CHARLES

CHOCOLATES
PRESENTED
BY:
GHINA HAROON
HIBA TAHA
USMANI
JUNAID MAHBOOB
KHURRAM ASGHAR
MAHEEN AFTAB

VISION
STATEMEN
T

Charles Chocolate believes in providing

the ultimate chocolate experience that
builds memories by offering a diverse
range of premium chocolate products

MISSION
STATEMEN
T

Charles Chocolate aims to provide the

top quality chocolate products globally,
that our customers and employees expect
from us while keeping in mind the well
being of society and our commitment to
traditional excellence

 Political: Not mentioned.

Economics:

PEST

US Market of chocolates has been growing

at 6% annually generally.
Premium chocolate market growing at
10% annually.
Growth has slowed down after the
financial crisis of 2008.

 Social:

PEST

Baby boomers focus on quality and ethics.

The demand was growing for dark
chocolate due to its heart healthy antioxidant properties.
Child labour and forced labour is
considered to be a part of cacao
production.
Environment friendly packaging.

 Technological:

PEST

Proportion of people shopping online in US

has increased over the last decade by
about 59% .
But Charles has been unsuccessful in this
field.
Generates only 6% sales via Online
selling.

PORTERS
5 FORCES
MODEL

Threat Of New Entrants:

Threat of new entrants is low because
new entrants need to invest a high capital
in order to enter the chocolate market.

 Substitutes Available:

PORTERS
5 FORCES
MODEL

Threat of substitutes is very high because

there is a lot of competition prevailing in
the chocolate market. The competitors in
the international market include Godiva,
Lindt etc. Moreover strong regional
competitors include Delice chocolates and
Cardons. Whereas other competition
includes Belgian producers and Dolce Via.

PORTERS
5 FORCES
MODEL

Bargaining Power Of Supplier: No

mention of suppliers in the case.
Bargaining Power of Consumers:
It is high because high number of
substitutes are available.
Other local companies offer discounts
which provides high quality chocolate at
lower prices.

PORTERS
5 FORCES
MODEL

Competitive Rivalry:

A number of competitors.
Some competing at quality.
Some at price.
Others at Brand Image.

EFE
MATRIX

OPPORTUNITIES

WEIGH
T

RATIN
G

New Franchises

0.3

1.2

Discounted prices

0.1

0.1

Upgrade Online Store

0.15

0.45

Change Brand Image

0.3

0.3

Extend Product Line

0.15

0.3

Increase Internal
Capacity

0.1

0.1

TOTAL

2.45

EFE
MATRIX

THREATS

WEIGH
T

RATIN
G

Intense
Competition

0.5

1.5

Aging Consumer
Base

0.3

1.2

High Prices

0.2

0.4

TOTAL

3.1

SWOT Matrix

Strengths
Company heritage
Variety of premium
products
Top of the range
chocolates
Rich chocolate aromas
Excellent retail
experience

Weaknesses
No measure of
employee productivity
Poor demand
forecasting
Resistance of new ideas
Less focus on online
sales

Opportunities
Growth in US market for
chocolates
Growing demand for
organic and dark
chocolates
Acquisitions/Takeovers
Franchising Charles
stores
Penetration in
international market
Growing online sales

Premium organic and

dark chocolates can be
produced to add to the
already existing top of
the range variety.
Stores may be
franchised and opened
in international markets
and provided with
excellent retail
experience to capture
higher market share.

Charles must start

forecasting demand to
produce more of the
products that are high in
demand such as organic
chocolates.
Online sales must be
emphasized to benefit
from the increasing
online purchase of
products.

Threats
Competition from
Godiva, Lindt, Delice

Charles can use its

heritage to tackle the
competition by building

PREMIUM
CHOCOLA
TE
MARKET

US$19.3 billion market for chocolates in 2011

6% Growth Rate
$2.7 billion Premium Chocolate Market
10% Growth Rate

New Entries into Premium Chocolates

Hersheys & Cadburys

of sales occur in 8th week prior to

Christmas
Growing demand for organic and dark
chocolate
Heart healthy anti-oxidants properties

COMPETITO
RS

COMPETITO
RS

CARDONS BELGIAN

DOLCE VIA

120 Year old

High End
Boston Firm
custom
chocolates
Successful in
American
England but
launch failed in Retailers,
Chicago
Online or Niche
wholesalers
Price: 35%
Sold single
lower than
Charles
bean or
organic
Moderate
chocolates
Quality
Strong
business in
corporate gifts
& group
purchases

Emphasized
Malls stores &
Candy
companies
Sold more
Candy than
Chocolates
Franchise
Model
Higher Price
than Cardonss
but lesser
Quality

 Founded in 1885.
Englands oldest chocolate company.
Head Quarters was located in Portlands
old port area.

CHARLES
CHOCOLAT
ES
HISTORY

Products:
Premium line of chocolate
Portland Creams
Truffles
Nuts and chews
Almond bark
Chocolate covered ginger
Premium chocolate novelties

 In 2009, company won a prestigious

superior taste award from Belgium
institute for taste.

HISTORY

The award described the product as

(classy, refined and elegant, top of
the range, rich chocolate aromas.)

 Chocolates were produced in a factory

owned by Charles on the outskirts of
Portland.
Production took place from 7 am to 4 pm
each day.
Bach processing and hand packaging were
used.

PRODUCTI
ON

Problems:
Set-up times cost
No measures of productivity in the plant.
Demand forecasting was difficult due to
seasonal demand.
Production planning was difficult due to
distortions arising from fluctuating
inventory levels.
Bringing change in the firm is difficult
because a strong culture prevails.

 Revenues from four areas:

BUSINES
S LINES

1.

Retailing

2.

Wholesaling

3.

Online/Phone sales

4.

Sandwich Heaven

 11 wholly owned retail stores

Produced 50% of the sales

RETAIL

Excellent retail experience

Americas innovative retailer of the year
award
Stores in tourist locations

 Produced 30% of the sales

Five categories:

WHOLESA
LE

1.

Souvenir shops

2.

Large retail chains

3.

Tourist retailers

4.

Corporate accounts

5.

High end food retailers

 Produced 10% of the sales

ONLINE/
PHONE
SALES

60% orders from regular customers

Increasing number of online customers
Orders processed in 3 to 4 days
Delivered to US, Canada and 50
international countries.

SANDWIC
H
HEAVEN

Purchased by Charles in 2009

Produced 10% of the sales
Sold Charles ice cream
Faced staff recruiting problems

 Company targeted affluent customers

Cruise ship visitors and tourists became
online and phone customers
Locals were frequent and loyal customers.

MARKETI
NG

Brand emphasized heritage

Traditional packaging
Packed in burgundy boxes and tins
Tins featured old-fashioned scenes and
American art

 Brand Perception
Most people not aware of the brand
Those aware of it praise the retail experience
and call it the best chocolate they have ever
had

MARKETI
NG

Advertising

Tourist Publications
Seasonal Print Media
Radio Ads
Donations to charitable events
Direct Mail
Search Engine Rankings
Website

 Troubles

MARKETI
NG

Increase awareness without diluting the

brand
Discounting or making cheap products
would risk brand integrity
Heritage image does not appeal to
younger crowd

 Strong Financial Position

Initially faced a significant growth rate

FINANCIA
LS

Growth rate has slowed down since

slowdown in tourism following financial
crisis
While chocolate sales fell after 2008,
Charles managed to grow its revenue
slightly due to contributions of Sandwich
Heaven
Margins were 50% of sales

 Jim Bell (1989-2012)

LEADERS
HIP

Healthy company, great cashflows and

good margins.
Steve Parkland got on board- previously
a vice president of operations for meat
processing companies.
Deal to buy shares, every year for 3
years.

 Senior Management Team:

LEADERSH
IP

1.

Mary Bird- Vice president sales and

marketing. Managed marketing plans,
retail stores, online store, wholesaling,
retail operations, communications, and
order desk staff. (shareholder)

2.

Ray Wong- Production Vice president,

not a shareholder. Computer
programmer, who developed all
internal production planning systems.

3.

Sven Amundsen-financial officer,

mainted books by hand. Owned shares.

CONFLIC
T?

Bird wanted to reduce out of stock, and

launch new products.
Wong retained control on scheduling and
production.
Wholesale manager gone as far to
overturns Birds decision.

 Franchising discussed.
Online business seemed very attractive.
Corporate gift market was promising

GROWTH
OPPORTUNITI
ES

Needed to revise cruise ship traffic

approach.
Open more stores in Boston?
Or extend product line in Maine?
Should Charles extend beyond New
England?

 Joint venture?
Acquisition?

GROWTH
OPPORTUNITI
ES

Keep playing it safe?

Tear away from traditional brand image?
If sales were to be increased, where to
place the factory?