Sim336 Strategic Management: Analysis Of Assessment Answers

Strategic assessment and recommendations for Godiva UK operating in the UK Chocolate Market in the Fast-Moving Consumer Goods (FMCG) channel

To conduct a strategic assessment of Godiva UK (FMCG) in terms of their external and internal environment, and to identify strategic options and recommendations in which Godiva UK can strengthen their UK market position. 

Your individual strategic management report will need to identify the internal and external opportunities and threats facing the Godiva UK FMCG, and present appropriate frameworks that inform your development of strategic options and recommendations for the company in terms of future strategic directions and methods of expansion.

The report should therefore be comprised of areas for consideration that address the following questions: 1. What is Godiva UK's current strategic positioning in the UK FMCG confectionery market?

2. What strategic recommendations can you propose Godiva UK follow to strengthen its current position in the UK Market?

Introduction 

Godiva is a chocolate brand that was founded in U.S.A in 1926. It is known as one of the best manufacturers of the luxury chocolates. These chocolates are purchased to gift on special occasions like Birthdays. The company produces seasonal chocolates with special packaging. The packaging in which the product is offered to the consumers is attractive and also the company gives emphasis on attracting customers towards the company. The chocolates that are offered by the company are expensive and also it is available in the Malls. Godiva Chocolatier is a brand that is owned by Campbell's company and also it contributes 6 percent of the total revenue on expansion. There are various challenges that are faced by the company in the UK market (Garrone, Pieters and Swinnen, 2016).

The challenges are related to the increasing level of competition and also threat to substitute for products. The concern of the company is to promote an international image of a product but as a luxury product. It gives emphasis to the production and decoration of the chocolates by hand and also the attractive designs are taken into consideration by the company.

In this report, the main emphasis is given to the strategies that should be considered by the company to enhance the growth and profitability in the UK market. In the first phase of the report, the focus is given on the pestle and five force models that will identify the threats and opportunities. The value chain analysis is also discussed by considering the Godiva Company. In the last phase of the report, the emphasis is given on the porter's generic strategies and also the strategic directions and methods are taken into consideration to survive in the competitive environment.

Macro Analysis : PESTEL 

Political factors 

Political factors play important role in conducting the day to day operations of the business.  To attain success in the industry of chocolates it is important to take into consideration a political factor that enhances the smooth working pattern of the company. In U.K there are many changes of the government takes place that gives direct impact on the operations of the business.  To hire the employees in the factory, there are many restrictions that are imposed and it could give negative impact on employing the candidates for conducting the activities of the organization. Godiva chocolatier should consider all the government regulations.

 It consists of health and safety rules. Product labeling regulations should be followed in a proper manner. The franchise operations should adhere to the registration and also with the disclosure of information. The imposition of taxes is the next factor that will determine how the Godiva Company manages the product in a proper manner (Garrone, Pieters and Swinnen, 2016).

Also, there are many taxes that are imposed, that analyze the management of payment and investment. In 2010 value-added tax was imposed that has given rise in the prices of chocolate and the increase in the price level has given decline in the sale of the chocolates.  To consider the corporate strategy, it is important that the company should consider the political differences (Afoakwa, 2016).

Economic Factors 

It is one of the essential factors that give direct impact on the buying behavior of the customers for the Godiva products. The economic decline globally has given effect on the extension plans of the Godiva and also it does not give impact on the sales. Godiva attained success by gaining 30 percent rise in the profits. The economic factor like per capita income, inflation and unemployment give direct impact on the profitability and success of the organization. This is considered as an important factor that gives direct effect on the customers and also reduces the purchasing power. Sometimes the impact can also be due to the fluctuation in the currency rate. The activities of the organization are directly affected by considering this factor (Oliveira et al, 2016). Economic up and down can give effect on the demand for the products that are offered by Godiva.

For example, the demand for chocolate products in U.K has enhanced. It can be seen that at the time of recession the demand for the product increases and also the labor cost is taken into consideration by the company.

Social Factors 

The taste and needs of the consumers keep on changing day by day. Godiva gives focus on enhancing the taste of consumers. The company offers a variety of chocolates that can be used by every age group. The social factors give direct impact on the buying pattern of the individual.  It is also seen that in U.K there are many problems that are arising like obesity in children and adults. The nutritionists give advice to many people to reduce the intake of chocolates. It has given direct impact on the sale of the product in the market. The main aim of the Godiva is to offer products all over the world by increasing the satisfaction level of the consumers. If the chocolate enhances the satisfaction level of the consumers, then it is seen that the costly chocolates can be sold easily in the market (Raynolds and Greenfield, 2015).

Technological Factors 

Technological is considered as an essential factor that gives direct impact on the productivity level of the company. If the company adopts an updated technology, then it can be easy to attain the large market share. Technology has given enhancement in the activities of the company. Godiva takes into consideration updated technology that altered the packaging and production in the past years. The company use pathogen systems and filing patents for heat-resistant chocolates (Hestad,2016).

Legal factors 

Godiva is one of the recognized brands in the market. There are many other substitutes in the market but Godiva is strong to compete in the market. The confectionery products have an uncertain future due to the hygiene issues. The company should be aware of all the legal proceedings so that the activities can be conducted in a proper manner. In the UK market, the legal proceedings are more as compared to another market. Godiva should also give focus on the trademark so that it cannot be copied by other competitors in the market (Kivetz and Zheng, 2016).

Environmental factors

Environmental factors give impact on the activities of the company.  Fossil fuels are used in a huge amount and also it leads to enhancement in the costs. It is very important for every organization to have a good environmental image in the market. So, Godiva should try to start investing in the green technologies that are environment-friendly (Nagle, Hogan and Zale, 2016).

Competitors Analysis 

Porter 5 Force Model 

It is used to analyze the competition level and also the profitability of an industry. These forces are related to the microenvironment analysis and also the ability to serve customers and to enhance the profits. The five forces are discussed below:

a.) Threats of New Entrants 

As it is seen that the industry has high profits, many new entrants will try to enter the market. The new entrance will give negative impact on the entire profits of the industry. So it is compulsory to block the new entry in the market. There are many threats that are related to the new entrance in the market. The threat of the new entrants is high, as it is analyzed that it is easy to enter this market. The legal formalities are less as compared to other businesses. The budget that is required to set up the new business is also less in this industry. With the low capital, the company can easily establish the business. A new entry in the market can give negative impact on the sale of the products (Cho, Huh and Faber, 2014). It is seen that in U.K there are number of large firms like mars that are dominating the market. So, the barriers to entry in the chocolate industry are high. There are many competitors like LINDT chocolate and also Ferrero Rocher chocolates.

b.) Threats of substitutes

 The propensity of the buyer to substitute is moderate. There are many substitutes available to the consumers. There are many popular chocolates available in the market and many companies offer product at a cheaper price to attract more customers towards the company. Chocolates are easy to preserve, so the rate of substitution is high. It is very easy for the consumers to substitute the products of Godiva, as the price of the products is high as compared to other companies. In the UK market, the luxury dark chocolates have entered the market by considering healthy eating and anti-oxidant benefits of the dark chocolates (Markey, Lovegrove and Methven, 2015).

c.) Degree of Industry Rivalry

Many businesses are competing against Godiva and planning to give tough competition to the company. The main rivals of the company are Hershey's, Ferrero. The rivalry will be considered strong among these companies because the products that are sold are similar in nature. If the level of competition is high, then it is evaluated that it leads to negative impact on the company's position. Other competitors take into consideration, an effective competitive strategy so that the success can be attained in an effective manner. The strategies that are adopted are advertising, discounts (Goldman, 2013). The competition level in the industry is high as there are many competitors who offer same type of luxury chocolates. Lindt and Ferrero rocher is one of the luxury products and the market share of the company is also large.  So the main competition is from the company like Lindt and Ferrero Rocher.

d.) Bargaining power of Suppliers 

Godiva has high bargaining power than its suppliers, as there are many options that are available to the customers. Godiva can easily buy the raw material at fewer prices and also more in bulk as compared to other competitors (Mai, 2014).

e.) Bargaining power of the Buyers

It deals with the capacity of the customers to reduce the prices of the products. It gives importance to the customers and also to the cost if the consumers give preference to another product. The power of buyer is high when there are many options available and it is low when there are fewer options available (Uggla, 2017). In this the buyer price sensitivity is also taken into consideration and also the competitive advantage is given to the company's products. In UK there are many competitors in the market, so the power of the buyer is high as the consumers can easily substitute the products with other product. For example: If Godiva chocolates are not available in the market, then the consumer can easily substitute with the other chocolates (Shen, Fishbach and Hsee, 2014).

Internal Analysis 

Value chain analysis

The value chain is the process through which the company adds value and it consists of production, marketing, and after-sales service. It is one of the important internal analysis tools that should be considered by Godiva.

The Value chain of Godiva 

Primary Activities 

• Inbound logistics: In this, the focus is given to the inbound logistics in which the company outsources the activities. The operations of the business are conducted by taking into consideration sustainable and recyclable materials. At the time of packaging, the company should take into consideration recyclable materials (Park,  Ungson and Cosgrove, 2015).
• Operations: Godiva gives focus on maintaining the quality standards so that the customers are attracted towards the company. When the quality services are given to the customers, then the organization can easily attain success (Dai and Fishbach, 2013).
• Outbound logistics: Godiva takes into consideration fast and timely logistic system so that the customers can easily get the product offered by the consumers. The company manufactures the products by evaluating the key markets. In the UK market, it   is important that the product should be available on every shop not only on the outlets so that the sales can be enhanced in a proper manner (Beressey, De Boeck and Rozzi, Godiva Chocolatier, 2015).
• Marketing and Sales:  The Company should give focus on marketing the products by advertising, Magazines.  The company tries to attract a huge customer base so that the activities can be conducted in a smooth manner. To increase the sales the company should offer the product through the online services. By considering the U.K  market it is essential that the company should give focus on promoting the product in the market so that the profitability can be increased. Like:  by introducing attractive taglines, so that the attention of the consumer can be grabbed easily (Parahoo and Mahate, 2016). For example : If focus is given on Ferrero rocher then it can be seen that company take into consideration proper marketing strategies to enhance the sale of the product in the market.
• Service: To increase the customer service the company should give focus on attaining proper information technology so that the product can be reached to the customers. The services should also be provided in a proper manner so that the satisfaction level can be enhanced.

Secondary Activities 

• Human resource management: Human resource is an important part of the organization. Without human resource management, it will be difficult for the organization to conduct the activities. Training should be taken into consideration by the company so that human resources of the organization can be managed properly. The human resource of the company should have proper knowledge about the products so that they can satisfy the consumer if any query arises regarding the products.
• Technology Development: Godiva should give emphasis to enhance the sales through e-commerce. It is important for the company to consider the updated technology so that the activities can be conducted smoothly.  If the company does not adopt the latest technology, then it is very difficult to survive in the competitive environment (Özer and Zheng, 2015).
• Firm infrastructure: The Company should give focus on establishing more outlets so that the products can be easily available to the consumers. Not only in Malls, but the company should give focus on introducing the products in the open stores. In the U.K market, the company should give focus on making the product available on the retail outlets, so that the company can attain success.

Porter's Generic Strategies 

Cost leadership 

Due to the high competition level in the chocolate industry, it is important to implement a cost leadership strategy. The cost leadership strategy will give emphasis to ensure that the products that are offered by the company are cheaper than the competitor's products. In the UK market, the level of competition is high, so it is important that Godiva should take into consideration proper cost leadership strategy so that the operations can be conducted smoothly (Griffin, 2014).

Differentiation 

In this strategy, Godiva should introduce innovative packaging by considering the dimensions that enhance the value to the buyers. The company differentiates itself through its products. The company offers extensive lines of products such as truffles chocolate selection by having the research and development abilities. Godiva should also offer exclusive product lines that cannot be copied by the competitors like chocolate dipped ice creams. Differentiation gives an advantage to the company. If the products that are offered by the company are different in nature, then the profitability can be easily attained.  The demand for the unique products increases as compared to the substitute products (Garg and Lerner, 2013).

Focus 

 This strategy should be considered by the company, so that cost focus can give benefits to the target segment in the UK market. The cost focus can give success and help the organization to achieve the goals and objectives of the organization. Next is differentiation focus that Godiva considers to differentiate the products in the target segment (Ramli, 2017).

Strategic Directions 

To enhance the market, it is essential that the company should consider effective marketing strategies so that the goals and objectives can be attained. The strategies that should be taken into consideration by the company are:

a.)  Positioning strategies

Godiva chocolates are sold in malls that receive the high-end consumers. To attract the interest of the customers towards the product, the company should position Godiva brands on the internet and on social platforms. The company will offer a modern platform for the consumers to avail the product at any time. If the products of the company are easily available, then large market share can be availed by the company. So, to attract the customers in the UK market it is important to give focus on positioning (Paharia, Avery and Keinan, 2014).

b.) Promotion strategies

Godiva should give focus on promoting the products by considering proper promotion strategies.  Promotion of the products can be done by establishing attractive taglines that attract customers towards the products. The company should also give focus on giving attractive advertisements so that the customers can get knowledge about the products. To promote the product in the market, the company should offer discounts, so that the consumers can easily get attracted towards the products. If in the UK market, Godiva does not consider effective promotion strategies, then it can create difficulty for the organization to sustain in the competitive environment.

c.) Pricing strategies 

The company should introduce low price chocolates so that the consumers can easily purchase the item by not giving any second thought. If the prices of the product are low, then it can be comfortable for the customers and also more customers can be attracted by adopting pricing strategy. As, there are many competitors in the UK  market, so to expand in the market it is important for the organization to introduce low price chocolates also. For expansion in the UK market, the company should introduce chocolates at a low price, so that the customers get attracted towards the products offered by Godiva (Marjanova ,Jovanov, Davcev and Boeva, 2016).

Introduced Sainsbury’s analyses

Godiva partners with Sainsbury launched masterpiece of chocolates. Sainsbury have 537 supermarkets and also many stores. Their target is price sensitive customer so that it can lead cost leadership. The business strategy is to provide low cost products as compared to the competitors. The company managed the strategy by introducing product in low price as compared to the competitors in the market.

Conclusion 

 By evaluating the report, it is concluded that effective strategies should be taken into consideration so that the company can easily accomplish goals and objectives in the UK market. In this report, micro and competitive analysis are conducted to access the actual position of the company.

In this report, the main emphasis is given to the key challenges faced by the Godiva. In the first phase of the report, the focus is on the external environmental analysis to identify the opportunities and threats. In this section, the Pestle and 5 forces model analysis is conducted. In the last phase of the report, the focus is on the competitive advantage by considering porter generic strategies. In the strategic direction section, the methods are explained for expansion of the company's products and services.

References 

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