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Ch-2 DQ

Ch-2 DQ

Q Assume you are the CMO for a firm that is a major producer of chocolate candy and baking chocolate. The bulk of your chocolate products are sold in the United States and Europe. For many years, your firm has purchased cocoa beans (from which chocolate is made) from Country A. Country A produces 30 percent of the world’s chocolate but recent reports of child labor have concerned many country leaders and consumers. On some farms, children are made to work as much as 100 hours a week and are physically abused. Furthermore, some receive no education whatsoever. You are considering whether or not your company should change suppliers and buy cocoa from Country B. Country B is the leader in ethically produced cocoa. Cocoa is produced in an environmentally sustainable manner and the country is the world leader of “fair-trade certified” cocoa production. Unfortunately, the price of cocoa from Country B is nearly twice that of Country A. this means you would have to significantly increase the price of your products which you expect to negatively affect the firm’s sales. This, in turn would likely lead to closing some company facilities and laying off workers. On the other hand, consumers in your markets are increasingly concerned about human rights abuses and seek to buy fair trade products.

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If I am a CMO for a firm (that is a major producer of chocolate candy and baking chocolate) that purchased cocoa beans from Country A which is in news for increasing child labor plus abuse issues while there is another country B that is known leader in ethically produced cocoa and tops the fair-trade certified” cocoa production but the price of cocoa from Country B is nearly twice that of Country A. In such a situation if I have to make a decision as to whether I should continue buying from country A or switch to country B (which would also lead to an increase in the product price and may negatively affect a firm’s sales), I will go ahead with purchasing cocoa beans from country B.