Rogers Chocolate - Case Study Example

? PESTEL Analysis for Rogers’ Chocolates PESTEL Analysis for Rogers’ Chocolates Introduction Rogers’ Chocolates was founded by Charles Rogers in 1885 in Victoria, British Columbia (BC). It was Canada’s oldest chocolate company and BC’s second oldest one. The company was owned by a private group. Five members including the past president of Rogers’ comprised the board of directors. Rogers’ sold chocolates, related specialty products and premium ice cream items. As Zietsma (2007) notes, firstly, competition was a point of concern since traditional players in the chocolate business were moving into the premium sector where Rogers’ had a presence (p 20). Secondly, there was a shift in consumer preferences towards organic chocolates. Moreover, consumers were becoming more environment conscious. There were significant costs involved in set up and cleaning involved in the production process. The disruption in schedules influenced by various factors was the cause for frequent out-of- stock situations faced by Rogers’. An ageing consumer base was also pertinent since there was no potential replacement for the eventual loss of customers. A traditional mindset of the employees meant that Rogers’ was not ready to reinvent itself in the present context. 2. PESTEL Analysis The political, economic, social, technological, environmental and legal issues pertaining to Rogers’ are described in this section. 2.1 Political Change in governments affect the formulation and implementation of policies related to the chocolate industry. Rogers being in the premium chocolate segment, its products could be considered as elitist. A populist government could be at logger heads with Rogers’. Moreover, there could be pressure from political parties to unionise Rogers’ since the company would attract the attention of trade unions. Lobbying by competitors was also one of the threats that loomed over Rogers. Any decision which was the result of such bargaining could prove detrimental to the business interests of Rogers. The sales of Rogers’ outside Canada was also affected by the policies of foreign countries especially those of the US and Europe. Diplomatic stand offs between Canada and other nations would have a bearing on the bottom line of Rogers’. Every trade related treaty signed between Canada and other nations provided an opportunity to Rogers’. Likewise, when such treaties are abrogated, it is a threat to the activities at Rogers’. 2.2 Economic The changes in the economy also have a bearing on the fortunes of Rogers’. In times of recession, the sales of luxury goods are hit the most, which brings a drop in sales of premium chocolate. Further, cost cutting measures are required at every step in business. This could adversely affect the quality and hence the brand name of Rogers’. There could be a threat of layoffs in such cases. This would lead to change in employment patterns in the organisation as permanent staff is replaced by part-timers. The prices of raw materials could also increase leading to a hike in the prices of chocolates. This would make Rogers’ products unattractive in foreign markets. Economic sanctions against the countries providing raw materials to Rogers’ could hit production. Damage to crops, diversion of raw materials to competitors on account of better prices etc. are some of the other issues that can hamper production. This would make Rogers’ products unattractive in foreign markets. 2.3 Social Rogers’ had not packaged itself differently based on current trends. Hence, an ageing baby boomer generation remained its target audience. Though this group of consumers had an inclination for quality goods, eventually there would be no customers left if the younger generation does not replace them. Rogers’ marketing would have to change to reflect this reality. Similarly, the employees at Rogers’ were caught in a time warp as they had been in the same organisation for two to three generations. While there was cohesion among employees due to this reason, there was no felt need for change in production techniques. A company would not succeed in the long run if the employees do not infuse fresh ideas and concepts. 2.4 Technological Rogers’ had not changed its practices for decades. The company did not take advantage of new developments in the machinery front. Similarly, management practices were not updated. The packaging was manual which meant more effort and costs towards this end. Competitors had attractive packaging which was lacking in Rogers’. Rogers’ could in fact kill two birds with one stone, if it were to move towards mechanised packaging of products. There was a need to modernise production scheduling to bring it in line with modern day scheduling; and this would solve the problem of ‘out of stocks’ that the company faced from time to time (Zietsma, p 24). 2.5 Environmental Consumer preferences were changing from the processed chocolate to organic ones. Similarly, people were taking to dark chocolate and not just restricting themselves to milk chocolate. ‘Going Green’ which started out as a fashion has taken roots in every strata of society. Hence, Rogers’ should adopt eco-friendly measures at all levels so that it can fulfil its commitment to serve customers given the requirement and the preference given the customers. While the environment had to be protected for the coming generations, the preference for organic chocolates should also be taken seriously. With stepped up vigilance by green groups, it made sound business sense to inculcate eco-friendliness in its activities. 2.6 Legal Rogers’ should give both labour as well as green laws the seriousness they deserve. Other laws had also to be adhered to. Unionisation within the context of national laws could be made mandatory over a period of time. Similarly, policy makers could pass laws which required stricter adherence to green laws. Rogers’ should plan the migration from old to new systems in such a way that green laws could be implemented without causing disruption to the operations at Rogers’. Laws regarding financial and fiscal affairs could also impact the day to day operations. Hence, Rogers’ needed to be vigilant at every stage so that it would not cause any breach to the implementation of the laws of the land. Emission limits may be raised progressively. Treatment of toxic wastes, waste disposal, soil degradation, contamination of ground water, deforestation etc. are some of the many aspects that come under the ambit of green laws. 3. Implications The PESTEL Analysis brings forth various issues which need to be corrected or improved. The issue of stock out should be addressed by prioritising items and executing deals. New and latest machinery should be purchased in a phased manner for the production to continue. Along with this, the employees should be open to new ideas and novel ways of performing duties. Last but not the least, there is a need for adequate product awareness irrespective of the target audience. The PESTEL Analysis is a strong tool that gives a clear picture about the external environment of the company. Used with the SWOT Analysis, it gives direction to the organisation by setting out a road map for the future. Put into perspective, the company can channelize its resources by cutting down wasteful expenditure and allocating funds for financial stability ad future expansion activities. One of the important issues is that of stock out. The production process is a chain reaction which requires synchronisation between different activities that make up the production process. However, the processing of orders is also important. There were instances where a retail sale with high margin was foregone for a wholesale sale with low margin. While it is not prudent to give up a profitable venture for a not-so-profitable one, a workaround is required. The entire production process should be changed so that both the deals can be incorporated i.e. to create a win-win situation. While every situation may not be salvaged in this way, items can be prioritised and then executed. Mechanisation of the packaging activity is but one of the remedial measures. As mentioned before, new and latest machinery should be purchased for the production to continue. This can be made in a phased manner to avoid the problems of migration from one system to another. While investment would be needed for the same, the gains accruing from such a decision are manifold. With new methods, newer opportunities which could not be leveraged before due to technological limitations can be pursued in right earnest. References Zietsma, C. (2007). Strategic Management (Case 7, Rogers’ Chocolates). Ivey Management Services. Read More