Case Analysis: Cocoa Sublime
Module 1: An Introduction to Strategy and Leadership
1.1 Approaches to Strategy:
There are broad two categories of approaches to developing strategy: Rational and Processual Approach. For Cocoa Sublime, it is following Rational Approach as it has a clear concept of what it is going to do, execution plan of how it is going to happen, sequential activities of what to do after what, and discrete information. Though some assumptions are made in developing the approach, these assumptions are also backed by experience and research.
1.2 Strategic Thinking:
Even in strategic thinking, there are two major dynamics: environment led ‘fit’ and resource led ‘stretch’. ...view middle of the document...
To govern this new business, an insider board has been developed. All these are business level strategies.
• For functional level strategy, Cocoa Sublime has gained Fairtrade Accreditation for supply compliance of Temple. It has to buy new machineries to process cocoa beans. It agreed to share promotional costs of co-branding with Temple. All these are few of functional level strategies of Cocoa Sublime.
1.4 Major Elements of Strategy
Five major elements of strategy are Arenas, Staging, Economic Logic, Vehicles, and Differentiators.
A. Arenas tries to answer where Cocoa Sublime will be active with how much emphasis.
• Cocoa Sublime focuses on health food segment
• Prime market segment are school and office lunch boxes
• Primarily it plans to operate within Australian market only.
• In creating the values, it collects raw materials from own local cocoa bean suppliers and import from reliable Asian and West African suppliers following Fairtrade Accreditation policies.
B. Vehicles presents various options to get there.
• Cocoa sublime has funded training for farmers and hiring of cocoa consultants to ensure quality raw materials.
• It plans to co-brand with Temple, another confectionary market player in Australia, which operates in health food segment with cereals and nuts.
• Along with Cocoa Sublime’s existing boutique stores for retail business, it goes to chain stores with Temple.
C. Staging serves the question of speed and sequence of moves.
• The new project with Temple will incur huge cost initially. But all the fixed and variables costs will be exceeded by revenue within 12 months.
• Initial order of supplying chocolate in 20 tons for first quarter with projected growth of 5-10% every quarter.
• Firstly it has to ensure quality of the cocoa beans. Next, it has to meet supplier compliances of Temple. Later, it has to obtain Fairtrade Accreditation. After that, it has to participate in promotional costs with Temple. Finally, it has to share its name in the packaging of new ‘Cocoa Sublime Super Fruit Bar’.
D. Economic Logic shows the way to obtain desired returns.
• Currently, the manufacturing process of Cocoa Sublime is labor intensive where a major part of processing is done by expert staffs. In order to meet high demand from Temple, Cocoa Sublime has to purchase new machineries and arrange refrigeration storage house. This will increase the cost.
• There is a minimum price for Fairtrade due to minimum wages for farmers and workers that in turn increases the total cost.
• Due to social and economic developmental initiatives, Fairtrade charges a premium that adds to the total cost as well.
• Still, people are ready to pay higher price for products that are Fairtrade Accredited. Thus, Cocoa Sublime has to emphasize this concern to the public to charge premium prices from the consumers.
E. Differentiators highlights the key success factors to achieve the target.
• Cocoa Sublime has a strong reputation for its high...