Viability Report for Cocoa Delights: Franchise vs Joint Venture

This report analyzes the viability of franchise and joint venture for Cocoa Delights. It discusses the benefits and risks of each option and concludes that a joint venture with Haigh's is the best strategy for Cocoa Delights.

Angad Australian Institute of Technology
ASSESSMENT
STUDENT DETAILS
Student Name
Student ID No.
Group No.
Date of submission
ASSESSMENT DETAILS
Unit Code BSBMKG608
Unit Name/Title Develop organizational marketing
objectives
Assessment Task No Task 2
Assessment Name/Title Viability report
Qualification Advanced Diploma of Marketing
ASSESSOR DETAILS
Assessor Name

Assessment – BSBMKG60A Develop organisational marketing objectives
Table of Contents
Assessment Task 2..................................................................................................................................
Viability report........................................................................................................................................
Business Opportunity Considerations...................................................................................................
Identifying the best choice for Cocoa Delights:.....................................................................................A
Macro environmental factors................................................................................................................A
Comments.............................................................................................................................................C
References.............................................................................................................................................1
Student Name SID S Page A of H

Assessment – BSBMKG608A Develop organisational marketing objectives
Assessment Task 2
Viability report
Business Opportunity Considerations
Business
Opportunity
1: Franchise 2: Joint venture
Cost and
benefits:
 Franchising can help Cocoa Delights in achieving its
target of 100 stores within just three years
 Prone to greater legal issues as many of stores would
be operating in a separate legal agreement
 Franchising provides an organisational system where
managers in each of stores are given rewards for their
hard-works
 Possibility of significant conflicts between the
employer and its franchise stores as they will carry
separate work mentalities. Franchising will be a union
of different minds with local mind clashing with that of
the nationals
 A collaboration with Haigh’s can also be very beneficial
 Haigh’s has only a few stores in three capital cities Adelaide,
Melbourne and Sydney
 Haigh’s enjoys extensive advertising
 Looking for more new stores in Brisbane
 A conflict of interest can happen between Cocoa and Haigh’s
 Haigh’s is expected to roll out a close to 100 stores within next 5-
7 years
 Advertising would be cheaper as Haigh’s already has access to
extensive advertising
 Joint brand advertising would be required once the deal between
Cocoa and Haigh’s gets completed

Assessment – BSBMKG60A Develop organisational marketing objectives
 Franchising is a good option in Melbourne
 Government laws does not really encourage
franchising
 Customers will have access to cheaper chocolates from Cocoa
and mid-range chocolates from Haigh’s
 Cocoa Delights will get assistance from Haigh’s in improving its
brand awareness
 Joint promotion will help Cocoa acquiring market shares in other
capital cities in Australia
Identifying the best choice for Cocoa Delights:
Cocoa Delights will be largely benefited from collaborating with Haigh’s. This is due to the following mentioned reasons (Bharucha 2016):
1. Cocoa Delights will grow to popularity in other cities as well because Haigh’s is already a reputed chocolate manufacturing firm in three major
capital Australian cities
2. Cocoa Delights will be able to exploit the extensive media reach of Haigh’s to maximum benefits
3. A low-cost combination with reach media value would result in improved cost benefits
4. Cocoa Delights will have the opportunity to cash on the already generated popularity of Haigh’s in Sydney, Adelaide and Melbourne
5. The market competition will also be lot on control as Haigh’s is itself a big brand
Macro environmental factors
PEST Factors 1: Franchise 2: Joint venture
Political:  Government laws have become stricter on waste and
environmental pollution. Franchisers can be vulnerable
 A joint venture such as the one between Cocoa Delights and
Haigh’s is much capable in countering legal barriers as compared
Student Name SID S Page A of H

Assessment – BSBMKG60A Develop organisational marketing objectives
to these conditions as they lack a robust legal and
organisational structure needed to counteract such
circumstances.
to franchisers. However, clash of thoughts between Cocoa Delights
and Haigh’s may result in additional challenges.
Economic:  Unemployment in Australia is on a rise. Franchisers face
difficulties finding the right staffs.
 A joint venture also requires correct set of skills; however, they
have better infrastructure and market value as compared to
franchisers, which is needed to attract skilled professionals.
Social:  Health benefits of cocoa is an advantage. However, this
will require doing awareness campaigns to make people
aware of these facts. Franchisers might lack the
marketing strategy or the investment support needed
to commence such practices.
 Cocoa Delights will have an advantage from Haigh’s media reach
Technology:  The number of internet users is increasing. This will
benefit franchisers provided that they have the
infrastructure to accommodate latest and advanced
technologies
 Both Cocoa Delights and Haigh’s are established companies
especially Haigh’s. Haigh’s has a huge presence in media. The use
of internet and the various other technologies will benefit the
company. Hence, Cocoa Delights will also have the advantage. The
bonding should be fruitful to each of companies provided that they
are able to avoid the conflicts.
Risk:  Lack of sufficient capitalization
 An ineffective infrastructure can affect the operations
 Legal policies can be torturing for the joint venture
Student Name SID S Page B of H

Assessment – BSBMKG60A Develop organisational marketing objectives
activities
 Government policies are stricter on franchisers
 Ineffective human resource management, which may
affect its capability to attract skilled people
 Clean energy policy is a growing challenge for the venture
 Disputes and conflicts
 Taxes
 Considerations
Fit: It is pretty difficult to control operations at franchisee business.
It is because a franchisee used to have its own legal and
organisational structure. The parent company by and far has no
significant involvement in decision-making and other operations
work.
A joint venture between Haigh’s and Cocoa Delights will be a much better
combination of a business relationship. Haigh’s already has established
markets in Australia. In addition, it enjoys an effective access to a variety of
media resources. Legal and organisational structure in this joint venturing
will be a much more stable option to rely on.
Impact: Franchising will help to open up stores within a less period of
time. However, it is susceptible to many challenges such as
external business challenges.
Joint venturing is indeed a better strategy to go with as Haigh’s already has
good reputation in the market. However, they also need to have strategies
to avoid disputes and conflicts from happening.
Comments
Based on the analysis of macro environmental factors following things can be concluded (Shah 2015):
 The joint venture between Cocoa Delights and Haigh’s will be the best future strategy for Cocoa Delights
 With this, Cocoa Delights will be able to achieve its target of 100 stores within next 3 years
 Marketing competency of Cocoa Delights will also improve as Haigh’s already has an extensive market reach
 Cocoa Delights and Haigh’s must avoid falling into clashes as these are one of the negative consequences of a joint venture
Student Name SID S Page C of H

Assessment – BSBMKG60A Develop organisational marketing objectives
References
Bharucha, J., 2016. Cadbury Vs Nestle: A Study of The Chocolate War. International Journal of
Research in Social Sciences, 6(9), pp.609-620.
Shah, K.U., 2015. Choice and control of international joint venture partners to improve corporate
environmental performance. Journal of Cleaner Production, 89, pp.32-40.
Student Workbook 2010 BSBMKG608A Develop organisational marketing objectives, Innovations
and Business Industry Council, Australia
Student Name SID S Page 1 of 8