PESTEL Analysis Of UK Chocolate Industry And Business Opportunities

1. You are a Strategy Consultant to the UK chocolate industry. You have been asked by the client to produce a short report that includes an analysis of the current trends in the macro business environment, and to identify the key opportunities over the next 3-5 years. You are required to collect secondary data relevant to the industry and produce a report based on the following tasks:

A. Introduction
a. Introduction to the industry you are analysing
b. By reference to scholarly work, summarise the advantages and disadvantages of macro business analysis
B. Using suitable framework(s), such as PESTEL, analyse and evaluate the industry’s external macro business environment
C. Identify and discuss at least 2 business opportunities that are present in the macro business environment

You are advised to produce a PESTEL.

Chocolate is one of the majorly favourite sweets of all times that is used in a variety of deserts and other forms of sweet dishes on a global basis. The importance of chocolate is increasing in the modern world with more and more countries demanding chocolate for their everyday consumption as well as processing of other sweets. The chocolate industry is therefore ever growing and accounts for approximately $50billion worldwide business (Chrystal, 2013). There are various types of chocolates namely Organic Chocolate, Dark chocolate and Milk Chocolate (Zujko & Witkowska, 2014). The share of Organic chocolate is 18%, dark chocolate is 31% while the market share for Milk chocolate is 51% which is more than half of the total chocolate industry (Torres-Moreno et al., 2012). The major competitors of the chocolate industry are non-chocolate candy industry and the milk-based traditional sweets. Chocolate industry is ever-growing with an annual increment of approximately 3% since the year 2010 (Squicciarini & Swinnen, 2016). The worth of the chocolate industry on a global basis is approximately $99 billion whereas the worth of the chocolate industry of United Kingdom is approximately 1 billion Euro (Berlan, 2012). The distribution of the chocolate industry in Europe is one of the most important among the various kinds of industries in that genre. Europe alone accounts for over 45% of the consumption and manufacture of chocolates worth approximately $20 billion (Afoakwa, 2016). In terms of the chocolate industry of United Kingdom, it covers more than 30% of the European market (Chrystal, 2013). The chocolate which is sourced from Ghana and other parts of Africa are processed and manufactured in the European Union and are made into fine chocolates that are distributed all over the world in the name of the finest chocolates in the world. In terms of United Kingdom, the average age of the chocolate consumer is more than 55 which accounts for approximately 21% of the consumers (Verna, 2013).

The PESTEL analysis is a tool used to monitor the macro-environmental factors of the business. PESTEL stands for Political, Economic, Social, Technical, Environmental and Legal factors of an industry (Yüksel, 2012).

The purpose of the PESTEL analysis is to monitor the various factors of the industry analysis considering the various factors of the world like social, technical, economic, and political and others.

Social – The social factors of the PESTLE analysis is of low importance in the level of importance scale and has a short-term impact on the industry as a whole. The social factors of the industry has an impact on the overall society as the people of the country love to eat chocolates and the things manufactured from the chocolate. The society’s love for chocolates makes sure that the industry is growing at a rate which is very steady and on the increasing frame. According to the Mintel GNPD, the consumption of chocolates has increased by 50% in the last five years in UK which symbolise the love for the chocolates in the country. The production of Easter chocolate has increased by 23%. The negative aspect of the social factor is the people of the country are prone to getting diabetic due to the increase in consumption of the chocolates. This will result in the decrease in the health aspect of the country which is something worth worrying about.

PESTEL Analysis

Environmental – Environment is one of the major factors of the PESTLE analysis of the chocolate industry of UK which assumes medium to high level of importance. The impact of the environmental factor is of long term as environment harm or preservation is both a process that is dealt with a long term effect. The chocolate industry of UK is causing an exploitation of the cocoa plantation of different countries which is affecting the environment of the place at a massive scale. The impact of the chocolate on environment is also one of the major negative factors as approximately 1,000 litters (264 gallons) to produce just one chocolate bar which makes the production of chocolate not suitable and friendly to the environment. The production of chocolates in congested and large pollution-emitting factories cause global warming on a large scale. The inclusion of the plastic packaging of the chocolates also are making the environment degradation as plastic is a non-biodegradable substance that needs to be kept away from the environment as much as possible to make sure that the environment is preserved. 

In order to identify any trends in the industry, PESTEL analysis should be done on a regular basis. There are a number of advantages and disadvantages of the PESTEL analysis which is to be considered while making the analysis (Rastogi & Trivedi, 2016). These are

• The analysis done is simple and provides an accurate framework of the industrial analysis
• Involvement of cross-functional skills and expertise
• Reduces the potential threats to the organization
• Aids the strategic thinking to the organization
• New opportunities within the organization are exploited
• Assesses the new market threats and competitions that are accessed both on a national and international level.

• Decision making can be hampered by over simplification of the evidences.
• Process has to be conducted regularly which is a time consuming process
• Must not only depend on the analysis done by the organization in terms of the PESTEL analysis
• The regular consideration of such a type of analysis is time consuming
• The access to original information is often restricted due to cost considerations
• Sometimes data is not used and assumption is used in the case which is not the kind of analysis needed for the PESTEL analysis of any industry.

The PESTEL analysis of the chocolate industry of UK also encourages the other business opportunities of the genre. The two business opportunities is making some cosmetics and other products related to chocolate and cocoa beans and also making various other drinks with chocolate as the primary ingredient.

The opportunity of these business ideas along with the chocolate industry of UK is one of the greatest. With more and more people engaging in the chocolate industry and with the greater demand for chocolate in the country of Britain, the opportunity of the making of the subsidiary industries is ever growing. The owners of the said industries can make the maximum utilisation of the cocoa beans left over and the leftover chocolates by the factories for making the cosmetics and other beverage items related to the industry.

Conclusion

In conclusion, it can be said that the chocolate industry of UK is ever growing and should reach height in the near future. The UK chocolate industry has a number of factors working in its favour and can be determined using the PESTEL analysis of the same. The importance of the PESTEL analysis is one of the major factors of the UK chocolate industry and its growing stage in the recent years. Moreover, a number of business opportunities can be created by using the chocolate industry as the primary factor. All these lead to the fact that the chocolate industry of UK is on a growing stage that needs boost up in the near future. Assessment 2

Green and Black Chocolate is a British company established in the year 1991 by the duo Craig Sams and Josephine Fairley. Though the company has no history like the other brands in the genre, the variety and popularity of the brand is noticeable in the long run. The company is headquartered at London in England with major manufacturing units in Canada, Poland and Italy. The company manufactures a wide range of chocolates and other food items like ice cream, biscuits and baking chocolates. The name of the brand is significant and symbolise the ethics the company possess. The green in the name stands for the fact that the company is concerned about the environmental factors while the black symbolise the use of rich dark cocoa chocolates that is needed to manufacture the best chocolate. The company has a history of incorporating good social responsibility in its business ethics which made the company win Worldaware Business Award in 1994 for good business practice and also England’s first fair trade mark. The company pledged to run its business based on organic chocolate manufacture till Cadbury purchased the company in 2005. Cadbury though pledged to run the business as a separate entity but in real, the chocolates manufactured thereafter are neither organic nor upto the quality standards. The chocolates sold in USA under the brand are under the fair trade mark though in other countries, they are like normal chocolates. The company has one of the best employee scheme as well as employs one of the best corporate social responsibilities in the industry during the initial years. There are a number of ways in which the company makes sure that all the CSR related responsibilities are done which is discussed here.

Advantages and Disadvantages of PESTEL

CSR or Corporate Social Responsibility, also known as Corporate Sustainability is defined as the form of business approach that is made for the sustainable development of the surrounding by the implementation of proper economic, social and environmental responsibilities and benefits to the stakeholders involved in the whole process. The concept of CSR is varied and has a number of benefits that make it one of the most important concept of the business circuit. The current CSR of Green and Black chocolates is in coordination with the major Cadbury brand as the former is one of the subsidiary brands of the later one.

Green and Black chocolate is under Cadbury in UK which is one of the most famous chocolate and confectionary brand with a total stake of more than 8% in the global business market. The corporate social responsibility of the company is therefore quite large in respect of the different types of shareholders that the company is adhering to in terms of IT, HR and other members. Green and Black chocolates, being under of the pivotal companies of the modern business arena employs a number of measures in making their impact in the Corporate Social Responsibility of the brand (Rummery & Greener, 2012). The company has even launched a website to deliberately state the corporate social responsibility of the brand in the website for the better viewing of the public in all forms. The corporate social responsibility of the brand. The brand adheres to the social responsibility of the giant and makes sure to the customers that the brand totally follows the concept of ethical sourcing, responsive distribution and consumption within limit. The giant also makes sure to further accept all the environmental norms that the environmental policy has in their writing (Hilton, 2013). The brand claims to source from all ethical sources without exploiting nature or the people involved in the process. Further, the brand claims to be vegetarian in all its products without any use of animal fats or cruelty involved. The corporate social responsibility of the brand makes sure that all the events of the brand as written in their website is made into practise. The current CSR of the company has limited amount of access to organic chocolates and manufactures chocolates according to the normal norms of other brands including the parent company.

CSR or corporate social responsibility of the brand makes sure that the company not only achieves heights in terms of sales and profit but also gives its percent to the environment and people from where it is originating (Squicciarini & Swinnen, 2016). The amount of CSR is totally dependent on the policy of the brand and the way the brand is doing for the environment and the people of the society. The CSR of a company is totally dependent on the social factors and does a special function in the success of the company (Kiessling, Isaksson & Yasar, 2016). There are a number of ways in which CSR contributes to the success of the company which are listed as follows –

• Recognition of the brand – With better CSR, the brand is well recognized in the business community. The recognition of the brand is directly proportional to the CSR of a brand which means that with increase in CSR, there is a better chance of better brand recognition of the customer.
• Positive review of the brand – The better CSR level ensures that the customers have a positive view of the brand in regards to the amount of social factor the company has. The customers mark a better than the other correlated brands if the brand has a good CSR level.
• Increment of sales – With the increase in CSR level of the brand, the sales of the brand increases to a great extent (Kotchen, & Moon, 2012). The increment of CSR makes sure that the brand attracts a lot of clients from other than the market which makes the sales of the brand shoot up.
• Customer loyalty – Better CSR implies better customer loyalty of the clients. Customer loyalty depends on a number of factors including a proper CSR level ie with increase in CSR, there is an increase in customer loyalty and vice versa.
• Savings of the operational cost – The savings of the operational cost is one of the major factors that is resulted with the better CSR of the products. There is an optimum level of operational cost that is projected in each of the sectors of the organization which is levelled by the increment in CSR of the brand. With better CSR, the customers as well as the clients have an idea about the different expenditures that the brand does in terms of the various other factors making the clients demand less of the profit from the brand.
• Organizational growth – With better CSR, the organizational growth of the brand reaches a level that is comprehended in the brand. The organizational growth of the brand is determined by the amount of CSR the particular brand has which is in direct variance. The CSR level helps the organization to flourish at a great level.
• Retainment of staff – One of the most important effect of a good CSR of the company is the retainment of the staff in their working premises. The company retains its staffs based on certain conditions out of which corporate social responsibility is one of the vital. The corporate social responsibility of the company makes sure that makes sure that the staffs of the company are kept on a permanent basis and the new staffs who are joining the brand are made sure to be keeping in the brand.
• Stability of the company – The stability of the company is dependent on a large scale on the CSR of the brand. The company when achieves a good CSR level makes sure that reputation of the brand is there for a longer period of time (Squicciarini & Swinnen, 2016). The stability of the company achieves heights as the company is stable and getting attracted to a huge amount of business of the staffs. Stability is a major factor of the brand which is partially dependent on the CSR level of the company to a major extent.

Two business opportunities that come with the analysis

Triple Bottom Line is a financial concept of the company that is mainly focussed on the three bottom points of the company namely profit, planet and people. The Triple Bottom Line of the brand seeks to establish the social and the environmental factors of the brand that is wholly dependent on the CSR level of the brand (Savitz, 2013). Through the concept of Triple Bottom Line, the company majorly focusses on the amount of economic impact, the environmental aspect as well as the societal features of the brand and the way that it follows. The concept of Triple Bottom Line was developed by Elkington and majorly focussed on the three P’s of the sustainability factor of the genre (Willard, 2012). The ways of the Triple Bottom Line majorly focusses on the commitment the brand has in terms of the social responsibility of the brand has in terms of the customer and makes sure that all the major implications are being followed by the brand.

On the basis of the new production facility at the new premises at an emerging market, a number of problems can be faced in the new market province. Though emerging and developing markets provide a host of opportunities and other features for the development of the brand in general, there are a number of challenges that is being faced by the brand in the developing economy as a whole. The advantages and challenges of the developing economy are as under –

• Profit – The amount of profit that the brand will have when intervening into the developing economy is one of the most important factor of the brand. The profit percent is more in the developing economy as the amount of competition in those countries is comparatively way lesser than the developed economy. In addition, the amount of profit also varies with the country in which the brand is setting up (Elkington, 2013). The emerging market promises greater profit as the brand can sell their products to a larger customer base. So setting up a company in an emerging economy is one of the major advantages of the brand. If Green and Black chocolate sets up an industry in an emerging market, there is a probability that the brand will get greater profit. Moreover, if the brand will manufacture organic chocolates like its initial days, then the profit percent is likely to increase.
• Planet – In the emerging market, the brand can set up industries that are environment friendly and can also imply measures that cater to the sustainability of the environment as a whole (Bailey & Alexander, 2017). The planet portion of the CSR is dealt with in a proper manner in the emerging market of the company. The planet portion of the CSR level is maintained in the emerging market with zeal. Green and Black Chocolate pledged to follow the environmental concerns and so if it follows the initial pledge, it can successfully complete its responsibility.
• People – When an industry opens up in the emerging market in different countries, then the people of the country are affected in a positive way. The people get a huge amount of employment in the new brand as a result of which the social impact of the people can be made on a positive note. The people of the society get a huge amount of ways and means to earn which in turn increases the economy of the country making it one of the advantages of the CSR of the emerging market. Green and Black chocolate in its new industry can employ a huge amount of people that can increase the employment level of the brand.

• Profit – The profit of the emerging market depend on a number of factors including the risk of being accepted by the people of the country. If Green and Black chocolates decides to open their brand at an emerging market, there is a possibility that the people of the country would not accept the brand either due to the presence of a native brand of chocolate or due to price point which can be high for that country. This makes the profit percent of the emerging market a risk to take. Alongside, the concept of organic chocolate brand may not work in an emerging economy.
• Planet – The planet of the emerging market receives a backflow as there may not be enough resources to get the allocated sources make environment friendly. The setting up of Green and Black chocolates at emerging markets can be made an environmentally friendly brand but the market would not have enough resources to make it the same. There would not be enough allocated findings or government support to establish the features required to make the industry environmentally friendly and sustainable as the brand pledged to be at the initial stage.
• People – In spite of giving benefits to the people in terms of employment, the people of the emerging economies face a number of issues in the establishment of a new brand with the acceptance and the number of problems that the people can have in getting used to the brand. If Green and Black chocolate manufactures its organic products in an emerging economy, there is a probability that the people would not be able to afford the brand and make suitable uses in terms of the price point and things require. Chocolate is considered as one of the luxury items in the economy of products which is not always adopted or needed by the developing nations. Organic chocolates are moreover more expensive than the normal versions.

Based on the above statements and analysing the various positives and negatives of the brand and the strategies, there are a number of recommendations that can be implied to the brand. In addition, the strategies that the brand can follow in terms of the developing economy can be said to say to be a mixture of positives and negatives. On one hand, there are a number of reasons as to why the brand should expand to the emerging economies and there are certain reasons too that does not permit the brand to venture into the world of emerging or developing economies. However, analysing all the pros and cons of the brand, the strategy of the brand to establish into the emerging economies of the world can be said to be on a positive note as it is important for a brand to venture into the emerging and developing economies of the world alongside the developed economies. With the emergence of the industries into the developing economies of the world, it is important for them to make sure that the industries receive the right amount of environment in the countries. This makes sure that the emerging economies of the world receive the right amount of exposure in terms of industries and industrialization.

The recommendations for the brand and the CSR level are as follows –

• The brand should make use of all the resources in its manufacture of chocolates and other types of commodities assigned by it. The different types of commodities is the manufacture of ice cream or milk-based products in the manufacturing of the brand (Bailey & Alexander, 2017). The different types of chocolates can be utilised by the brand in the process which makes it one of the best ways to manufacture the different types of items using chocolates and cater to the taste of all the people of the genre.
• The brand should delve into the various emerging economies of the world and make sure that each of the economies are getting enough of the advantages and social responsibility benefits that the company accomplishes.
• The brand makes sure that all the social ways and means of the brand are being fulfilled and make sure that every customer of the brand is aware of the activities of the brand in association with the various other factors associated with the same.
• Green and Black chocolates should also make provisions for eco-friendly packaging of the brand’s products and make sure that the packaging are bio degradable and environment friendly.
• Some of the chocolates can be made vegan by using soya milk or almond milk instead of cow milk to cater to the taste of the people other than providing people with the organic chocolates that they already have.
• The tastes of the people should cater to the mixed population which means that other than traditional chocolates a number of other flavours of chocolates should also be made so that every person have their preferred taste in the chocolate scene.

These recommendations if followed by the brand along with the proper Corporate Social Responsibility, will make sure that the brand achieves proper heights and profit margins within the time.

Reference

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