Management course project, consists of 3 Phases as described in the attachment. require thorough understanding of analysis requirements. In this part only Phase 1 & Phase 2 are required and due. Thus, you will be provided with an access to files for analysis report type and clear explanation of assignment requirement.READ AND STUDY THESE INSTRUCTIONS BEFORE YOU BEGIN. READ THEM AGAIN.

This individual case assignment assesses your ability to use the concepts, perspectives, and
analytical tools taught in the course to recommend strategic change to improve a firm’s
performance.

Your final output will be a professional quality executive report* addressing all aspects of
analysis and strategy formulation. You will apply the analytical concepts and tools provided in
the course to analyze the assigned firm, diagnose and prioritize strategic issues, and
recommend a course of action to address what you believe is the most important issue
affecting the firm’s performance over the next five years.

*Avoid writing too much. Strive to communicate clearly and fully, but with concise,
well-formatted text. For example, be sure you have clear organization and flow of
topics using section headers, tables, lists, bullet points, graphics, etc. Get to the point.
Keep the report focused on giving and supporting your conclusions, taking the reader
through your chain of analysis that leads to your final recommendation.

You will need to conduct adequate research to gather data for your analysis. Certainly, you
should start with the firm’s most recent Annual Report/10-K (available in Sakai). To
understand and account for the impacts of the COVID-19 pandemic, you should also compare
the current 10-K information with the results prior to COVID found in the firm’s 2019 1-K
report (also found in Sakai). Initial information about the external environment can be
gathered through the Ubalt library website from IBISWorld industry reports on the industry
(chocolate production – report 31135, and chocolate retailing – report OD5339). Be sure to log
into MyUB and then access this database through the library.

You will also need to research further into RMCF’s website, industry journals, trade
associations, popular business press, etc. It is expected that you will have a minimum of 6
additional different sources beyond the firm’s SEC reports and the IBIS resources mentioned
above. Use credible sources and properly cite (in-line citation style) your sources and provide
a reference list as an attachment to your report. Note that citing me or materials from this
course is not necessary or appropriate. Lack of citations/references and or inappropriate
citations will cost points. Research sources are for research data – you are to demonstrate the
ability to pull important data from these sources, analyze and synthesize it, and develop your
own conclusions as described in the course and the analysis templates that will be covered.
Reporting the conclusions and findings of others’ analysis is 100% unacceptable.
Repeat –

*DO NOT report other people’s analysis and conclusions. You
are to use data to work through the templates and other
analysis tools in your own brain. Be an analyst, not a reporter.

Once you have completed each of the analytical and diagnIntroduction

Dave & Buster’s Entertainment, Inc., has shown a troubling inability to capture and create

value over the past several years. Its issues stem from an inability to retain customers after stores

have been open for just one year. Revenue streams appear fine, despite slowing growth, but the

firm’s entire growth is based solely on a honeymoon period where new stores make 10-20% higher

profits in first years. The current strategy of continuously opening new stores, roughly fifteen per

year, is unsustainable and the growing losses in comparable sales will catch up with the firm.

Dave & Buster’s Entertainment, Inc., needs to shift from continuous growth to reinvestment

in its current stores. The reinvestment plan needs to feature a multifaceted approach to bringing in

new customers and driving return visits. Several steps need to be taken in order to realign the

economic environment with its strategic mission to lower the price point for customers to enable

higher volumes of customers. The fact that the average customer is in the 69th percentile of income

in America is not in line with its goal to be a one stop shop for all entertainment.

Firm Strategy

Strategic Orientation

Dave & Buster’s Entertainment, Inc.’s (hereinafter “D&B”) slogan “Eat Drink Play and

Watch” fully describes its product focus. (D&B, 2019). D&B has designed not only a bar and

restaurant but has also fit in an arcade. A D&B location serves food and beverages, including

alcoholic beverages, and offers sports-viewing experiences and arcade style games. Its primary

product category is entertainment more so than dining.

The Texas based business operates one hundred and nineteen stores in the United States and

two in Canada; however, a consultant has been hired to consider more international locations in

the future. (D&B, 2019). D&B customers are primarily between twenty-one and thirty-nine years

old with a moderate lean towards men. Additionally, it also markets to families with children and

teenagers. The average household income of a customer is $75,000 which is roughly 19% higher

than the average American household income. (U.S. Census Bureau, 2019). D&B’s target

customer is one who is interested in video and arcade games.

D&B has asserted themselves in three different markets: a restaurant, a sports bar, and an

arcade. D&B asserts itself as better or at least comparable to any other option in any of the three

categories, but with the bonus that a customer can engage in all three activities in one location. Put

simply, D&B “provides a multi-faceted customer experience that cannot be easily replicated at

home or elsewhere without having to visit multiple destinations.” (D&B, 2019).

Business Model

D&B owns and operates its one hundred and twenty-one retail locations throughout the United

States and Ontario, Canada. Its revenues are earned through the four retail components of “Eat

Drink Play aMGMT 790.WB Fa22 CAPSTONE CASE

Intro note:

The Sakai Files Directory folder for the Capstone case provides you with a detailed explanation of this project. You’ll also find the grading rubric for the final report. Remember there are two examples of full reports provided in the Files Directory. While these are from a slightly different assignment, and these are very good but not perfect reports, you may find these useful for understanding how the final report might look.

READ
the instructions very carefully before you begin anything. Read them again. This project should be done in three steps and each has specific parameters. Know what is expected and when and why.

THIS IS AN INDIVIDUAL ASSIGNMENT. You are not to collaborate and work in groups on this. This is also not a ‘research’ task. It will do you no good to search the Internet for existing case analyses and recommendations that you can ‘report’. Demonstrate YOUR ability to be the analyst. Your final report submissions will be processed through

Turnitin
. Any level of unreasonable plagiarism will, at minimum, cost you points as it demonstrates a lack of knowing how to do the work. Significant plagiarism may result in a ZERO grade, an F in the course, and reporting to the University. So…..don’t even copy and paste small bits! Use your own words.

On the final report submission deadline of December 7, I will distribute a short assignment for you to report back on your reflections and learning from the course. Nothing to do now…but just be aware of this as it has a value of up to 20 points toward your final grade.Sheet1

FIVE FORCES INDICATOR SHEET

Strong forces suggest Key Success Factors……

If the indicator is an underlying reason for a STRONG force,

to be successful in this industry, producers must….. (examples)

THREAT OF NEW ENTRANTS

1
Can new entrants compete effectively without having to build scale?

drive costs/prices down via economies of scale; drive up the costs to compete

2
Have buyers shown a low level of loyalty to existing producers?

increase customer loyalty

3
Are the costs of entering and competing relatively low?

drive up the costs of competing (marketing scale/scope for example)

4
Can new entrants easily get distribution and access to buyers?

work to lock up available distribution channels

5
Would buyers have low/no costs to switch to new entrants?

create switching costs

6
Does the industry seem to be growing and attractive to new entrants?

…can’t do anything about this

THREAT OF SUBSTITUTES

7
Are substitutes readily available and affordable?

…can’t do anything about this

8
Do substitutes offer a similar or superior cost/benefit solution?

deliver a superior value/benefit versus substitutes – differentiate

9
Can buyers easily switch to and learn to use substitutes?

create switching costs

10
Have buyers shown a willingness to switch to substitutes?

create switching costs / improve differentiation

BARGAINING POWER OF BUYERS

11
Can buyers easily switch between producers?

create switching costs

12
Have buyers shown a low level of loyalty to individual producers?

increase customer loyalty

13
Are there only a few large-volume buyers?

work to lock in buyers for long period of time; create volume/scale savings

14
Are purchases relatively large, infrequent, and important?

reduce perception of a large purchase…make it seem smaller (e.g. spread out)

15
Are producers’ goods pretty much the same (i.e. commodity-like)?

differentiate

BARGAINING POWER OF SUPPLIERS

16
Are most suppliers’ goods unique and differentiated?

differentiate

17
Is it difficult or costly for producers to switch suppliers?

negotiate for long-term deals to avoid frequent negotiations

18
Are there a limited number of suppliers or is supply limited?

enable ability to use broader range; lock in key suppliers long term

19
Does the supply account for a major portion of producer costs?

reduce dependency on key inputs as much as possible

RIVALRY AMONG PRODUCERS

20
Are there many rivals of about the same size and power?

…can’t do anything about this

21
Is the industry declining or experiencing slow growth?

…can’t do anything about this

22
Is it easy for buyers to switch between producers?

create switching costs

23
Have buyers shown a low level of loyalty to individual producers?

improve customer loyalty

24Klassic Kinetics – Strategy vs Tactics

STRATEGIC CHANGES
· Expand product scope by acquiring HF Games
· Change their value proposition to emphasize higher quality and premium aesthetics
· Change value proposition to retailers by giving them a higher margin structure
· Change business model – stop use of distributors and sell direct to retailers
· Enhance business model and value proposition by offering major retailer custom, private label programs
· * Although not specified, it’s fair to assume they might have also expanded their geographic market to include Europe to whatever extent HF had distribution channels there.

TACTICAL ACTIONS

· Change specification on plastic for higher quality
· Move production from Mexico to Taiwan
· Increase retail pricing position
· Implementing a sales incentive program for sales staff
· Adding more customer service reps
· Shifting ad spending
· Increasing trade show presence
· Revising their website
· Designing and promoting a new logo/identitySheet1

INDIVIDUAL CASE ASSESSMENT REPORT
MGMT 790

Fall 2022

TOTAL

GRADING RUBRIC

150

Fails to Meet

Meets

Exceeds

Missing
Expectations

Expectations

Expectations

wt

LOW
HIGH
LOW
HIGH
LOW
HIGH

SCORE

TOPIC

ANALYSIS OF THE FIRM
0.25
0
23
27
29
33
34
38

Appropriate use of tools and methods to adequately and correctly: (1) describe the firm’s strategy; (2) describe the firm’s most valuable resources, capabilities, and source(s) of competitive advantage; and (3) assess and describe the firm’s performance.

ANALYSIS OF THE ENVIRONMENT
0.25
0
23
27
29
34
35
39

Appropriate and correct use of process steps, concepts, and analytical frameworks to: frame and describe the firm’s industry, identify and describe broad environmental drivers of change, identify and describe competitive forces affecting industry performance, prioritize key success factors now and in the coming 3-5 years.

DIAGNOSIS
0.25
0
22
25
27
32
32
36

Both linkages of strategic alignment are assessed for the current and future state and key misalignment issues are identified. Causes and effects are connected to specify the performance implications of the key issues such that an argument is made to identify the one most important misalignment to address.

RECOMMENDATION/IMPLEMENTATION
0.15
0
13
15
17
19
20
22

Clear specification of one recommended strategic change to address the one priority misalignment issue is given. Multiple implemention principles and managerial levers are highlighted as relevant for successfully executing the recommended change and a summary forecast of expected improvement in performance is shown.

QUALITY, COHESION, COHERENCE
0.1
0
9
11
11
13
14
15

Quality – grammar, formating, word choice, and overall readability; Cohesion – all sections tie together and arguments build on prior information while avoiding side tracks, unnecessary information, and unsupported new directions; Coherence – wording is clear and usage of terms and concepts evidences accurate understanding and ability to communicate as a strategic manager.

1
0
90
105
112.5
132
135
150

TOTAL

60%
70%
75%
88%
90%
100%

0

0.6
0.7
0.75
0.88
0.9
1

90
105
112.5
132
135
150

Sheet2

Sheet3EXTERNAL ANALYSIS Reading and Template

In this stage of our analysis, our objective is to understand the major trends and forces that characterize the industry, also referred to as the product-market, in which our focal firms competes. This stage is all about the external environment – the context – and has NOTHING to do with our firm or any specific firm. Don’t let your thinking/focus fall back to the firm here…stay at the INDUSTRY level.

Why do we need to understand the demands and trends external to the firm? Because we must make an assessment of how well a firm’s strategy and internal characteristics align, or fit, with he demands of the market in which they compete. We must know how the character of their industry defines certain key success factors – things producers must have or do. We must also pay attention to how those characteristics may change over time, and more importantly what underlying broad trends will cause such change. By understanding these factors and forces, and by working to ensure our firm’s strategic choices and activities are in line with those variables, we can better achieve strategic alignment and competitive advantage. We can spot opportunities and threats, poor or old choices that need updating, as well as signals of major changes ahead that suggest we need to completely rethink our business.

Up until now, we’ve mostly talked about the firm itself. That is all ‘internal’. But the firm operates in a dynamic environment. It is useful to break this environment into two parts – the task environment and the macro environment.
You must step above thinking about your firm or the firm you are analyzing in external analysis. Focus on staying away from thinking at all about any individual firms.

The task environment is what we often call ‘our industry’. This is where the firm interacts with suppliers, customers, competitors, substitutes, etc. Everything here is interdependent, that is, a change in one segment affects the whole task environment system. This can also be thought of as the competitive environment for as you will soon see, all the players in this zone are seeking a share of the ‘value’ available from this market. Navigating the task environment is the core of competitive strategy and the related choices.

The macro environment is a level beyond just the focal industry. Here, there are conditions and forces of change that affect many industries and are virtually one-way influences, that is, firms can usually do little or nothing to change the nature and direction of such forces. These forces cause changes to the task environment over time. Thus navigating the macro environment is all about knowing when and how to adapt to keep up with such changes. Changes here can make once successful strategies and firms obsolete, can open doors for disruptive entrepreneurs to wipe out old dominant firms, and can make it a race among existing firms to see who can adapt most rapidly, efficiently, and effectivelInternal Analysis
1
‘Resource-based theory’ (RBT) offers the best explanation of why a firm outperforms others
Internal, firm-level differences #1
External, industry factors #2 (we’ll address later)
Luck, change, random effects #3
RBT – Firms have unique bundles of resources and capabilities…so we want to know the answer to:
Q: What is that a firm has or does that best explains its superior performance?

What is the purpose of internal analysis?
2
Defining a business in terms of what it is capable of is a better basis for formulating strategy than selecting a ‘position’
Creating, defending, and exploiting an internal competitive advantage is the primary path of sustainable performance
So, what is the firm’s source of competitive advantage – so we can defend, exploit, extend it?
OR… if doing poorly, what foundation can we build on to create CA?
OR….if no foundation, what specific res/cap should be acquired/developed to best create CA?

A framework for internal analysis
3
Identifying strategic resources
Always recall that we are not after an asset list – we are seeking to understand sources of competitive advantage
“Inputs to the production process”; ‘competitive assets’ possessed/available to the firm; all assets that can be drawn on when formulating and implementing strategy
Tangible; Intangible; Financial; Human
What we DON’T mean
Outcomes/things ‘achieved – customers; market share
Outcomes/things produced – inventory; product line

Resources are ‘things’, nouns – what the firm possess that can be used in the production and delivery of their products or services

A framework for internal analysis
4
Identifying strategic capabilities
Ulrich and Smallwood: the skills, abilities, and expertise of an organization
The ways (i.e. routines through which) people and resources are brought together to accomplish work.
Capabilities are things the firm does (processes, activities performed), does well, and does repeatedly.
Not what the firm achieves
Not “the capability to grow”
Capabilities describe what they DO that leads to the outcome
E.g. The capability to identify and develop attractive new retail locations
Whereas resources are things (nouns) capabilities involve verbs “…capability TO XYZ (e.g. innovate, identify, motivate, hire and train, design…”)

A framework for internal analysis
5
Identifying the underlying sources (actual or potential) of competitive advantage
Do we need to know ALL the resources and capabilities a firm possesses? – NO – recall our purpose
What make a resource or capability strategically valuable…which are sources of sustainable competitive advantage?

Sources of competitive advantage
6
Value, protected from erosion and imitation, durable
Barney –
V – valuable
Contributes to value creation or value capture
R – rare
Few if any rivals possess it
I – Inimitable
Difficult or costly to imitate
O – Organization
Of little value if don’t have means to exploit it

Prioritizing
7
Let’s refer to allKlassic Kinetics: Reinventing with Next Generation Leadership

Founded in 1978 by George Baker, Klassic Kinetics has successfully established a niche position in the kinetic (
involving motion) toy industry. Competitive pressures, though, have made it tough for the firm in recent years and growth in revenues and profits have been disappointing. In 2017, George handed over top management to his daughter Beth who had been with the company since completing her MBA in 2010. Starting as an accounts receivable clerk, Beth rose to be the firm’s controller, chief financial officer, and then chief operating officer. With nearly two years of transitioning into the top leadership position, Beth is now executing her plan to reposition Klassic for greater long-term performance in a much more competitive market.

Based on a handful of items George designed and built for his own young children, George started Klassic with a small line of wooden blocks and aluminum building sets. The brand evolved in the 1990s to emphasize a broad portfolio of plastic snap-together building sets designed to stimulate curiosity, creativity, and manual dexterity in toddlers aged 3-5. Product and packaging design is performed inhouse at their Baltimore headquarters. Manufacturing and packaging is performed through strategic alliances with two factories in Monterrey, Mexico. The core products are made of a mix of recycled plastic resins in order to keep costs, and prices, low. This supported Klassic’s historic market position as an affordable option for parents and educators with solid profit margins for specialty retailers who must compete with mass merchants such as Amazon and Walmart. Bulk-packaged products ship from the Monterrey factories directly to the company’s six regional distributors located across the continental United States (and one in Ontario, Canada). These distributors account for virtually all of Klassic’s revenues, with a small portion coming from the firm’s direct sales of slightly damaged and discontinued items which are sold through inventory liquidators (who re-sell such items to retail outlets such as Big Lots). The distributors, who handle multiple specialty product lines in the toy market, sell and supply Klassic’s products to roughly 300 specialty educational and preschool toy and supply retailers throughout North America. Klassic’s relationships with and service to the distributor accounts are handled by three regional sales managers. Support to the retailers is provided by the distributors.
Due to the severe competition in the toy industry, from intense price competition at the retail level and pressures from low-cost producers competing directly from Asia, Beth’s plan to jump-start the firm’s performance involves a great deal of change. She and her father know the risks, but they have decided the firm must change a great deal to survive and succeed.
The first move Beth made was to expand the company’s product breadth by acquiring BUSINESS STRATEGY TEMPLATE

MGMT 790 Fall 2022

Strategy
: In the broadest sense, a strategy is a plan (i.e. set of interrelated
choices) for achieving desired outcomes. The primary aim of a commercial firm is to achieve a desirable level of long-term economic performance.
Business-level (aka competitive) strategy is a plan to compete in a specific product-market. This contrasts with
functional-level strategies which are specific to the aims of a functional department (such as marketing or human resources) and
corporate-level strategy which is about how to best manage resource allocations across a portfolio of different business units competing in different product-markets.
Thus, for our purposes, a firm’s business-level strategy is a set of choices for delivering value to a market in a way to achieve sustainable (i.e. long-term) superior performance …
their strategy is how they intend to achieve lasting success
.

Long-term performance of a company or business unit is partly a function of

strategic alignment
. Ideally, all facets of strategy align and fit to customer and competitive demands. The internal choices and facets of a firm must also align. That is, the firm ideally possesses (and exploits) the resources and capabilities to execute their strategy in a distinctively attractive manner.

THEREFORE, before we can begin to identify ways to improve a firm’s long-term performance,
we first have to understand their current strategy….we need to clearly understand how they are currently trying to compete and succeed. We need to be clear on their Strategic CHOICES. We need to have a clear answer to questions such as:

· What do they sell? To whom do they want to sell? Where do they hope to sell?
· How do they position themselves to be uniquely attractive to customers?
· Through what channels will they deliver value and how do they transact business with buyers?
· What are the major sources of revenue? What is their ‘system’ for of making money?

To help answer these, we can use the following systematic and structured approach to identifying and describing firm business-level strategy:

First is what some call their
Strategic Orientation – WHAT, WHERE, TO WHOM, AND WHY:

1.
Define their PRODUCT FOCUS – Describe the

primary
product or service category(ies) the firm offers.

2.
Define their GEOGRAPHIC MARKET FOCUS – What is the extent of the geographic market in which they

intend
to compete (e.g. East coast, national, global…?).

Note that this is NOT the ‘location/site selection’ strategy of a retail business.

3.
Characterize their primary TARGET CUSTOMERS – Do they sell to consumers, businesses, governments? What are the primary characteristics that define their ‘target’ customer? (Example of inPERFORMANCE TEMPLATE

MGMT 790 Fall 2022

Improving long-term firm performance is the focus of strategic management. We can’t develop a plan to improve something if we first don’t understand that ‘something’!

As you should know from your prior courses in accounting and finance, HOW you go about assessing a firm’s performance depends on WHY you are doing it. That is, there is not just one way to assess performance…there are many. And you first must be very clear about why you are doing it and to what ends. For example, an accounting focus often seeks to compare performance against goals or budgets to report on specific achievements of what is desired or required. A finance perspective may emphasize ‘return’ measures to evaluate the efficiency of resource deployment. General management might even use a balanced scorecard approach to measure ‘operational’ performance. Your banker will assess your credit-worthiness.

For the purposes of Strategic Management, we are assessing the degree a firm is achieving sustained (and sustainable) competitive advantage. This is not an operational measure or an investment quality measure or an efficiency measure. It is all about assessing if the strategic choices and the deployment of actions and assets to implement those choices is well designed and executed. So let’s look at a simple way we can meet our objective here.

Performance (
effect) is largely a function of the quality of the firm’s strategic alignment and the degree to which they possess competitive advantages over their rivals (there is, we must accept, also a factor of chance and luck!). That is, the quality of a firm’s strategy, their ability to execute, and the degree those provide an advantage over rivals largely determines performance. As an
outcome variable, we can’t directly improve performance…we need to address underlying
causes of performance outcomes related to alignment or competitive advantage. Remember, we are

NOT
analyzing the firm with an investment or credit-worthiness perspective – we are using performance to assess the quality and competitive advantage of their strategy, business model, and overall strategic alignment (i.e. the quality of current strategic management).

You can look at many different metrics (i.e. measures or data points) to assess performance. Accounting measures are backward-looking, but they are based on standards so you can compare them to other firms and across time. Stock prices tell you about how financial markets assess the firm’s prospects for future earnings. Qualitative measures such as customer loyalty, employee satisfaction, and company reputation can also provide clues about the quality of a firm’s alignment and competitive advantages.

At the most fundamental level we need to examine accounting metrics because they are not subject to non-strategic influences (like stock prices) and because we can make clear comparisons to

STRATEGIC THINKING

Key Terms and Concepts

CRITICAL THINKING BEING ANALYTICAL
GOOD JUDGMENT RATIONAL vs. RATIONALIZING
STYLES OF THINKING LOGICAL ARGUMENTATION
PROBABLISTIC DECISION-MAKING STRATEGIC MANAGEMENT
COMPETITIVE ADVANTAGE FIRM AS (and in) A SYSTEM

This class is a capstone, integrative course to bring together all your prior studies about business and wrap them into a way of THINKING about business that is necessary for success – your individual success and the success of your firm or your employer. Specifically, we are talking about deliberate thinking, and

deliberate thinking requires a PROCESS for deriving conclusions, making decisions, and selecting among alternative choices.
We, of course, are going to focus on the application of such thinking and thinking processes in relation to a business enterprise. The concepts and methods, however, are also useful for other decisions and choices you must make in your life.

One flaw of human nature is that we tend to spend our intellectual capability RATIONALIZING to make the world around us fit what we believe to be true rather than BEING RATIONAL to objectively figure out cause-effect relationships and to evaluate the probability of our choices leading to desired ends.

This class attempts to develop your ability to break from human nature and your natural biases, heuristics (look that up), and logic traps. Instead, the aim is to help you become more analytical and make better decisions, recommendations, and choices. What we will cover are fundamental concepts and methods for good thinking and decision making. The methods presented are not the only ways or necessarily the best ways, but they are the most widely recognized principles and approaches. A great place to start your journey as a better business thinker.
—————– ——————————————–
Search the Internet for ‘how to be successful in business’ and you will get a LOT of tips and advice. But there is one underlying thing that underscores all those lists and tips and stories and advice:

making good and appropriate decisions

. Some things that influence your life are out of your control. For example: your parents; where and when you were born; how you were raised; were you received your primary education; etc. Your career success will, to some degree, also be affected by luck, timing, and being in the right (or wrong) place at the right (or wrong) time. There is, however, one key – even related to random luck and timing – that you can strive to control:
your decisions – – your choices on how you respond to things, what goals you choose, how you choose to behave and think, and what you pay attention to and prioritize.

A business enterprise (let’s call it a ‘firm’ just to be short) is really just a group of people doing things toward a common end result. Just as for individuals, the success or failure of a firm iMGMT 790

Diagnosis, Formulation, and Implementation of Strategic Change

The objectives of this final stage of our strategic management ‘project’ are:

· Identify the primary underlying cause of the most important performance issue that needs to be corrected (i.e. root cause analysis and prioritization)
· Identify the most appropriate change to make to remedy that causal factor and improve performance (i.e. selection and specification of a solution)
· Outline the important steps, considerations, and expectations of implementing that change (i.e. how to execute that solution and to what outcomes)

Step 1 – clarify the performance outcome target

Our aim is always to achieve, sustain, and improve competitive advantage. Recall that is defined as long-term, superior performance. What this basically means is we are seeking the one best way we can improve long-term performance in a way that is most sustainable. That means a strategic change, not just a quick tactical move like cutting costs or have a sales promotion.
So, narrow the scope of what ‘improve performance’ as a target means. That is, use your performance assessment work to conclude if the most important improvement to target is improved
value creation (growth rate) or
value capture (profitability). Which dimension of performance most needs attention? Keep it simple here…just pick one of these two targets. Do not try to solve anything yet!

Write a short statement that states your conclusion.

Example statements for Step 1:
· XYZ’s revenue growth rate is declining and is below industry average. To improve strategic performance, their
ability to create value must be improved.

· XYZ’s growth is acceptable but their profitability is below industry average. Specifically, their operating efficiency is inferior as indicated by their below average Operating Margin over the last three years. Their
ability to capture value, specifically in operating profitability, is the primary area to focus on toward improving long-term performance.

Step 2 – Summarize the variables in the strategic alignment model

Recall the fundamental model of strategic alignment in which performance is largely a function of the quality of overall alignment.

PERFORMANCE

STRATEGY
RES & CAPs
EXTERNAL

As you have already learned, a thorough analysis of each of the three aspects of alignment results in a set of primary conclusions. You’ve learned to prioritize the firm’s strengths/most valuable resources and capabilities, to specify the strategic choices that describe their competitive strategy, and to identify the key success factors and most significant change issues that shape the firm’s competitive environment. Now, get all those conclusions organized for analyzing cause-effect issues. Create an ‘all-in-one-place’ summary of your prior analysis steps. Summarize your conclusions from the previous templates about the firm’s internalTable of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM 10-K

(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2022

OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-36865

Rocky Mountain Chocolate Factory, Inc.
(Exact name of registrant as specified in its charter)

Delaware 47-1535633
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

265 Turner Drive, Durango, CO 81303

(Address of principal executive offices, including ZIP code)

(970) 259-0554
(Registrant’s telephone number, including area code)

Securities Registered Pursuant To Section 12(b) Of The Act:

Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, $0.001 Par Value per Share RMCF Nasdaq Global Market

Securities Registered Pursuant To Section 12(g) Of The Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Table of Contents

Indicate by check mark1

Corporate Strategic Management
Technology and Innovation

Business Strategy – summary
2
The Question: How to compete in one business – ‘competitive’ strategy within a single industry
Rivalry! – Similar goods/services to the same market
Single-path ‘strategic alignment’ concept

Corporate Strategy
3
Corporate strategy is about managing an enterprise with multiple business units, each having distinct business contexts and thus different business strategies
Organic – expanding into new arenas with new business unit
Not merely an extension of current unit’s strategy: Product Focus/Market Focus; topic is about a new business unit entirely
Inorganic – acquisitions of businesses in other arenas
Doesn’t matter if integrated or operated as distinct ‘entity’
The questions:
What businesses should we be in?
How do we make the whole more valuable than the parts (synergy…value-added)?
How do we optimize shareholder value?

Corporate Strategic Management
4
Porter article –
Portfolio management (selector; banker)
Restructuring (intervenor)
Transferring skills/competencies (integrator)
Sharing/Economies (integrator)

Two general modes of managing multiple units:
Financial Control
Strategic Control

Portfolio Management
5
What businesses should we be in and how to best allocate resources among them? Example:

Restructuring
6
Step into the business unit and intervene (“fix it”)
We can take business XYZ and do a better job of increasing performance than its current management
Transform via altered structure, strategy, etc.
Buy low…enhance performance, then retain or sell

Integrating skills and activity
7
The integrator approach relates to the concept of the value chain
Firm level
Industry level

8

…Transferring Skills
9
Synergies!
Related businesses – overlap/linkages in value chains
Caution – synergies are often ‘mirages’ (Goold et al)
Unrelated businesses – no value chain connections
Exploit a source of competitive advantage in business A
Take (transfer) our superior ability to do XYZ and leverage that in business B to enhance performance
What overlapping slice of the value chain is an opportunity

PepsiCo – expertise and supplier power in grocery channel; acquisition of Frito Lay…related distribution channel/customers
Honda – small engine expertise from cars to motorcycles, lawn equipment, small aircraft, robotics…related engineering/mfging

Sharing resources/capabilities
10
What slice of the value chain can we consolidate for economies of scale or enhanced efficiency?
Business A has excess distribution capacity
Business B has excess distribution capacity
Consolidate! – optimize unit A’s capacity and close B’s

Common rationale = ‘Back end’ consolidations – share HR, Finance, IT (staff/corporate functions)

Two general modes of managing multiple units
(Goold & Campbell, 1987)
11

Which best describes your firm’s approach?

Is diversification into entirely new arenas wise?
12
Porter: ETable of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM 10-K

(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2019
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-36865

Rocky Mountain Chocolate Factory, Inc.

(Exact name of registrant as specified in its charter)
Delaware 47-1535633

(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

265 Turner Drive, Durango, CO 81303
(Address of principal executive offices, including ZIP code)

(970) 259-0554

(Registrant’s telephone number, including area code)

Securities Registered Pursuant To Section 12(b) Of The Act:

Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, $0.001 Par Value per Share RMCF Nasdaq Global Market
Preferred Stock Purchase Rights RMCF Nasdaq Global Market

Securities Registered Pursuant To Section 12(g) Of The Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 1

Issue Diagnosis and Change Formulation

Assessing the quality of strategic alignment
2
CAUSE (problem)= misalignment
EFFECT (symptom/outcome)= the performance ‘condition’

You must clearly understand the root cause(s) of the condition to effectively formulate changes necessary to improve your desired outcome.

Performance is a function of….
3
Strategic Alignment and Competitive Advantage
We will focus on assessing strategic alignment; competitive advantage requires more time to compare/contrast against competitors. Our competitive advantage evaluation is partly accounted for in our relative performance metrics.
Our model of Strategic Alignment – we now need to assess the quality of alignment and identify Misalignments that help explain the ‘condition’ we are trying to address.

4
PERFORMANCE
Value Creation and Value Capture
STRATEGY

ENVIRONMENT
Key Success Factors
Drivers of Change
RESOURCES AND CAPABILITIES
Metrics (growth and profitability) and non-financial indicators
Strategic Orientation
Business Model Variables
Industry structure
PEST Analysis
5 Forces Analysis
Identify &
Prioritize Strengths/ Sources of CAdvtg

You’ve done all these components so far…
Now we need to assess the linkages between the components

Diagnosis Process steps – overview
5
Clarity on the aspect of performance that needs addressing
Evaluate Strategy –> Environment alignment (S-E)
Evaluate Res/Cap –> Strategy alignment (R/C -S)
Evaluate misalignments – link cause-effect relationships
Identify the one most critical misalignment issue*

Diagnosis
6
First – What is the condition we need to address? What is the ‘target’?
Our ‘dependent variable’ or outcome objective is PERFORMANCE
Dimensions: Creating and Capturing value
Ideally, upward trend and superior to industry
What is the main deficiency in performance? On what dimension is performance most below desired level…currently and into the future?
GROWTH – Value Creation? Or PROFITABILITY – Value Capture?
If Profitability, is the issue more about GROSS Margin or OPERATING efficiency?
Now we have a clearer objective of what we need to diagnose.

Strategy-External Environment alignment
7

Do each of the components of strategy align with the future (key DOC) KSFs of the industry?

Think through the alignment of each component.
Explain any weak or misalignments – what specific component is not aligned with what specific DOC or KSF

Resources/Capabilities – Strategy alignment
8

Do the firm’s resources and capabilities align with what is necessary to execute all of the components of strategy?

Think through the alignment of each component.
Explain any weak or misalignments – what specific resources and/or capabilities do not align well with the demands of which specific components of strategy?

Performance implications of the misalignments
9
For each of the identified misalignments, think through its implications on performance – connect Cause and Effect
Which misalignment Sheet1

FIVE FORCES INDICATOR SHEET

2. Overall Assessment

1. Assess indicators

of Each FORCE

Yes
NO*

(Strong, Weak, or Moderate)

THREAT OF NEW ENTRANTS

1
Can new entrants compete effectively without having to build scale?

2
Have buyers shown a low level of loyalty to existing producers?

3
Are the costs of entering and competing relatively low?

4
Can new entrants easily get distribution and access to buyers?

5
Would buyers have low/no costs to switch to new entrants?

6
Does the industry seem to be growing and attractive to new entrants?

THREAT OF SUBSTITUTES

7
Are substitutes readily available and affordable?

8
Do substitutes offer a similar or superior cost/benefit solution?

9
Can buyers easily switch to and learn to use substitutes?

10
Have buyers shown a willingness to switch to substitutes?

BARGAINING POWER OF BUYERS

11
Can buyers easily switch between producers?

12
Have buyers shown a low level of loyalty to individual producers?

13
Are there only a few large-volume buyers?

14
Are purchases relatively large, infrequent, and important?

15
Are producers’ goods pretty much the same (i.e. commodity-like)?

BARGAINING POWER OF SUPPLIERS

16
Are most suppliers’ goods unique and differentiated?

17
Is it difficult or costly for producers to switch suppliers?

18
Are there a limited number of suppliers or is supply limited?

19
Does the supply account for a major portion of producer costs?

RIVALRY AMONG PRODUCERS

20
Are there many rivals of about the same size and power?

21
Is the industry declining or experiencing slow growth?

22
Is it easy for buyers to switch between producers?

23
Have buyers shown a low level of loyalty to individual producers?

24
Is it difficult for producers to adjust production if demand changes?

25
Are producers’ goods pretty much the same (i.e. commodity-like)?

* Indicator questions are worded such that a “NO” indicates a weak force, i.e. that the force does not have a substantial

negative influence on industry profitability. SO – a “YES” is an indicator of a STRONG Force.




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