MANAGEMT 7044 Strategic Management : Analysis of Peru and Mexico
You are a strategic management consultant commissioned to undertake a supply analysis of the world cocoa industry.
You will carry out an analysis and summary of the Côte d'Ivoire, Indonesian and Dominican Republic cocoa production situations inclusive of a PESTEL.
You will carry out an analysis and summary of the Peru and Mexico cocoa production situations inclusive of a PESTEL.
You will carry out an analysis and summary of the Brazil and Cameroon cocoa production situations inclusive of a PESTEL.
You will carry out an analysis and summary of the Ghana and Nigeria cocoa production situations inclusive of a PESTEL.
2) You must choose one of the firms from the points below and provide appropriate strategic recommendations with reference to at least five (5) peer reviewed academic journals:
You have been commissioned by Barry Callebut to assess and report on the factors contributing to the impending 15 year chocolate production shortage. This report should include a synopsis of the group, its holdings, current market position, and Five Forces Analysis.
You have been commissioned by Cargill to advise on strategy to mitigate the threatened 15 year cocoa shortage and ensure the group maintains an aggressive and competitive posture. This report should include a synopsis of the group, its holdings, current market position, and Five Forces Analysis.
You have been commissioned by Mondelez to provide an exposure analysis to the world's growing cocoa shortage. This report should include a synopsis of the group, its holdings current market position, and Five Forces Analysis.
You have been commissioned by Hershey to provide an exposure analysis to the world's growing cocoa shortage. This report should include a synopsis of the group, its holdings, current market position, and Five Forces Analysis.
Answer:
Introduction:
Very few are there in the world who does not have any passion for having chocolates. Be it any marriage ceremony or joyful events, chocolates are an integral part of such occasions. In spite of having potential harm for the health, chocolate has successfully influenced a mass number of people across the globe. However, the number of supply is reducing due to poor farming methods. It has all created a sort of panic into chocolate lovers (Afoakwa 2014). This assignment tries to bring the production problem in some of the leading nations of world by conducting a PESTEL analysis. It also describes the scenario in Cargill Group, which is one of the leading companies in cocoa industry.
PESTEL analysis of Côte d'Ivoire, Indonesian and Dominican Republic
|
|
Ivory Coast |
Indonesia |
Dominican Republic |
|
Political |
· Civil Wars · Child Slavery |
· Quality of production · No solution for pests infection |
· Unorganized producers · Lacks in bargaining power |
|
Economy |
· GDP is high · Largest exporters of cocoa |
· Challenged by international exporters · Involved in direct selling with Cargill, Olam and others |
· Investments problem · Less commercialization of the production |
|
Social |
· Developed as a location that has 20% of its population in the production · Workers are from neighbouring countries such as Liberia, Guinea |
· Farmers are efficient that has positioned the country as one of the largest producer |
· Ageing population of farmers · Predecessors are not interested in cocoa farming |
|
Technological |
· Infrastructure is good · Education system is supportive for the advancement of technology in the production |
· Good infrastructure for the logistics management |
· Technical management of harvest is incapable |
|
Environmental |
· Depends heavily on agriculture · Dominant cash crop production |
· Farmers are the backbone · Local traders do collect beans from these farmers |
· Availability of small cocoa plantations · Availability of land to support harvest |
|
Legal |
· Governments are active in bringing relief from the civil wars |
· Government is supportive · No threat for price controls · Trade license is easy to avail |
· Majority of farmers lack legality in land titles |
Table 1: PESTEL analysis
Source: (Created by Author)
Ivory Coast is suffering of civil wars that are one of the problems for the cocoa production; however, the government is active in bringing peace. The infrastructure of the production and the technological involvement is also supportive (Paschall and Seville 2012).
International exporters challenge Indonesia but it has supports from the well-established logistic management and the government policies. Moreover, it has no tensions for price hike and trading license (Minifie 2012).
Dominican Republic is suffering of organized production, technological advancements, legal adherence and many more (Schwan and Fleet 2014).
PESTEL analysis of Peru and Mexico
|
|
Peru |
Mexico |
|
Political |
· It has supports for having diverse relationships with leading economy in the world |
· Engagement of the Federal Government to facilitate more supportive designing for the production |
|
Economy |
· Investment flows, good relations with leading countries in economy |
· Devoid of local production · Most of the productions take place in Tabasco |
|
Social |
· Shares a long relationships with the cocoa production |
· Majority of farmers have opted an alternative of cocoa for earning high profit |
|
Technological |
· Technical advancements have made this possible to add more flavours to cocoa such as organic cocoa |
· Lacks in technological advancements · Lacks in supportive infrastructure for the production of cocoa |
|
Environmental |
· Environment is harvest friendly · Given place to organic cocoa |
· Climate is not favourable for the production |
|
Legal |
· Supportive government rules that supports manufacturing of cocoa and export |
· Government is supportive but climatic problem is stressing it to rely on neighbour countries for the production
|
Table 2: PESTEL analysis
Source: (Created by Author)
Peru is developing country, which has ample supports from the government. It is transforming the chances into some different forms of cocoa production such as organic cocoa (Joel et al. 2013).
Mexico has supports from the government but a climatic problem in the country has forced it to rely on neighbouring countries for the cocoa production (Giacometti, Joli? and Josi? 2015).
PESTEL analysis of Brazil and Cameroon
|
|
Brazil |
Cameroon |
|
Political |
· Imported chocolate is less consumed · It is expensive |
· Poor community · Less knowledgeable farmers |
|
Economy |
· Among the top four producers of cocoa · Growth of 10% per year |
· More than 75% of the population are cocoa farmers · Financial crunch |
|
Social |
· Among the top consumers of chocolates in the world · Export of cocoa is less because of huge demand in the local country |
· Lack of knowledge of all the processing in the cocoa production |
|
Technological |
· Greenhouse gases · Family farm production · Import is low to be cost effective |
· Lacks in technological advancements |
|
Environmental |
· Climate is favourable |
· Lack of pesticides · Lack of warehouse |
|
Legal |
· Government is supportive · Allowed the addition of fats to make it cost effective and appealing |
· Lack of solution to the poverties, which is affecting the curiosity of farmers towards the cocoa production |
Table 3: PESTEL analysis
Source: (Created by Author)
Brazil is technically advance and has supports from the government that have all made this possible for the country to become one of the best producer of cocoa in the world (Spaargaren, Oosterveer and Loeber 2013).
Cameroon is deprived of solid proof solution to the poverties that is affecting the morale of farmers and the cocoa production (VERTER 2016).
PESTEL analysis of Ghana and Nigeria
|
|
Ghana |
Nigeria |
|
Political |
· It has all the supports on several things such as land, insecticide, labour, fertilizer and many others |
· Many of cocoa farms are developed such as Bonny, Calabar, Ota and many others
|
|
Economy |
· Main crops of the country · Second largest cocoa exporter |
· Leading agricultural export of the country |
|
Social |
· Main agricultural export of the country · Harvest process is one of the most organized commodities in the world |
· Farmers are encouraged with the set up of different farms by the government |
|
Technological |
· Inception of cocoa marketing board to control the industry |
· Export is handled by few farms · Low scale farmers are involved in farming |
|
Environmental |
· Forested areas are cultivated where rainfall is maximum |
· Harvest is done in regions that have high temperatures and scattered rainfall |
|
Legal |
· Supports from the government in the form of harvest infrastructure and availability of pesticides and fertilizers |
· Liberalization of marketing and trade of cocoa |
Table 4: PESTEL analysis
Source: (Created by Author)
Ghana is the second largest exporter of cocoa, which has ample of supports from the government and the local farmers. The technological advancements are serving the foundation of its success in the country (Montet and Ray 2016).
Nigeria is benefitted from the government move to establish many small farms to facilitate the production of cocoa (Varzakas and Tzia 2015).
Cargill Group
The Company is operating in 70 countries across six regions such as Africa, India, Asia Pacific, North America, Europe, Middle East and Latin America. In India alone, it operates in several sectors such as cotton, sugar, food products, edible oils and many more.
Its holdings
It owns many companies across the globe of which five are the most important that is as follows (Clay 2013):
- Cargill Ocean Transportation
- Truvia
- Diamond Crystal Salt
- Cargill Cotton
- Cargill Chocolate and Cocoa
Current market position
The Cargill is the largest private companies in America, which is winning the top spot for many years.
Five Forces Analysis
|
Industry Rivalry · ADM Company · Ag Processing Inc · Tate & Lyle · Kerry Group · Ingredion Incorporated
|
Power of Buyers · It is moderate · Switching cost is low · Numerous options of buyers are there |
|
Power of Suppliers · It is also moderate · Many suppliers are available |
Threat of New Entrants · It is low · High capital is needed to start up the business · Wide range of products are a challenge to the new entrants |
|
Threat of Substitutes · It is moderate · Peru has already come up with its alternate such as organic cocoa · It is receiving a good appreciation from the customers |
|
Table 5: Five-Force Analysis of Cargill
Source: (Created by Author)
Strategies for the Cargill Company
- To acquire other companies to enhance the global appeal
- Marketing needs to be done aggressively
- Needs to switch to different suppliers to have cost effective production
The Cargill Company needs to acquire different companies in different parts of world may be in those parts, which are a rich producer of cocoa such as Ivory Coast, Ghana, Indonesia. This would help in availing cocoa in large number with the help of local companies. It needs to conduct marketing aggressively to arouse the curiosity of customers towards its well-being. Switching to different suppliers would provide a cost effective production of cocoa, which is important to have a good profit margin (Stewart and Amerine 2012).
Conclusion:
Injustice payment to the farmers who are responsible for the harvesting of cocoa is the one problem that is warning the shortage of cocoa in the future ahead. To mitigate the issue, it has become important for the local governments of different countries to step into the matter. The farmers are required to pay for their hard work.
References:
Afoakwa, E.O., 2014. Cocoa production and processing technology. CRC Press.
Clay, J., 2013. World agriculture and the environment: a commodity-by-commodity guide to impacts and practices. Island Press.
Giacometti, J., Joli?, S.M. and Josi?, D., 2015. Cocoa processing and impact on composition. Processing and impact on active components in food. London/Waltham/San Diego: Academic Press. p, pp.605-12.
Joel, N., Pius, B., Deborah, A. and Chris, U., 2013. Production and quality evaluation of cocoa products (plain cocoa powder and chocolate). American Journal of Food and Nutrition, 3(1), pp.31-38.
Minifie, B., 2012. Chocolate, cocoa and confectionery: science and technology. Springer Science & Business Media.
Montet, D. and Ray, R.C. eds., 2016. Fermented Foods, Part I: Biochemistry and Biotechnology. CRC Press.
Paschall, M. and Seville, D., 2012. Certified Cocoa: scaling up farmer participation in West Africa. Case Study Series, New Business Models for Sustainable Trading Relationships, 28.
Schwan, R.F. and Fleet, G.H. eds., 2014. Cocoa and coffee fermentations. CRC Press.
Spaargaren, G., Oosterveer, P. and Loeber, A. eds., 2013. Food practices in transition: changing food consumption, retail and production in the age of reflexive modernity. Routledge.
Stewart, G.F. and Amerine, M.A., 2012. Introduction to food science and technology. Elsevier.
Varzakas, T. and Tzia, C., 2015. Handbook of food processing: food safety, quality, and manufacturing processes. CRC Press.
VERTER, N., 2016. Cocoa export performance in the world’s largest producer. Bulgarian Journal of Agricultural Science, 22(5), pp.713-721.
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