Rocky Mountain Chocolate Factory (RMCF)

Rocky Mountain Chocolate Factory (RMCF)

Rocky Mountain Chocolate Factory (RMCF) is an international franchisor and confectionery. The company manufactures candies, chocolate, and confectionery products. The factory has an annual rate of 30 to 40 franchises annually but has plummeted down to 5 to 10 in a year. 2007 to 2008 financial crisis has been attributed to this drop as it has resulted to specific stringent measures, such as the tightening of loan standards in the U.S by the small Business Administration. RMCF’s CFO, Bryan was shocked, by this trend, and on anticipating that the trend would continue on the downward trend, it was inevitable to consider having to refocus the company and expanding it internationally. Due to the company’s size and the associated limited human and financial resources, the company’s expansion into foreign markets must be managed smartly, and the accompanying risks effectively mitigated. It is at this point that it is essential to adopt the best expansion strategy that will ensure both smart management and mitigation of all the risks that will emerge along the way.

To get the best expansion strategy to adopt, it is essential to first perform a SWOT analysis of Rocky Mountain Chocolate Factory (RMCF). The fact that the company can operate 30 to 40 franchises annually is an eloquent illustration of the company’s internal strength. Having branches in other countries, such as the United States, is an illustration that the company has the potential of serving international markets. Another internal strength of the company is the fact that it has carefully laid out its stores; it also neatly hand-mixes fudge on a marble table for its client to watch. The company’s weakness is the financial crisis, which has led to its franchise declining to about 5 to 10.

The company should capitalize on the strengths and use the Market development strategy to expand to Brazil. Several reasons can justify the choice of applying the market development strategy in Brazil. The first reason is the fact that RMCF is relatively small as far as market capitalization is concerned, it is thus wise to go for the best strategy as far as increasing market capitalization is involved. The best approach is the Market development strategy. The need to expand is also another reason for choosing this strategy. Though the company is known to produce superior and high-quality products, which beat its competitors, both in taste and quality, the company has exhausted its current market. It, therefore, needs to explore other markets, and the best market entry strategy in such circumstances in the market development strategy. The fact that the company isn’t intending to introduce new products but seeks to expand its current products leaves the ideal approach being the Market development strategy.

Brazil is the ideal country due to the availability of a perfect Market for RMCF products. More so, Rocky Mountain Chocolate Factory, needing ready and vast markets, ought to be situated in a location with heavy traffic. Brazil is a tourist destination with heavy traffic and also famous for its excellent football skills, receives quite a heavy traffic, and even with a population standing at 209.3 million, it’s an economic giant both in Latin and South America. Such a vast community, and with most of them being the ideal RMCF target market, the middle class, then it is of no doubt that the perfect place for RMCF to expand its market to Brazil.

Though the market development strategy would be the ideal strategy for RMCF to utilize mainly in Brazil, it is imperative to note that the strategy has its disadvantages. The CFO must incorporate these disadvantages in the expansion plan if the company is to expand successfully. The first and most crucial disadvantage to take care off is the evolving markets. The fact that the market development strategy is the perfect answer to a landscape that is continually changing as far as customer tastes are concerned. It is essential to note that as the tastes continue to expand, especially in the new market, customers may start being no longer interested as they used to be by the products. This then poses a product marketing challenge. The extra cost is also another disadvantage. This is because as a product enters a new market, especially for the first time, processes in the market such as advertising and marketing usually lead to extra costs that make the product expensive. It is thus imperative for the company to strategize on how to deal with these disadvantages.

In conclusion, it is clear that the financial crisis is negatively impacting on RMCF franchising activities and expanding is imperative if the company is to survive the turbulent times. The best strategy to adopt, as outlined, is the Market development strategy. On the other hand, Brazil has an up-and-coming market and thus the perfect location to expand to. It is therefore prudent that the company expand to Brazil as soon as possible, however, while growing, it must be privy of the risks and disadvantages involved, if it’s to expand successfully.