Cherry Lady Case Study
Case Study Questions
1. Name two macro environmental forces affecting the chocolate industry in the early 2000's to 2012 and explain how they are impacting the industry. State which of the five types of forces your answer falls under. See Figure 2.7 in the textbook.
Two macro environmental forces affecting the chocolate industry in the early 2000’s to 2012 are economic and social.
The social force falls under the social category. Social forces impact the chocolate industry tremendously. In the U.S. more than 80% of all candy is bought on impulse, but 57% of American women and 46% of men stated that chocolate was their favorite snack/dessert. Even though there are recent trends that suggest that consumers decrease their dietary
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C-18) So with such high demand, even mass market producers started to notice the trend and act accordingly. The mass market producers acquired some of the small businesses and also created their own line of rich premium chocolate, but this market was competing more on an efficiency level so there arose some problems. The problem with the mass market producers were that they were competing on a cost advantage approach so it is harder for those companies that are mainstream to become premium. Mass market producers could produce more chocolate with less ingredients than the premium chocolate. It was a more efficient market! Last but not least, the chocolate industry is experiencing a spike in the cost of raw materials as well as packaging costs, distribution, and energy, leaving the premium chocolate segment with lower exit barriers than the mass market producers because the raw materials only account for a small portion of overall costs in relation to the expenses of marketing, advertising and packing for the premium chocolate segment. You are not describing exit barriers. Exit barriers include getting rid of assets, giving up psychological ties to the industry, laying off people.
3. Using Porter's Five Force model describe the Bargaining Power of Buyers. The buyers in the chocolate industry are the retailers, not the end consumer.
The bargaining power of the buyers in the chocolate industry is high because the buyer has several