Case Name :      Theo Chocolate

Authors :           Michael Cummings, Gary Ottley

Source:              Babson College

Case ID:             BAB692

Discipline :        General Management

Case Length :    29 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Theo Chocolate, Inc. is a small start-up chocolate manufacturer struggling to establish brand recognition in the highly competitive branded gourmet chocolate segment. Theo’s unique value proposition, of being “the only organic, Fair-Trade, bean-to-bar chocolate factory in the United States,” drives its business. The company was started and operates under the premise that socially responsible business practices are cornerstones of its operations. Since its inception, Theo has built a loyal and growing following, especially in the Pacific Northwest region of the United States. Its first three years were spent building this customer base and forging a brand based on its value proposition and everyday business practices. However, despite steady improvements in all financial indicators, to date Theo had not been profitable – the company expected to break “into the black” in its fourth year. The case explores the challenges Joe Whinney and Debra Music (the Founder/CEO and VP of Sales and Marketing, respectively) face as they emerge from the first stage of the entrepreneurial venture. The key decision facing the company, and Debra in particular, is whether Theo can in fact afford to stay true to the strategy and value proposition that has defined its existence. It is trying to establish a unique brand in a marketplace that is dominated by large well-established competitors with significant resources at their disposal. It has not been profitable in doing so. The case provides students an opportunity to wrestle with very real issues that idealistic entrepreneurs face – compromising principles, brand-building, managing cash flow and planning for the future.