Cote d'Ivoire, Indonesian and the Dominican Republic Cocoa Production and PESTEL - Case Study Example

STRATEGIC MАNАGЕMЕNT Name: Course: Professor: University: City: Date: Strategic Mаnаgеmеnt Côte d'Ivoire, Indonesian and Dominican Republic Cocoa Production and PESTEL Cocoa production in Côte d'Ivoire is among the major economic activities that contribute about 30 percent of the world’s cocoa production. The total crop produces constitutes about 1,448,992 tones. Cocoa produced in Côte d'Ivoire is exported to high-end retail and wholesale companies such as Nestle and Cadbury. Smallholder farmers employ unique farming concepts and efforts that ensure all the cocoa seeds are harvested when just the enough number is sufficient for production and export (WorldAtlas 2017). The farming produce constitutes approximately two thirds of the country’s economic benefits that are redirected to improving diverse concepts of the nation such as transport. Prices for cocoa production have been fluctuating over the years recording a difference in the financial and investment sectors. Based on the PESTEL analysis, legal factors including health, safety, employment regulations and equal employment opportunities have been violated considering the increased number of children employed under hard labor rules. In addition to harsh labor conditions, child laborers on the Ivory Coast often do not receive any education therefore derailing the social factors. Indonesia has become a competitive nation to Côte d'Ivoire with the close adaptation of the production and manufacturing elements. It is the third largest producer of cocoa products therefore generating about 849,875 tons in a year (WorldAtlas 2017). The Sulawesi island contributes approximately 75 percent of the nation’s cocoa that is exported in terms of raw beans. To improve the amount that is exported, the government is working to stimulate national value-added processing industries to process cocoa beans. However, based on the PESTEL analysis, it is likely that the production levels of the country are interfered with the pod borer insect. It forms a significant environmental issue that often damages the cocoa trees. Diverse environmental aspects that are evident include the possibility of seasonal floods. The Dominican republic has been identified among the companies that produce chocolate products ethically. Forests in the republic cover the cocao plants ensuring that organic cultivation may take place. To manage its overall produce, the republic ensures that environmental sustainability is ascertained that will accelerate continuity (WorldAtlas 2017). After cultivation, the farers dry the beans and expose them to fermentation. However, this process has been associated with increased challenges considering that the tome stages oxidize and ferment at different rates. During the roasting process, the cocoa beans often produce different tastes for the chocolate. Similarly, it has focused on the Fairtrade-certified cocoa production that includes products vetted by global trade companies to ensure favorable farming practices. This affirms the conformance to PESTEL requirements environmentally and legally. Peru and Mexico Cocoa Production and PESTEL Peru and Mexico are among the major producing nations of cocoa. The growth of the product in the nations has developed significantly to reflect positive levels of the income that is acquired from the production and sale of cocoa. In Peru, the prevalence of white cocoa has become a force to reckon with, as the nation has been able to sustain international sales in the recent years. The White criollo cacao beans are grown mainly in the north of Peru in the region near Piura. Arguably, economists and agriculturalists have identified that Peru is one of the largest producers of Cocaine with approximately 60, 000 hectares being used for production (WorldAtlas 2017). It produces about 340 tones of the product. Mexico on the other hand focuses highly on investing in diverse brands of the product by funding approximately 37,000 producers. Theobroma cocoa trees that grow in the Amazon river basin are the major cocoa products in Mexico. A PESTEL analysis of the two nations offers extensive insight on why the production and distribution as well as sales of the cocoa products have been limited. Cocaine produced in Peru is often limited by vicious competition over agricultural land. Limited environmental resources such as land often interfere with the ability of producers, farmers and manufacturers to reap desirable of the produce (WorldAtlas 2017). Similarly, the type of coca planted in the regions form the macroeconomic factors that affect the sale o f popular cocoa products in the nation. An indifferent nature of both products in terms of price and quality affect the ability of the farmers and producers to enjoy the benefits. Environmental factors in terms of pests and diseases often affect the Mexican cocoa produce despite the identification of rather resistant crops. Nonetheless, Peru and Mexico are likely to yield more from intensified programs that concentrate on countering such challenges. Brazil and Cameroon Cocoa Production and PESTEL Cocoa in Brazil is produces in three major regions. The state of Bahia generates about 95 percent of the nation’s cocoa while the Amazon Basin and the Espirity Santu produce 56, 000 tones and 10,000 tones respectively. Although Brazil produces a significant amount of high quality cocoa, they import a larger amount of the product displaying a lacking element in their operations. With the presence of unique tree features that are able to counteract any diseases and displayed greater genetic diversity than the previously known hybrids, Bahia was able to maintain its production level. However, in the recent years, Brazil has recorded a reduction in cocoa production and the government expects it to drop higher by 15.7 percent (WorldAtlas 2017). The economic and technological factors involved are among the PESTEL elements that control the production of cocoa. Cameroon is among the West Africa nations that produces more cocoa than other world regions. It grows over 275,000 metric tons of cocoa through the farmers in the diverse locations of the nation (WorldAtlas 2017). To maintain such a serene level, the country ensures that they maintain sustainable practices through training the farmers on desirable methods that would ensure economic growth. Profitability and productivity are the core aspects that the government considers while implementing diverse programs. PESTEL economic concepts are largely employed in this case to ensure that the sector’s macroeconomic factors are maintained. Labor cooperatives have been designed to control the legal elements in the employment sector. However, because of poor management, Cameroon has been unable to maintain the quality of its cocoa products as well as counteract the environmental challenges. Scarcity of land implies limited ability to produce products therefore implying failure to meet the required demands locally and internationally. Ghana and Nigeria Cocoa Production and PESTEL Cocoa production in Nigeria is an opportunity that the government and other investors have highly considered as they seek to elevate the country’s economy. It contributes largely to the export volumes within the country rendering it fourth among African cocoa producing nations. In Nigeria, the cocoa trees often grow with areas that have relative distribution of rainfall as well as high temperatures (WorldAtlas 2017). Initially, the seeds were grown in nurseries and later transplanted to the desirable locations. Recently, the development of technology, elevated demand, increasing global prices and availability of resources, the nation is able to produce enough cocoa for local and international use. Nonetheless, the PESTEL elements that are visible in this country include labor inequality particularly within the farms. Payment procedures and allowances are rarely offered to en and women who perform similar tasks. Different from Nigeria, Ghana produces cocoa beans and is the second largest processing nation. Its production accounts for just under a sixth of the country’s gross domestic product relaying its relevance. It contributes about 835,466 tones of the product. In the rainforest areas, the farmers are able to cultivate desirable growth with the availability of land, labor, fertilizer, insecticide and agricultural equipment (WorldAtlas 2017). Most of the farms are owned and managed by the farmers therefore implying lack of corporate control. Based on the popularity of the quality product in Ghana, it is likely that economic factors often affect the ability to accrue economic wealth. The cost of the product in Côte d’Ivoire is significantly higher leading to cases of smuggling interfering with the costs. Mondelez Exposure Analysis to the World's Growing Cocoa Shortage According to Mondelez, the increasing demand for chocolate products has created controversy among the cocoa producing nations. Such an increase in demand has been permeated with a decrease in production and processing levels therefore becoming an issue of debate globally (Wexler, 2017). Mondelez produces Oreo and Cadbury products has considered offering training to cocoa farers across different nations. As part of the sustainability program, the company intends on educating the farmers regarding spacing seedlings, applying fertilizer and pruning trees. The company also joined a plea to share data that will reduce the increasing costs of chocolate products from 40 percent (Ford et al. 2017). Mondelez International, Inc. is among the multinational companies that deal with food and beverage products. With the headquarters in Chicago, the company deals with chocolate, biscuit and confectionery products. The major brands that the company deals with include Oreo, Chips Ahoy and Cadbury. Mondelez considers its products rich in heritage and available in the different countries. Founded in 1923, the company has continued to maintain top-notch delivery of dairy products acquiring a variety of smaller organizations (Kruschwitz 2012). Similarly, to ensure that the consumers understand the importance of the brand, Mondelez concentrates on collaborating with the community to promote sustainable practices in the delivery and production of their chocolate products. Concepts such as compliance and integrity are factors that Mondelez values while delivering to the diverse consumers. In 2016, Mondelez International, Inc. was ranked 133 among the nations that sell chocolate and snack products. It recorded a market cap of $65.7 billion with sales amounting to $29.64 billion. Recently, the company was ranked 52 among the most innovative and sustainable companies and 124 in market value (Schaefer at al. 2017). In terms of revenue, the company concentrates approximately $29.64 billion as determined by Forbes. In terms of assets, the company maintains a competitive position recording $64.8 billion with profits of $7.3 billion. Such a position is accelerated by the influence it has in Latin America, Asia Pacific, EEMEA, Europe and North America. Based on the five-force analysis, the company faces increased threats of new entrant into the market because of the increase in demand and access to cocoa products. The large industry size creates an opportunity for the entry into the market. The threat of substitutes is created by the substantial differentiation in the products that the company deals in (Kruschwitz 2012). Cocoa products are changing as more companies try to counteract the challenging prices and resource accessibility by introducing a wave of products. Suppliers of processed beans also ensure they maintain elevated standards therefore stirring competition. The changing supply chain distribution also poses as a threat to the company since it creates likelihood of raising the bargaining power. The bargaining power of the suppliers on the other hand is limited since they have access to other products. References Ford, T., Neate, R., Branigan, T. and Saner, E. (2017). The cocoa crisis: why the world’s stash of chocolate is melting away. [online] the Guardian. Available at: https://www.theguardian.com/lifeandstyle/2014/nov/21/cocoa-crisis-world-chocolate-stash-melting-away [Accessed 28 Mar. 2017]. Top of FormTop of FormTop Kruschwitz, N., 2012. Why Kraft Foods cares about fair trade chocolate. MIT Sloan Management Review, 54(1), p.1. Schaefer, S., Agarwal, S., Gara, A. and Murphy, A. (2017). Mondelēz International on the Forbes Global 2000 List. [online] Forbes. Available at: https://webcache.googleusercontent.com/search?q=cache:_gIXqTpNDBMJ:https://www.forbes.com/companies/mondelez-international/+&cd=5&hl=en&ct=clnk&client=firefox-b-ab [Accessed 28 Mar. 2017]. Top of Form Wexler, A. (2017). Chocolate Makers Fight a Melting Supply of Cocoa. [online] WSJ. Available at: http://www.wsj.com/articles/chocolate-makers-fight-a-melting-supply-of-cocoa-1452738616 [Accessed 28 Mar. 2017]. WorldAtlas. (2017). Top 10 Cocoa Producing Countries. [online] Available at: http://www.worldatlas.com/articles/top-10-cocoa-producing-countries.html [Accessed 28 Mar. 2017]. Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Schaefer, S., Agarwal, S., Schaefer, S., Agarwal, S., Gara, A. and Murphy, A. (2017). Mondelēz International on the Forbes Global 2000 List. [online] Forbes. Available at: https://webcache.googleusercontent.com/search?q=cache:_gIXqTpNDBMJ:https://www.forbes.com/companies/mondelez-international/+&cd=5&hl=en&ct=clnk&client=firefox-b-ab [Accessed 28 Mar. 2017]. Bottom of Form Bottom of Form Bottom of For Bottom of Bottom of Bottom of Form Bottom Read More