Chocoban Ltd.
CHOCOBAN LTD.
Chocoban is a well-established producer and marketer of the finest boxed chocolate and was started ten years ago by two partners, Henry See and John Juan. Prior to their partnership, Henry was marketing vice-president while John served as comptroller in a candy company with national distribution. The two men agreed at the outset that Henry would handle distribution and marketing and John would look after production, accounting and company finances; overall planning and major decisions would be agreed upon by both.
The partners have decided to position the company product in the medium-high price range. They were successful in developing and selling a quality chocolate and enjoyed an edge over competition. Their single manufacturing plant served a densely populated market. With increasing customer acceptance, 20 retail outlets were opened. Until recently, growth seemed limited only by financial resources. In the past months, however, each partner unearthed information that raised concern to both. Reviewing costs, John discovered that production costs per kg of candy were rising with each new retail outlet opened. He realized that the company has outgrown the production expertise of the present management staff.
Henry’s revelation was even more disturbing. He noted that sales have begun to drop off in several of the stores. He found that in each instance, an aggressive competitor with a lower-priced line has moved into their territory. Meeting John, he observed, “People can’t taste quality any more. I feel strongly that we should develop a cheaper line as quickly as possible, to sell for around half our present price. We should cut our production of the premium line to half its present rate and use the extra cocoa beans for our new line.” John agreed to look into recipes, costs and schedule.
A week later, John met with Henry again, this time to report his findings. “Our kitchen has developed two recipes that we can make at a
Chocoban is a well-established producer and marketer of the finest boxed chocolate and was started ten years ago by two partners, Henry See and John Juan. Prior to their partnership, Henry was marketing vice-president while John served as comptroller in a candy company with national distribution. The two men agreed at the outset that Henry would handle distribution and marketing and John would look after production, accounting and company finances; overall planning and major decisions would be agreed upon by both.
The partners have decided to position the company product in the medium-high price range. They were successful in developing and selling a quality chocolate and enjoyed an edge over competition. Their single manufacturing plant served a densely populated market. With increasing customer acceptance, 20 retail outlets were opened. Until recently, growth seemed limited only by financial resources. In the past months, however, each partner unearthed information that raised concern to both. Reviewing costs, John discovered that production costs per kg of candy were rising with each new retail outlet opened. He realized that the company has outgrown the production expertise of the present management staff.
Henry’s revelation was even more disturbing. He noted that sales have begun to drop off in several of the stores. He found that in each instance, an aggressive competitor with a lower-priced line has moved into their territory. Meeting John, he observed, “People can’t taste quality any more. I feel strongly that we should develop a cheaper line as quickly as possible, to sell for around half our present price. We should cut our production of the premium line to half its present rate and use the extra cocoa beans for our new line.” John agreed to look into recipes, costs and schedule.
A week later, John met with Henry again, this time to report his findings. “Our kitchen has developed two recipes that we can make at a