impacts from new legislation |
Low to Medium |
|
The brand value of Cocoa Delight’s products |
Moderate to Medium |
Table 3: Risk Impact Likelihood
(Source: created by author)
Fit
According to the concept of strategic management, analysis and decision must be made to achieve a sustained competitive advantage. Franchising option looks the most promising as compared to joint venturing considering that this will create a rapid solution to roll out a huge number of stores for “Cocoa Delights”. Franchises understand local preferences better than the brands. Hence, Cocoa Delights will see an increasing number of stores while putting up lesser outputs as compared to joint venturing. Franchising option can help to attain some more opportunities other than these. However, Cocoa Delights may be tested on quite a many occasion for kinds of issues common with franchising. One of the greater issues of a franchising are legal issues as each store under a franchise client will operate on a separate and distinguished legal agreement (Kashyap and Murtha 2017). This would not just create legal challenges to the parent company but may also cause a reputational damage to it.
Impact
After reviewing the Haigh’s chocolate proposal of a joint venturing with Cocoa Delights, this can be said that Cocoa will get opportunities to sustain its organizational capabilities and goals. With a joint venturing, both Cocoa and Haigh’s can operate across different market segments within the same industry. A joint venture is a mutual agreement between two parties. It is designed for a definite period of time provided that everything turns out as expected. It gives the two-party a new entity and assets using which both parties can fulfill their objectives of the venturing (Cheptegei and Yabs 2016).
Short-Term Objectives
Long-Term Objectives
Report
Cocoa in search of an improvement in its marketing capabilities has come up with new marketing objectives. These objectives are worth discussing especially because these goals would help to analyze whether the joint venture between Cocoa and Haigh’s is a success (Taneja 2016). Objectives are being classified into two types such as short-term and long-term objectives.
Short-term objectives: The management of brand awareness is possible considering that Cocoa would be able to add 100 more stores to its name. However, employee engagement will be required to make this actually happen. Since Cocoa does not have a very good financial reward scheme for employees, it can affect their morale. In absence of adequate motivating factors, employee engagement could be low (Malik, Butt and Choi 2015).
Long-term objectives: Brand awareness in long-term is expected to be achieved with the help of entering new markets. With regard to this fact, the company has a few favorable and unfavorable factors. Favorable factors include the joint venture with Haigh’s as this would assist in TV advertising campaigns. Unfavorable factors include the funding and a compliance with competition policy as per ACCC. The operation will cost around $1.1 million in each one of the new markets. How such a huge funding will happen as there is no clue on this. Additionally, the legislation such as that being managed and regulated by ACCC may restrict a speed expansion of Cocoa. It is being indicated in the list of objectives that 5% of the total turnover will be allocated to the marketing budget. However, this is not an appropriate solution to funding issues (Eyvrigh 2016).
Key Performance Indicator
Compatibility: The short-term and long-term objectives as set in this report are gettable and compatible with the operations provided that joint venturing with Haigh’s turns out to be a success. However, there are some challenges left as uncovered by joint venturing, which could have been covered from a franchising. Joint venturing is allowing to access to cheaper chocolates of Haigh’s. It additionally allows using the extensive media channels of Haigh’s. However, it does not straightaway provide a monetary solution to Cocoa Delights as compared to a franchising, which is required to roll out more stores. The new stores under the joint venture will still have managers well versed in marketing skills. They will be able to facilitate effective marketing as because Haigh’s owns a huge media coverage. However, the number of stores should also grow to make Cocoa’s chocolates accessible to a large population. This is where a franchising is a good option. However, it also has its weak zones (López-Duarte et al. 2016).
The above analysis suggests a few points. Cocoa Delights can have difficulties in managing its brand awareness. One of the long-term objectives is to create brand awareness in every new market. However, an entrance to new markets will require sufficient funding, which can be an issue (Yu, Ramanathan and Nath 2014). Advertisement of products will get stronger. The allocation of 5% of the total turnover to the budget is a good move.
Consistent: Marketing objectives are made consistent with strategic organizational objectives. Some of the strategic objectives of Cocoa Delights are:
One of the marketing objectives is to create brand awareness. It is in the line of approach towards entering new markets. However, it does not assure the rollout of new stores. The rollout will indeed require financial resources. The joint venture between Haigh’s and Cocoa Delights will prove to be a good collaboration for either of the party. However, it does not ensure a fund as high as required to roll out so many stores within just a span of 2-3 years. A compliance with the Competition and Consumer Act 2010 is hard to be practiced considering that market competition is a fact and it grows only unless and until the market segment is disrupted from new substitute (Leppäaho, Plakoyiannaki and Dimitratos 2016).
Equipped: To be able to enter new markets and attain 18% market shares in each of the capital cities in Australia, it is important that the concerned firm possesses adequate physical, and financial resource to take care of different activities. The joint venturing between Cocoa Delights and Haigh’s should be beneficial to Cocoa in many regards. This should enhance Cocoa’s capability in advertisement competency as Haigh’s already possess an extensive media capacity. The business model that Haigh’s uses should be effective in producing chocolates at cheaper rates. However, Cocoa need much more than these to achieve its short-term and long-term marketing objectives. Cocoa needs to expand to a wider market and for this, they need to open up many stores in the nearing future, which is a bit difficult considering an instant funding would still remain a constraint for Cocoa. This could have been resolved, had Cocoa considered to prefer franchising over the joint venturing (Rask 2014).
Legal: The fulfillment of marketing objectives may also get barred from the active legal policy for competition in Australia. According to the competition policy as regulated by the “Australian Competition and Consumer Commission”, companies cannot go beyond a fair competition (Accc.gov.au 2018). It means Cocoa Delights may not go at speed to introduce more new stores. Hence, the objective to bring in 100 new stores in just a span of three years looks unrealistic at this moment until and unless it goes live and sets positive trends.
The “Risk Management” section as stated in the aforesaid section also helps to understand whether the marketing objectives are feasible to Cocoa Delights. The findings of the section suggest that operations at future stores can be in trouble for a lack of financial reward. The potentiality of the risk varies from high to medium. It means that even if Cocoa is able to introduce 100 stores as highlighted in its list of objectives, it would be difficult to sustain operations at those stores.
Since there are high to medium chances of Haigh’s not using any advertisement for its chocolates, the direct benefit of the fact will get transferred to Cocoa. It is because Haigh’s enjoys a good advertisement channel, which Cocoa does not have. New legislation can have a negative impact on the joint venture and so on Cocoa’s business. The potentiality of the risk ranges from low to medium.
A Brief Summary of Meeting
The meeting of the learner with the CEO (as acted by the assessor) was educative and informative. The learner discussed the short-term and long-term objectives with the assessor. The assessor did pay a significant attention to the session and helped the learner with his experience and knowledge of management concepts. The session was helpful for the learner in understanding whether the objectives are appropriately outlined. The session did eventually help the learner to identify and analyze whether marketing objectives could be attained. This is also why the learner was able to analyze objectives from several aspects such as its ‘Compatibility’, ‘Equipped’, ‘Legal’, and ‘Consistent’ with strategic organizational goals and objectives. Moreover, this could be said that the meeting, which the learner has had with his assessor did help him to enhance his knowledge of management concepts.
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