Reference no: EM133315579

Case: As the world's fourth largest confectionery company, the family-based Ferrero Group (Ferrero) has operations in 53 countries with 22 manufacturing plants and 78 worldwide subsidiaries. The company's European headquarters - two of them, one in Alba, Italy and the other in Luxembourg - oversees the operations of 33,000+ employees and more than 7500 external collaborators. The company is active in all aspects of its value chain, which begins with the raw ingredients. That end-to-end view includes procurement and quality control through ownership of hazelnut plantations. It closely guards some of the recipes for its raw ingredients. Plant locations were intentionally placed near the reference markets. The company is involved in its own machine redesign and has an engineering staff to support that. It handles its own packaging and logistics. It has active control over its Internet-based operations and several supporting activities like marketing.

The company has a high expressed concern for Corporate Social Responsibility (CSR) and has set ambitious goals in that area. That is quite significant since the company operates in many underdeveloped countries and envisions growing developing markets in countries such as India and China as key to its future success. The company has also embraced social consciousness in its products and sought to minimize the amount of sugar to which its customers are exposed. The Ferrero Group needed to achieve and maintain solid differentiation. Fairtrade cocoa was one of those source products with huge social influence. American providers were already far ahead in its use; it represents 83% of their supply. In the face of fierce competition from strong global players like Nestlé S.A., Mars Inc., and Mondelez International Inc., Ferrero was looking at strategies to achieve its objective of doubling its revenues of $10 billion in the next 10 years.

Question 1. Is there explicit evidence of Sustainable Design in the Ferrero Group supply chain?

Question 2. Which global industry codes of conduct are guiding the Ferrero Group supply chain?

Question 3. What opportunities are available to the Ferrero Group to help it to establish a highly differentiated level of social consciousness in its supply chain?