Situation Analysis

for

"Cadbury: An Ethical Company Struggles to Insure the Integrity of Its Supply Chain"

The Case study highlights the challenges faced by the Cadbury including the backlash it received from
common public, media and US Government on the grounds of its suppliers, primarily Cocoa farmers
in Ghana and Côte d’Ivoire and Palm Oil Producers in Malaysia and Indonesia employing child slavery
as a major means.

This issue came to the notice of common public in 2001. But, the ground work on this issue was before
done by Britain’s Channel 4 where they claimed that 90% of the workers working at the farms are child
labours, including the trafficked one. However, the movement against abolishing child labour in
Chocolate industry gained momentum after the Knight riders ground report on child slavery in Ghana.

The challenges faced by the chocolate industry, primarily Cadbury can be divided into two categories
i.e., internal and external.

Internal challenges include; (1) Some executives of other chocolate manufacturing companies not able
to meet the 2001 protocols set by chocolate Manufacturers Association in agreement with all
stakeholders including respective governments, chocolate manufacturers, farmers. Within stipulated
timeline of 4 years. (2) Some chocolate manufactures not willing to label the chocolates which are
sourced from regions with slaves and poor working conditions on the grounds that this will in turn
depreciate the demand of raw material urging the farmers to rely more on slaved labours to further
lower the cost price. (3) Huge supplier base i.e., 40,000 suppliers to be directed to follow Cadbury
business ethics when it comes to child labour within a short span of 4 years’ time after they realised
that their realisation to track the working conditions at all raw material producing locations on being
targeted by NGO Groups after Palm Oil Protest (4) Cadbury, itself not admitting the report by Britain’s
Channel 4 report on child slavery in Ghana and Côte d’Ivoire.

External challenges include (1) the depression of demand of chocolate in 1990s leading to downward
slide in chocolate prices in the market. This led the West African farmers to employ cheap child labours
to ease down the cost of production of Cocoa. (2) Pressure from NGO groups, public and media on
abolishing the child labour at all levels (3) Relying on blame Game and not coming up with constructive
approach to tackle the child labour issue. This is evident by the fact that Côte d’Ivoire’s Minister of
Agriculture Alfonse Douaty blamed the depressing prices of chocolate. (4) In audits and inspection, it
becomes difficult to identify if the employed children are slaves or the family members. (5) Nearly
impossible to trace the incoming chocolate raw material whether it is from a region with ‘no slavery’
practices or slavery infested region. (6) Threat of people abandoning the chocolates altogether as this
would spiral downwards the whole chocolate industry. (7) The Cadbury, company being the target of
NGO groups. This is evident by the fact that the NGO group ‘Friends of Earth’ blamed Cadbury of
promoting child labour in Malaysia / Indonesia, even though the Palm oil contains only 0.001% of the
constituent raw materials.

Looking back at the internal challenges, we can conclude that chocolate manufacturing companies
took to themselves to clear by all the 2001 protocols. Instead, if they had delegated the responsibilities
at all levels from Tier 1 to Tier 3 suppliers and enforced the similar stringent regulations to respective
suppliers should make themselves capable of meeting the 4 years deadline. There could be policy
changes change will happen at the grassroots level. Secondly, the pressure of NGO groups and media
on Cadbury primarily and other Chocolate manufacturers is valid. In response to the directed pressure,
each chocolate manufacturing companies should declare their roadmap in front of Media. This could
make them come clear to the public by being transparent. Lastly, Cadbury having a legacy to oppose
the child slavery cannot accept the fact that the chocolate industry they were involved in the child
slavery. This shows that the Britain Channel 4 report awakened the comfortable management of
Cadbury. This shows that their beliefs of ‘abolishing slavery’ was not audited at their supplier’s end. If
this is audited.

Coming back to external challenges, the major challenge is at the grass root level i.e., at the farmers
level in Côte d’Ivoire and Ghana where the demand of Chocolate directly affects Cocoa beans price
which is evident during the Anglo-Boer war in 1900s. In such cases the respective government should
support farmers by announcing MSP so that farmers do not rely on ‘child slavery’ for lowering the
initial cost of production of Cocoa beans. If we look at the role of government of Côte d’Ivoire, it shows
that they have not shown mature role by working in the area for uplifting the conditions of farmers
instead they resorted to blaming Market price fluctuations for farmers resorting to child slavery. In
such cases, government should in addition to MSP, government should provide subsidies on
agriculture facilities, in addition to awareness sessions to farmers on child slavery. Lastly, we can see
that Cadbury and other chocolate manufacturers faced a threat of them loosing business in case
people altogether ban chocolates. In such case, Cadbury should work on alternate products such as
products including milk by the time, they are able to completely follow 2001 protocol. Secondly, they
can add advertisements on existing product showcasing how much they have achieved from 2001
protocol.