Casdbury Case Analysis

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The Macro Environment

There were several factors that affected the operations of Cadbury. These were Political, Economic, Socio-Cultural, Ethical, Technological and Ecological aspects of its environment.

In relation to the Political aspect, the US Harkin-Engel Protocol demanded the involvement of all stakeholder groups in the industry to improve the child labor standards and to work toward a certification of cocoa harvested without slave labor (Chatterjee & Elias, 2007, November 27). This gave a direct impact to Cadbury as it meant that significant efforts be made to make sure that their raw cocoa beans were sourced from suppliers that did not use slave labor. The International Labor Organization’s Convention no. 182 was adopted to eliminate the worst forms of child labor (Chatterjee & Elias, 2007, November 27). This made an indirect impact to Cadbury since the issue on child labor were identified in the cocoa supply chain. As a customer, the company did not have a direct control over the cocoa farms. Therefore, it could not enforce working conditions. Also, the political tension along the ethnic lines of the country that produces cocoa beans (Chatterjee & Elias, 2007, November 27) gave an indirect hit to Cadbury. This was due to the corresponding instability in the cocoa bean prices that became the reason for the cocoa farmers to resort to cheap labor, worst child slavery.

During the boom stage of the cocoa market in 1970, the prices of cocoa climbed, which encouraged further planting of cocoa trees. In addition, during this period there is a flexible supply of migrant labor from adjacent countries, and plentiful land not already under cultivation. However, prices fell in the 1980s due to the surplus of supply over the demand for cocoa. Cocoa farmers addressed this price decline by reducing costs particularly in its labor. Most of them employed children and even turned to human traffickers for child slaves from neighboring countries (Chatterjee & Elias, 2007, November 27). This economic situation made an indirect hit to Cadbury, as it resulted to unethical practice, which was contrary to the company’s values and beliefs, and even placed the company’s reputation in a difficult situation.

As mentioned before, Cadbury’s membership to the Religious Society of Friends (Quakers) created a strong ethical value system in the organization which greatly contributed to its success. In addition, Media attention played an active role in the dramatic change in the industry. The eagerness of the press to get the latest biggest news and even their determination to get deep into the rural areas of the Ivory Coast handed them actual stories of child slavery (Chatterjee & Elias, 2007, November 27) that opened doors for the industry’s attention to social responsibility.

“Poverty as a product of social and economic inequality and insufficient educational facilities are two primary causes of child labor” (International Labor, 2002). Also, the tragic impact of HIV/AIDS pandemic has greatly aggravated the problem of poverty, particularly in Africa. Children who have lost one or both their parents to AIDS become child laborers, because they have to find work in order to survive. Other popular perceptions and local customs and traditions also play an important part in child labor, such as traditions that push poor families into indebting themselves heavily for social occasions or religious events, then relying on their children’s work to pay off the debt. The view that work is good for the character-building and skill development of children. The tradition that children are expected to follow in their parent’s footsteps in a particular trade, and to learn and practice that trade at a very early age (International Labor, 2002). These causes of child labor gave an indirect impact to Cadbury. The strong ethical values and reputation of Cadbury pushed it to make immediate and long-term solutions, and to become proactive and socially responsive to the needs of its environment. Lastly, pressures from the Non-government units such as the “Friends of Earth” and “Stop the Traffik” challenged the chocolate industry to become ethical in its actions.

The technological factor that greatly influence Cadbury was the purchase of the cocoa press in 1866. This allowed them to become the pioneer in selling “pure cocoa essence” (Chatterjee & Elias, 2007, November 27). This provided the company an advantage in the industry that became a turning point for the company towards its success. Another technological factor was the emergence of media devices like the television and newspaper. These tools were used to expose unethical practices in the cocoa supply chain. In effect, it became instrumental to the change in the way the chocolate industry manage its business nowadays. They are now more careful in their actions and became more socially responsive to their environment.

Ecological factors were also mentioned in the case, such as environmental degradation caused by Palm oil, deforestation in Indonesia and East Malaysia, use of pesticides on plantation, and forest fires. These were not proven to be directly connected to the company, or if connected were only at a minimal amount such as the Palm oil. However, the mere fact that these were being associated with Cadbury by a concerned group, such as the “Friends of Earth” using media and public protest meant that the company needed to respond quickly in order to protect its reputation. This provided a change in the organization’s perspective as far as its dealings with its suppliers are concerned. They realized that they were not immune from scrutiny. Hence, it called for the organization to ensure that all of their suppliers are working with their business interests (Chatterjee & Elias, 2007, November 27).

Lessons learned

Caring for the common good is very crucial for the success of every organization. This means that internally, companies must take into consideration the welfare of its employees. If the manpower are well taken cared for, efficient production becomes inevitable. This is in turn leads to positive bottom line for the company. Also, positive company values such as equality, hard work, democracy and cooperation can greatly contribute to the success of the organization.

Organizations must become proactive in learning all the aspects of its external environment. They should ensure that all these parts are working together, and are aligned with the firm’s values and standards, so its goals can be achieved. It is important to note that the organization is dependent to its environment, and that the different aspects in the environment such as the Political,