Question

Cocoa Processing Company (CPC) Ltd is the primary manufacturer of chocolate in Ghana. The
chocolate manufacturing process goes through several activities. The initial steps involve
harvesting, fermenting, drying, and roasting of the cocoa beans. Afterwards, the cocoa powder is
made and tempered to remove the excess cocoa butter. In the final stages, cream, sugar, and milk
are added to the melted chocolate; the mixture is moulded into chocolates and then packaged and
made ready for sales. CPC buys the roasted cocoa beans from suppliers and converts them into the
chocolates. External distributors manage the distribution of the chocolates produced by CPC. The
senior management of CPC is considering various options to expand its business. For now, only
milk chocolates are manufactured and sold by CPC, but the company is considering the
introduction of white chocolates and dark chocolates into the market. The main ingredient for the
white chocolate is the cocoa butter that is separated from the cocoa solids. Although the white
chocolates do not contain any of the cocoa solids, the cocoa solids form a significant portion of
the dark chocolates compared to the milk chocolates. Manufacturing all the white and dark
chocolate has very similar manufacturing processes as that of the milk chocolates. Going forward,
CPC plans to control all activities involved in the manufacture of the chocolates, from harvesting
of the cocoa beans to packaging of the chocolates. The senior management of the company is of
the view that if they control all the steps for manufacturing, they can manage all the three different
kinds of chocolate better. CPC further plans to take control of the distribution of the chocolates
too.
You are required to:
Describe how CPC can strategically approach the decision to harvest, ferment, dry and roast cocoa
in-house or outsource these services from external suppliers. Also, identify and explain when it is
appropriate for CPC to assume these processes in-house and when these steps should be
outsourced. What benefits can CPC gain from controlling all stages in the manufacturing of the
chocolate? (15 marks)
Your answer MUST NOT exceed three (3) pages.