Question

Question 1
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.

Answer 1

ANSWER

INTRODUCTION

In this project question we have to develop in-house and outsource strategies for Cocoa processing Company. Basically Cocoa Processing Company (CPC) Ltd is the primary manufacturer of chocolate in Ghana. The chocolate manufacturing process have various steps in its process. 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. We have to develop strategies for the organization. And in this project analysis of the strategies would be done for CPC.

IN-HOUSE STRATEGY V/s OUTSOURCING

If Cocoa Processing Company (CPC) wants to harvest, ferment, dry and roast cocoa in-house then all the steps of the process should be done at home. As per the information provided in the case study we can say that if CPC did all the steps at home then it would be beneficial for the organization. Because costing of the company in the long run can be reduced. Organization can develop all the steps of chocolate process in house. Initially it will cost the company to set all the infrastructure at home but in the long run it would be beneficial for the organization. For doing all the steps at home, company should arrange required labor or manpower for the process. And all the material for the harvest, ferment, dry and roast cocoa in-house should be arranged by the company. With proper planning, all these steps can be performed at home effectively. When we compare in-house and outsource these services from external suppliers then we can say that outsourcing will be costly for the organization and it will negatively affect the organization in the long run. In my opinion CPC should assume these processes in-house when company is planning strategies for the long run and mission and vision of the organization is to win the competitive advantage. On the other hand we can say that if organization wants to survive only in short run and there is no planning for future strategies then outsourcing these services from external suppliers would be the best option for the company.

BENEFITS FOR THE COMPANY

CPC can have various advantages from controlling all stages in the manufacturing of the chocolate. Some of the benefits of CPC are given as follows -

1. Company can plan and execute strategies according to the requirement in the market.

2. Control on various steps like budget and advertisement can be handled by CPC directly.

3. Strategies of the organization can be modified as per the taste of the target market.

4. Company can directly control the manpower and labor of the organization and required changes can be made by the company.

5. Changes in any steps at any time can be done by the company if controlling of all stages in the manufacturing of the chocolate done by the company.