Strategic Management Analysis of Godiva in the United Kingdom

This report provides a comprehensive strategic management analysis of Godiva's operations in the United Kingdom. It begins with an executive summary and an introduction outlining the importance of strategic management. The report then delves into Godiva's company and industry background, followed by an external analysis using PESTLE and Porter's Five Forces frameworks to assess the political, economic, social, technological, legal, and environmental factors, as well as industry rivalry, buyer power, supplier power, and threats of new entrants and substitutes. An internal analysis, including VRIO analysis, evaluates Godiva's resources and capabilities. The report also explores strategic directions using Bowman's Strategy Clock, identifying potential strategies like hybrid, differentiation, and focused differentiation. Finally, the report offers strategic recommendations for Godiva to maintain its competitive advantage in the UK market, concluding with a summary of key findings and suggestions for future success.

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management: Godiva in UK

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Executive Summary
Strategic Management is an important process for an organization to effectively manage its
business operations. An organization needs to adopt various effective strategies to deal with the
challenges and stay competitive in the industry. The major objective of this report is to analyze
the internal and external environment of the Godiva that is offering premium and luxury
chocolates and other food products at higher prices. This report includes the external analysis of
the company in context of United Kingdom. The environment in this country is favorable for the
business of Godiva. It includes different strategic aspects of the company. Godiva is facing two
major challenges, i.e. intense competition and health concerns of people. Furthermore, it includes
internal analysis of company by considering its resources and capabilities. At the end, it consists
of different strategies in strategy clock of Godiva. The company can go ahead with the given
recommendations to stay competitive in the market.

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Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Company and Industry Background............................................................................................4
External Analysis.............................................................................................................................5
Macro Environmental Analysis (PESTLE Analysis)...................................................................5
Political:....................................................................................................................................5
Economical:..............................................................................................................................5
Social Factors:..........................................................................................................................6
Technological Factors..............................................................................................................6
Legal Factors............................................................................................................................6
Environmental Factors.............................................................................................................7
Micro-Environmental Analysis (Porter’s Five Forces Analysis).................................................7
Industry Rivalry........................................................................................................................7
Bargaining Power of buyers.....................................................................................................7
Bargaining Power of Suppliers.................................................................................................7
Threats of New Entrants...........................................................................................................8
Threats of Substitutes...............................................................................................................8
Internal Analysis (VRIO Analysis).................................................................................................8
Valuable.......................................................................................................................................9
Rare..............................................................................................................................................9
Inimitability................................................................................................................................10
Organization...............................................................................................................................10
Strategic Directions (Bowman’s Strategy Clock)..........................................................................10
Low price and low value added.................................................................................................11
Low Price...................................................................................................................................11
Hybrid........................................................................................................................................11
Differentiation............................................................................................................................12
Focused Differentiation..............................................................................................................12
Risk High Margins.....................................................................................................................12
Monopoly Pricing......................................................................................................................12

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Loss of Market Share.................................................................................................................12
Strategic Recommendations.......................................................................................................13
Conclusion.................................................................................................................................13
References......................................................................................................................................14

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Introduction
Strategic management is the approach that is used to develop and implement new and effective
strategies and marketing tactics, so that it can successfully stay in the competitive business
environment and gain competitive advantage over its competitors. It is an important process for
an organization to enhance its performance and status in perspective market. This report includes
different analyses for strategic management of Godiva in United Kingdom, i.e. a well-established
manufacturer of premium chocolates and other related products, like; cocoa, coffee, truffles,
biscuits, sweets, shakes, chocolate liqueur and party and wedding favors and some other food
items in gift baskets. The organization is well-known and well-established in United Kingdom
and in some other countries due to its premium and luxury chocolates. The report consists of
various strategic aspects about Godiva by conducting different analyses, like; internal analysis,
external analysis and strategy clock etc. At the end, it includes strategic recommendations to
overcome the challenges, which are faced by the organization in this industry.
Company and Industry Background
Godiva Chocolatier is famous producer of premium chocolates and other related food products.
In the year 1926, the organization was found in Belgium. In 2007, it was acquired by Turkish
Yildiz holdings. Currently, the company is operating over 600 shops and boutiques in Canada,
Europe, United States, and United Kingdom, Asia and products and services of Godiva are
available through more than 10000 retailers also. Along with the chocolates, the company also
offers some other food products, like; biscuits, cocoa, truffles, coffee, dipped fruits, sweets,
shakes, chocolate liqueur and other food products, which are prepared in gift baskets. In addition,
Godiva manufactures some occasional and seasonal chocolates with special gift packing for
special occasions (Godiva, 2017). The signature package of this company is Gold Ballotin. In
addition to chocolates and food products, the company has taken license for manufacturing the
ice-cream, coffee pods, cheesecake, which comes in different flavors of chocolate. It offers the
products in Kosher and sugar free varieties.
Godiva is offering its products and services in different countries. The company has covered the
food and chocolate industry in United Kingdom by its premium chocolates. The chocolate
industry in United Kingdom is one of the largest in European Union with British people having

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more chocolates than other country in European Union (Burns, 2016). So, it is beneficial for the
organization to offer its products in United Kingdom. It will enhance the sales of its chocolates
and other food products. According to a survey, it was analyzed that approximately 20% of the
chocolates sold in the country is consumed by people above 55 years. There are various players
in the industry, which are posing competition for Godiva in UK, like; Cadbury, Ferrero, Galaxy,
Mars, Maltesers etc. Godiva can take various benefits and competitive advantage as it offers the
occasional and seasonal chocolates with attractive and special packaging (Godiva, 2017).
There are some challenges, which are faced by Godiva in UK industry. The major challenges are
like; intense competition and health concerns, as people are becoming more conscious for their
health. It is affecting the sales of chocolate products and decreasing the revenues of the company
in UK chocolate industry.
External Analysis
Macro Environmental Analysis (PESTLE Analysis)
Pestle analysis is an approach which has been executed by the business organization so as to
execute the external environment and also the factor which are prevailing in the business
environment and are also held responsible for stimulating the operations within the
organizational structure. The below executed analysis has been made focused on the external
components of Godiva Gems:
Political:
The political elements comprises of the political stability of the economy, the trends emerged
due to the political operations and activities etc. These are some of the components which are
very much liable in stimulating the business environment of Godiva Gems (Agarwal, Grassl &
Pahl, 2012). For instance, the business entity has a need to comply legally with other industries
for the government regulations which include health, sanitation, and safety rules for the
operations and activities etc. In case of products labeling the rules and regulations should be
strictly followed by the entity. The imposition of taxes has been considered as another liable
political factor which determines how Godiva has been managing the products and services. For
example, if there is a rise in the value-added tax, then this may lead to an increase in the

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chocolate price and reduced sales. And however there will be a decrease in the taxes and this will
increase the demand for the products.
Economical:
The economical factor comprises of the economic stability of the economy which is linked with
the stability of the business corporation and also gets affected from the same. For instance the
interest rates or the tax rates increased by the governing authorities of UK will surely have
impacts on the prices of the products and which will directly have an impact on the demand of
the products. Moreover, due to global economic downturn there was a pause or softness in the
sales of Godiva Gems (Bock, Opsahl & George, 2010). On the basis of the research it was also
observed that the consumers reduced visiting the malls where the stores and boutiques of the
business entity are located and which also affected the sales graphs.
Social Factors:
The business corporation is found very much concerned about the society and has been involved
into the operations and activities which are social friendly and are manufactured after
considering the needs of the society. Moreover, there are various concerns in United Kingdom
owing to increasing cases and situations of obesity and other health issues. Many doctors and
nutritionists advise the people to reduce the consumption of chocolates and other sugar products
that will impact the sales of Godiva in the future. As it is offering chocolates and gift wrapped
chocolates, so it must go ahead with the youth segment (Kluyver, 2010). The youth generally
prefer to gift the luxury chocolates on special occasions to the people whom they care and they
want to make an impression. In addition, the company is offering sugar free chocolates, which
can be consumed by the people with diabetes and sugar diseases.
Technological Factors
In today’s business environment, technological factors play an important role in the growth and
success of an organization. The organizations are using new and advanced technology to update
and upgrade its operations and services. Godiva has adopted various technological aspects,
which are related to trends in this industry. It has an attractive website, which is depends upon to
develop brand awareness and image. Furthermore, it uses this website for ordering facility for its
chocolates and other food products and discussing about the reputational concerns among
strategic consumer relations (Garrone, Pieters and Swinnen, 2016). In addition, Godiva is

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adopting different tools and techniques for its internal and external operations, like; ERP, CRM
etc.
Legal Factors
Godiva is operating within a systematic legal framework and following all the rules and
regulations of the country. It is complying with all the taxes and regulations, which are imposed
in the companies in chocolate industry. Godiva has faced some issues related to regulations and
policies. In the UK industry, it was forced to decrease its marketing efforts for ice-cream
segment to eliminate the legal disputes in the future. The firm did not want to come in any
business concern, which seems violate the trade regulations and policies. The company is needed
to pay different taxes to government at different tax rates (Ho, 2014).
Environmental Factors
For the growth of each and every company, environmental factors play a significant role, as the
people are becoming very much concerned about environment and related things. After
considering these factors, Godiva has increased its attention towards corporate social
responsibility (Hill, Jones and Schilling, 2014). It is focusing on the environmental concerns,
which are received from customers related to recycling and packaging of chocolates and other
food products.
Micro-Environmental Analysis (Porter’s Five Forces Analysis)
Micro-environmental analysis is a tool of strategic management that is used by an organization to
analyze different factors in the industry, which may impact the growth and success of company
in respective industry. In this, the analysis for Godiva has been conducted by evaluating Porter’s
five forces, which are given below;
Industry Rivalry
For Godiva, industry rivalry is high in UK chocolate industry. There are various companies,
which are competing against Godiva and planning to make control over this company (Hitt,
Ireland and Hoskisson, 2012). The major competitors in the industry are, like; Ferrero, Cadbury,
Galaxy, Mars etc. These players have covered a significant market share in the UK chocolate
industry. Industry rivalry will be powerful among these firms as they offer similar products and
services in their stores. Godiva is offering premium chocolates, so prices of products are higher
than its competitors. It is affecting the growth of its business in the country.

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Bargaining Power of buyers
Bargaining power of buyers is moderate for the organization in this sector. The buyers of Godiva
are dispersed all over the world and they are billions in the number. In the industry, the number
of competitors is increasing with the premium and luxury chocolates and with attractive
packaging. They are offering their chocolates and other food products at lower prices, which can
alter the customer loyalty. The customers may switch to any other brands with similar products.
There is no switching cost for buyers (Kipley & Jewe, 2014).
Bargaining Power of Suppliers
Bargaining power of suppliers is very low in the UK chocolate industry, as there are so many
suppliers in the industry. Godiva has greater bargaining power in comparison to its suppliers. As
there are number of suppliers in the industry, so that organization can purchase raw materials at
lower costs and in the bulk.
Threats of New Entrants
For Godiva, the threat of new entrants is low as there are so many organizations, which are
already well-known and well-established for their products and services. These firms consist of,
like; Mars, Ferrero, Cadbury, Nestle and some other international brands (Meissner, 2012). It
creates a barrier for entry to start a new brand or company. Moreover, another barrier is
requirement of high capital investment in the initial phase of start-up.
Threats of Substitutes
Threat of substitutes is moderate for Godiva in United Kingdom. In the country, supermarkets
are trying to imitate the famous chocolates and offering their own brands in the stores at
comparatively lower prices. Moreover, confectionaries have been brought various gift packs and
snacks. Thus, there is a number of substitutes, which exist in the market, like; beverages, chips
etc. But, still Chocolate products cover higher share than its substitutes as people can preserve
them easily.
Internal Analysis (VRIO Analysis)
Internal analysis of an organization can be conducted by using VRIO analysis. VRIO analysis is
a strategic tool that is practiced to determine that which capabilities and resources of the
company are more useful for its competitive advantage and power (Managementmania, 2016).
This consists of the resources and capabilities that have different characteristics of VRIO, like;

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Valuable, Rare, Inimitable and Organization. Below-given table shows the VRIO analysis of
Godiva in UK.
Resource/Capabilities Valuable Rare Inimitable Organization
1. Tangible Assets:
 Financial
Resources
 Physical
Resources
 Technological
Resources
 Human
Resources




-
-
-

-
-
-





2. Intangible Resources
 Copyrights and
patents
 Innovation
Resources


-
-




Valuable
Resources of an organization are valuable if they assist the companies to enhance supposed
customer value. There are various resources, which are owned by the company and owned by
Godiva. Physical resources of Godiva include raw materials, machinery, ice-cream, stores etc.
The above table shows that all the resources of Godiva are valuable as company is purchasing
these resources on a higher value and these are supporting the organization in increasing
customer value and satisfaction.

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Rare
This component of VRIO analysis indicates that how limited and rare are the resources. At
Godiva, there is only resource, which can be considered as rare, like; human resources. The
company has several people in its team, who have patented a lot of their products and services,
hence making sure significant competitive advantage for Godiva (Nagle, Hogan and Zale, 2016).
Inimitability
Organizations, which have rare, valuable and expensive to copy resources can attain significant
competitive advantage. Godiva is offering the premium and luxury chocolates, so imitation of
resources is significantly low. The company is trying to sustain its market share with the efforts
in marketing and research and development process. The organizations cannot copy its resources,
like; copyrights, patents and innovations of organization.
Organization
A company must organize its processes, systems, policies, management, culture and
organizational structure to become able to realize the capacity of its rare, valuable and inimitable
resources and capabilities. By this only, an organization can attain a significant competitive
advantage (Peteraf, Gamble and Thompson, 2014). At Godiva, all of the resources are assisted
by existing systems and management and organization can use the resources properly. Godiva’s
priority has always been to carry the best and most innovative chocolates to the people that make
difference from its competitors.
Strategic Directions (Bowman’s Strategy Clock)
Strategic clock of Bowman is a model, which discovers different options for strategic direction,
i.e. how the products and services of an organization should be positioned and directed in the
market to provide it competitive position in the industry (Thompson & Martin, 2010). This
strategy clock assists in understanding different alternatives of how a company can position its
products on the basis of two dimensions, i.e. perceived value and price. Strategic clock for
Godiva is explained below;