RSM 222 Case Assignment Question A1 The chocolate industry is one with many players. There are many custom bar providers as well as big players within the industry. The direct result of that is very high rivalry between competitors within the industry. The internet provides customers with the ease of obtaining information about the various types of chocolate on offer from the many chocolate makers, and that will quite possibly lead to intense price competition between chocolate makers. The indirect result of having many players in the industry is high buyer power. Potential customers have many choices, and are unlikely to show much loyalty towards any chocolate maker. D.C. faces the problem of trying to not only retain its customers but also attract new customers. In the face of these industry forces, D.C. apparently tries to mitigate that by attempting to differentiate it's products from the others. It's strategy appears to be that of trying to create unique and customizable chocolate bars that are most probably uncommon in their current market (European-Styled chocolate bars in an American market), and speed of service. With their inability to compete with larger companies on lowering costs due to their smaller size and resulting lack of economies of scale, they aim to increase the willingness-to-pay of their customers with the novelty, flexibility and speed of delivery of their products. With their focus on the quality and variety of their products, the costs for each type of chocolate could vary significantly. They may also be charging higher prices compared to that of their competitors. Hence, it is critical that they obtain accurate computations with regard to their variable costs, namely their direct materials and direct labour costs instead of relying on estimates. There also is a need to take into consideration the cost of extra special