External Environment Analysis



External Environment Analysis

Introduction

The Real Chocolate Company is one of the largest and most profitable chocolate in world. The Australian bureau of statistics released data that stated; in 2001-02 the annual turnover for the Real Chocolate Company was $1.58 billion and represented 3.3 percent of the turnover of all food, beverage and tobacco manufacturing in Australia (IBISWorld, 2003). Figures like these demonstrate a vast marketplace that is shaped by many underlying external factors.

The Real Chocolate Company's market place is characterized by well-established brand names. The Real Chocolate Company in Australia is dominated by three major competitors; Cadbury, Nestle and Mars Inc. Innovative packaging and product development through strategic planning is a key component in maintaining a competitive edge. The Real Chocolate Company also experiences a slow rate of expansion with growth opportunities in exporting. These are all traits are of an Real Chocolate Company in its "mature" stage of its life cycle.

External environment

The external environment controls elements in the market place that constantly reshape and dictate target markets. Managers must scan environmental information to maintain superior marketing mixes, identify future opportunity and recognise possible threats. (Summers et al 2003)

Five main factors are considered with the external environment; Political/Legal, Economic, Socio-cultural, Technological and Competitive environments. The following information describes the challenges of each factor that organisations constantly need to monitor.

TOWS Matrices

Threats

Consumption of chocolate products is lower in France than in several other European countries. Annual consumption of finished chocolate products per head of population was 5.1kg in 1995 compared with 6.1kg in other European countries. Consumption of chocolate per head in France rose in France between 1980 and 1999. There is a considerable seasonal variation in consumption.

Unlike the UK, France has a larger consumption of chocolate bars than of chocolate-coated confectionery bars. In recent years French consumption of chocolate products has been marketed by two main trends: a change in eating habits and a destructuring of meal arrangements which favour “snacking” and individual consumption, and an increase in demand for products with a high cocoa content.

Opportunities

It is estimated that chocolate bars are bought regularly by 88 per cent of households with children and that French people consume an average of 18 chocolate bars per year. Total consumption of chocolate bars was 3.4kg per head in 1995. Bars of chocolate are popular items traditionally used for children's after school snacks, often eaten with bread, thus they are normal shopping basket items.

Consumption of chocolate bars varies regionally. Consumption of milk chocolate bars is relatively higher in the east and south west regions.

There are marked differences in consumption according to age, income and household size. Elderly people consume a smaller volume of chocolate bars than average. The under 35s are the largest consumers of milk chocolate. Households with children under 15 are the largest buyers of milk chocolate.

Weaknesses

The French chocolate industry, comprising some 107 enterprises, had a turnover of Fr 116.5 billion (excluding tax) in 1997. The industry is dominated by multinational, mainly foreign owned groups. As you can see in Figure 1, ...