Big Chocolate and Its Impact

This assignment delves into the concept of 'Big Chocolate,' focusing on major multinational corporations like Mondelez (Cadbury), Mars, Nestle, and Hershey. It analyzes the industry's political and social influence while examining the effects of a unified chocolate market. The assignment draws upon various sources, including academic papers and company websites, to provide a comprehensive understanding of Big Chocolate's impact.

Running head: CASE STUDY
Case Study
Name of the Student
Name of the University
Author Note

1CASE STUDY
Executive Summary
The purpose of this report is to discuss on the case study regarding the Big chocolate. The big
chocolate is a industrial term that is assigned to the multi-national chocolate food producers.
According to the self-described fair trade proponents, that includes the Ghanaian cooperative
Kuapa Kokoo, the ‘Big chocolate’ companies are Mondelez, which owns Cadbury, Mars, Nestle
and the Hershey company. The discussion elaborates on a detailed examination and summary of
the Ghana and Nigeria cocoa production conditions comprehensive of a PESTEL. The report
also discusses the analysis of the Hershey group and the growing cocoa shortage with and the
Five Forces Analysis.

2CASE STUDY
Table of Contents
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
Discussion........................................................................................................................................4
1) Summary of the Ghana and Nigeria cocoa production.....................................................4
PESTLE Analysis........................................................................................................................5
Political....................................................................................................................................5
Economic.................................................................................................................................6
Social-......................................................................................................................................6
Technological..........................................................................................................................6
Legal........................................................................................................................................6
Environmental..........................................................................................................................6
2) Analysis to the world's growing cocoa shortage...............................................................7
Five Forces Analysis....................................................................................................................7
Threat of New Entrants............................................................................................................7
Bargaining power of the buyers...............................................................................................8
Bargaining power of the suppliers...........................................................................................8
Threat of substitute products and services...............................................................................8
Intensity of Rivalry among Competitors in an industry..........................................................8
Conclusion.......................................................................................................................................9

3CASE STUDY
References......................................................................................................................................10

4CASE STUDY
Introduction
The report discusses on the case study regarding Big chocolate. The big chocolate is the
business term that is allocated to the multi-national chocolate food producers. According to the
self-described fair trade promoters, that includes the Ghanaian cooperative Kuapa Kokoo, the
‘Big chocolate’ companies are the Mondelez, which owns Cadbury, Mars, Nestle and the
Hershey company. Big Chocolate also refers to the political and social effects of a unifying
industry. The merged buying enables the large cocoa users to handle noteworthy impact on the
economies and numerous of the poor African nations who rely on the cocoa production as a
significant factor of the foreign trade.
Task 1
Discussion
The discussion elaborates on a detailed analysis and synopsis of the Ghana and Nigeria
cocoa production circumstances inclusive of a PESTEL. The report also discusses the analysis of
the Hershey group and the growing cocoa shortage with and the Five Forces Analysis.
1) Summary of the Ghana and Nigeria cocoa production
In country of Ghana, cocoa is referred to as the king with the manufacture of the cocoa
accounting for just under a sixth of the country’s Gross Domestic product (Kumi and Daymond
2015). More than three quarters of the farmers of the country define themselves as the
smallholder farmer, which means that the cocoa farm is owned and sustained by the farmers who
live on that property. The high operational costs are taking a toll on the Ghanaian cocoa industry.
The small cocoa farmers from Ghana are smuggling their cocoa to the Ivory Coast where the

5CASE STUDY
cocoa is selling fifty percent more (Laven and Boomsma 2012). The reasons for the success of
the cocoa sector are the favorable prices. A range of the models estimate the sensitivity of the
production supply to the farm gate prices discover that the small-scale cocoa manufacturers in
Ghana and Nigeria have responded in a positive manner to the price incentives. There is
liberalization of the domestic cocoa marketing is also a factor for the success of the cocoa sector.
The internal marketing has become competitive in nature. The new buying system puts a steadier
stream of money in the hands of the producers that gives the farmers working capital to buy
manual labor and other inputs when required. The Cocobod maintains the quality of the cocoa.
The quality upholding comes at a cost that includes the cost of ensuring that the lower quality
beans are not mixed into the ones that are prepared for export and the costs of management. The
cocoa production is an agricultural manufacture activity that provides a high level of income in
the unit field. The amount of the capital that is invested by the manufacturers is also high when
compared to the other agricultural production due to the demand for labor force being high and
intense.
PESTLE Analysis
Political- Ghana had fallen victim to bribery and lawlessness after its independence and
hence despite being rich in the department of the resources it could not prosper much. There are
two distinct parties in which looks into the matters of the productivity of the country. There is
liberalization of the domestic cocoa marketing is also a factor for the success of the cocoa sector.
An assortment of the models estimate the sensitivity of the production supply to the farm gate
prices discover that the small-scale cocoa producers in Ghana and Nigeria have answered in a
positive manner to the price incentives (Srdjevic, Bajcetic and Srdjevic 2012).

6CASE STUDY
Economic- the exports of cocoa, gold and oil are the major returns generating resources
for Ghana and Nigeria. Cocoa and gold together account for around seventy percent of the
exports from the country. However, due to the heavy reliance on these commodities, which have
no value, addition to them makes the economy highly exposed and defenseless to the economic
distresss. For instance if the prices of any of these commodities fall down then the economy will
be hurt. The cocoa production reached an all high time between 2009 and 2010, but the reality
was that the two respective countries were unable to put into operation the modern and the
productive means of agriculture and the soil fertility that has been decreasing over the years.
Social- To persuade the different ethnic groups to blend the government has implemented
diverse policies. Nevertheless, there is poverty, the lack of education, diseases, vulnerable rural
livelihoods and difficult labor conditions.
Technological- The countries have shown tremendous growth in research and
development and have spent a major portion of their Gross Domestic product on relevant
activities. However, the science and technology needs to be developed.
Legal- the government of Ghana and Nigeria has embarked vigorous campaigns in
various forms to ensure a healthy workforce by the promotion of cocoa and its derivative
products. For maintenance of the reputation of the high quality of the cocoa the Ghana Cocoa
Board and the Quality Control Company Ltd. has been implemented for SPS related projects.
Environmental- The World Wildlife Fund had made an alignment with the NGO’s at
Ghana and Nigeria to preserve the forests and the forest life.

7CASE STUDY
2) Analysis to the world's growing cocoa shortage
Milton Hershey established Hersheys after his caramel company was a hit. In 1894, the
company introduced Hershey’s cocoa that was the very first product available to the public. Thus
the brand of Hersheys was born. Hershey is a member of the World Cocoa Foundation. The
company produces a variety of products that are chocolate and candy based (Beg et al. 2017).
The company has been criticized for not having programs to ensure sustainable and ethical cocoa
purchase (hersheys.com 2017). The company has none policies to produce cocoa that has been
devoid of the use of labor misuse and they have refused to make available public information
about its cocoa resources. As of August 24 the Hersheys Company it at the price of $105.52 with
a volume of 2,298,937. The Hersheys Food Corporation holds the top position is the U.S.
confectionary market. The name is identical with chocolate. The company operates in two main
divisions, Hersheys Chocolate North America and Hershey International, the latter exports the
products of the firms to over 90 countries. The company is renowned for its major candy brands
and also markets grocery products that are used for the purpose of baking. The global cocoa
production has been down in the recent years due to handful of factors that also includes climate
and crop failure while the demand has been on the rise. The cocoa bean shortage has resulted
from the plagues and cost the farmers around $700 million in losses each year and is a concern
for the Hersheys Chocolate, Mars and Incorporated who together produce three quarters of all
the chocolate products that are sold in the United States each year.
Five Forces Analysis
Threat of New Entrants- The threat of the new entrants is low due to the existence of
the economies of scale, difference in products, need for large capital requirements, lack of the

8CASE STUDY
distribution channels and regulations which are in place for the food manufacturers (E. Dobbs
2014).
Bargaining power of the buyers- The number of large volume of the buyer’s and the buyer’s
relatively low profits from the product increases the bargaining power of the buyers. It is low
because of the differentiated products in the industry and the presence of the switching costs and
the lack of backward integration.
Bargaining power of the suppliers- The bargaining power of the suppliers is decreased due to
the industry being an important consumer of the supplier group and the supplier does not pose a
threat of forward integration. The bargaining authority is reasonable to high as this supplier
group is concentrated. There are no substitute products and the importance of the supplier of the
supplier product to the industry.
Threat of substitute products and services- The threat of the substitutes are high in the cocoa
industry. The industry has to compete with other alternate cooking flavors as vanilla and lemon.
There should be competition in the retail arena also. The competition should also be with the
non-chocolate snacks and other alternatives.
Intensity of Rivalry among Competitors in an industry- The intensity of the opposition is
high. There are equally balanced contenders that are slowly growing and have high storage and
fixed costs and high exit barriers. These create the price wars, battles in advertising, new product
lines and higher value of the customer service in the chocolate and cocoa industry.

9CASE STUDY
Conclusion
Thereby, the report elaborates on a detailed examination and synopsis of the Ghana and
Nigeria cocoa production situations inclusive of a PESTEL. The report also discusses the
analysis of the Hershey group and the growing cocoa shortage with and the Five Forces
Analysis. The big chocolate is a commerce term that is allocated to the multi-national chocolate
food manufacturers. According to the self-described fair trade supporters, that includes the
Ghanaian cooperative Kuapa Kokoo, the ‘Big chocolate’ companies are Mondelez, which owns
Cadbury, Mars, Nestle and the Hershey company. Big Chocolate also refers to the political and
social effects of a unifying industry.

10CASE STUDY
References
Aneani, F., Anchirinah, V.M., Owusu-Ansah, F. and Asamoah, M., 2012. Adoption of some
cocoa production technologies by cocoa farmers in Ghana. Sustainable Agriculture
Research, 1(1), p.103.
Beg, M.S., Ahmad, S., Jan, K. and Bashir, K., 2017. Status, supply chain and processing of
Cocoa-A review. Trends in Food Science & Technology.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
hersheys.com (2017). HERSHEY'S | Products & Nutrition. [online] Hersheys.com. Available at:
https://www.hersheys.com/en_us/products.html [Accessed 25 Aug. 2017].
Kumi, E. and Daymond, A.J., 2015. Farmers’ perceptions of the effectiveness of the Cocoa
Disease and Pest Control Programme (CODAPEC) in Ghana and its effects on poverty
reduction. American Journal of Experimental Agriculture, 7(5), pp.257-274.
Laven, A. and Boomsma, M., 2012. Incentives for sustainable cocoa production in Ghana–
moving from maximizing outputs to optimizing performance. Amsterdam: Royal Tropical
Institute.
Lee, H., Kim, M.S. and Park, Y., 2012. An analytic network process approach to
operationalization of five forces model. Applied Mathematical Modelling, 36(4), pp.1783-1795.
Oluyole, K.A. and Taiwo, O., 2015. Socio-economic Variables and Food Security Status of
Cocoa Farming Households in Ondo State, Nigeria.

11CASE STUDY
Oluyole, K.A., Emaku, L.A., Aigbekaen, E.O. and Oduwole, O.O., 2013. Overview of the Trend
of Climate Change and Its Effects on Cocoa Production in Nigeria. World Journal of
Agricultural Research, 1(1), pp.10-13.
Onumah, J.A., Al-Hassan, R.M. and Onumah, E.E., 2013. Productivity and technical efficiency
of cocoa production in Eastern Ghana. Journal of Economics and Sustainable
Development, 4(4), pp.106-117.
Oyekale, A.S. and Oladele, O.I., 2012. Determinants of climate change adaptation among cocoa
farmers in southwest Nigeria. ARPN Journal of Science and Technology, 2(1), pp.154-168.
Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multicriteria
decision making based on SWOT/PESTLE analysis: a case study of reconstructing a water
intake structure. Water resources management, 26(12), pp.3379-3393.