Question

Case 22: Rocky Mountain Chocolate Factory Inc 2008

Use the PEST framework. Identify important macro level environmental forces occurring in the case. How are they shaping the future profitability of the industry Rocky Mountain competes within?

Answer 1

Rocky Mountain Chocolate Factory (RMCF)is an international brand which has a franchise base model of business and produces gourmet chocolates, confectioneries stores and also manufactures premium chocolates and other expensive and premium confectionery products. The headquarter of the company is in Durango, Colorado. The company is listed on NASDAQ.

Following is the PEST (Political, Economic, Social, Technological) analysis on the company and also listed are the factors that have an impact on the macro environment of the organization. These factors not only impact the firm’s competitive advantage but also the profitability of the whole Consumer Goods industry.

Political Factors

The company is operating in more that a dozen nations and hence it is exposed to the dozen different political risks and enviorments.For the company to be successful in any market it needs to take into account the following political factors.

The legislation on wages in the country and the fixed minimum wages.

The state of political stability in the country.

The taxation rates and benefits in the country.

The corruption level and red-tapism in the country of operation.

The interference of a country's bureaucracy in the consumer goods business.

Economic Factors.

The macro economic factors which affect the Rocky Mountain Chocolate Factory are the rate of inflation, rate of interest, the forex rate and the economic growth of the country of operation. The following factory are impaortant and needs to be taken into account.

The interventation of government in free market trade practices

The economic growth rate of the market.

The cost of labor.

The rate of inflation.

The Whole Sale Price Index.

The quality of infrastructure in the Confectioners industry.

Social Factors.

The culture of a society has a great impact on the culture of the organization. It is important for RMCF to understand the believes and attitude of its customers and to design their sales messages accordingly. The social factors that need to be taken into account are :

Culture and traditions.

Skill level of the population.

The leisure interests and habits.

The educational level and awareness of the general population.

Food habits of the population.

Technological Factors

Technology can be both, a helping hand or a disruptive force. It is affecting various industries across different nations. The analysis of technology generally involves that an organisation understands some of the following impacts;

Recent development of technology in the confectioneries market.

The impact of technology on the product offering of RMCF.

The use of technology by the competitors of RMCF.

The impact of technology on the overall cost and spendings of RMCF.

A detailed PEST analysis helps identify all the operating challenges that Rocky Mountain Chocolate Factory, Inc. may face in the macro environment of the market the company operates in and help serve as a great tool to beat its competition.