Charles Chocolates – Case Write-Up

CharlesChocolates – Case Write-Up

CharlesChocolates – Case Write-Up

Issue:

Theissues in the Charles Chocolates case the need to expand the companyoperations and diversify its product portfolio to achieve theexpansion goal. The case also covers the condition of the chocolatemarket in the U.S and the annual growth rate for the players in theindustry.

Analysis:

Threatof entrants: Thechocolate market in the U.S is considerable stiff given that thereare several companies that have already established their marketstanding. For instance, Godiva supported by Nestle have taken themarket by a storm especially with their high price points, glitzpackaging and widespread distribution. This has made making an entryinto the market difficult.

Threatof constitutes: This implies switching costs, the inclination of thebuyer to the substitutes and the price performance. An examination ofthe chocolate market reveals customer preference for the substitutebrands, such as Nestle, Godiva, and Cadbury. The high-end productsfor Godiva are sold at 200 percent compared to 300 percent of theCharles prices.

Bargainingpower of supplier: This implies the significance of volume tosupplier and cost relative to the total purchases in the industry.Based on the case, Charles chocolate company has an increased supplyof cocoa reducing its production cost. The production planning hasalways been complicated by the distortions of data arising fromout-of-stocks as well as the over stocks.

Bargainingpower of buyer: The chocolate industry emphasizes on quality andbuyer information reveals that the customers are preferring qualitychocolate. Charles chocolate is a well-known brand with an identityfor its clients.

Rivalry:Rivalry in the chocolate markets is as a result of the stiffcompetition from the incumbents in the industry. The majorcompetitors of Charles chocolate are Cadburys and Hershey, who havemoved into the quality chocolate market via up market launches andacquisitions. This has in turn increased their market share making itdifficult for Charles Chocolate to penetrate a considerable market.

Analternative expansion strategy should focus on increasing sales fromthe phone and online business.

Recommendation:

  • Increased marketing to establish brand loyalty and increase sales

  • Invest in its phone and online business