Godiva Europe

I. Introduction

Based out of Belgium, chocolate giant Godiva has built their business around an image of quality and luxury. Financial resources became abundant when Godiva was acquired by the powerful multinational Campbell Soup Company in 1974. Initially Godiva began as a Belgian company and branched out into the global market as opportunities allowed. Godiva International is comprised of three decision centers - Godiva Europe, Godiva USA and Godiva Japan - called the triadic enterprise.

A recent reorganization effort by Charles van der Veken led to an operating profit of 13 million Belgian francs although he inherited a 10 million franc deficit when he inherited his responsibilities as president of Godiva Europe. Despite a recent surge in operating profits, Godiva Europe faces some challenges in their home market as well as the global market. Sales and consumer reactions to recent advertising campaigns have been negative in Godiva's home of Belgium. The company faces a challenge in presenting a new face of the company to consumers who are very familiar, yet also very indifferent to distinguishing brand names in chocolate.

Godiva International is fortunate to be experiencing growth and positive reactions to the company's products in several markets around the world. The markets of Spain, Portugal, France, Japan and the United States appreciate and enjoy the quality that comes from the hand made chocolates by Godiva. However, these areas must be treated with care to ensure continued success.

II. Situational Analysis

To facilitate a discussion of the Godiva Europe internal and external environmental factors, the S.W.O.T. analysis will be used to help identify key issues presented in the case. The S.W.O.T. analysis provides information about a company's strengths, weaknesses, opportunities, and threats. Each component is outlined below:

Exhibit 1 - S.W.O.T. Analysis

Strengths Weaknesses

o Global leader of luxury chocolates

o High-quality product

o Strong leadership

o Company roots in Belguym

o Strong share of duty-free markets

o Belgian market is saturated

o Production capacity

o Consumer Behavior

o High production costs

Opportunities Threats

o Differentiate Corne Toison d'Or from Godiva brand

o Create image specific to each consumer market around the world

o Countries with expanding markets

o Production capacity

o Consumer apathy towards hand-made chocolates

o French franchisees

o Corne Port Royal

o Leonidas

Strengths

Global leader of luxury chocolates

Godiva is fortunate to have strong brand recognition. Most consumers associate the Godiva brand with high-quality luxury chocolates. Part of their huge success is due to the fact that the Godiva company was acquired by Campbell Soup Company in 1974. this acquisition, a wealth of corporate experience was infused into Godiva. In addition to the management experience needed to lead the company to success, Godiva also had financial stability with Campbell's support. These factors combined led Godiva to their position as global leader of luxury chocolates.

High quality product

Hand-made and hand-decorated chocolates distinguish Godiva in the global market from the ordinary chocolates purchased in department or discount stores. The company has always strived to maintain an image of luxury and the products sold around the world support this image.

Strong leadership

The reorganization initiative fronted by Charles van der Veken led to phenomenal increase in operating profit. Despite inheriting a 10 million Belgian franc deficit upon acceptance of his role as president of Godiva Europe, van der Veken led the division to an operating profit of 13 million francs within one year. Van der Veken also initiated the restructuring of Godiva into a retail network. As a result of this restructuring, van der Veken also has set a goal for Godiva stores in the Triad Countries to be achieve the desired image of the company through redesign and redecorating.

Company roots in Belgium

Belgium is known for a long tradition in the handcrafting of chocolates. Godiva was founded by Joseph Draps in the 1920s and introduced an assortment of luxury chocolates for which he had no name. The name Godiva was taken from the legend of Lady Godiva because of the international sound. Having roots in a country known for its hand-made chocolates gives Godiva a competitive advantage in the global market.

Strong share of duty-free markets

The international image of Godiva is sustained through these tax-free shops, mostly located in airports, throughout the world. Godiva's competitor, Leonidas, is not present in the duty-free markets which results in a significant increase in sales for Godiva. A significant share of Godiva sales is derived from these shops.

Weaknesses

Belgian market is saturated

Godiva's prestigious image around the world is not recognized by consumers in the country's home of Belgium because of the number of competitors in the region. Instead, the famous chocolatiers are seen more as an aging brand with little life left in the product life cycle. In addition to the market saturation, some European markets have reached a plateau in terms of chocolate consumption. In these same markets, consumers are extremely price sensitive to the cost of high-quality luxury chocolates.

Production capacity

Because the Belgian facility is not at full capacity, production for markets growing at a high rate can not be achieved. Empty space equals less income for the Godiva. Additionally, the Pennsylvania production facility in the United States is at full capacity and is unable to supply the needs of the U.S. market. To meet the demands of consumers in the United States,