CHAMPIONING EDI AND ESG WHILE USING CHILD LABOUR: THE
HERSHEY PARADOX CASE STUDY SOLUTION
e
pl
m
Sa
SYNOPSIS
The CEO of the Hershey Company (Hershey) was preparing for the March 2023 Hershey Company Investor
Day. Hershey was a Fortune 500 company, was one of the largest chocolate companies in the world, showed
n
a strong balance sheet, and was still headquartered in Hershey, Pennsylvania, where Milton S. Hershey had
tio
founded the business in 1894. Milton Hershey had built the brand image around happiness and caring for
children, and he left a legacy in the form of a school for disadvantaged children. That brand image continued
under Michele Buck, the first female CEO of the company and a parent of three children.
lu
The DEI business and the product most associated with Hershey, chocolate, depended on cocoa beans from
So
The Case Solution Starts From page 4
,ASSIGNMENT QUESTIONS
e
1. What are the characteristics of the chocolate industry and how does it present one example of a global
pl
supply chain?
2. What exactly is the Hershey paradox?
m
3. What risks and disruptions does Hershey’s CEO face? Which are the biggest?
4. Do you believe that CEO Buck is doing some impression management? Explain.
Sa
5. What approach do you recommend for the CEO for a successful Investor Day?
n
tio
lu
So
The Case Solution Starts From page 4
, ANALYSIS / ANSWERS TO THE ASSIGNED QUESTIONS
1. What are the characteristics of the chocolate industry and how does it present one example of
a global supply chain?
The chocolate industry is a specialized segment of the food and beverage industry. With an estimated $103
billion in sales3 and the world’s top 15 chocolate manufacturers headquartered in the United States, Europe,
and Asia4 but suppliers of the key ingredients grown mostly in West Africa, Asia, and Latin America, the
chocolate industry is global (see Exhibit 1). The industry has been very concentrated at the top (chocolate
e
production and sales) and extremely fragmented at the base (with much of the key ingredient, cocoa beans,
pl
grown on and harvested from hundreds of thousands small farms in Western African countries, such as
Ghana and Cote d’Ivoire (also known as Ivory Coast).
m
The chocolate industry and specifically its supply chain have been heavily criticized for the practice of
millions of children working on cocoa bean farms. The issue of child labour used to produce cheap
Sa
chocolate has been raised for decades. This issue of child labour is not specific to one company, product,
or country; and the issue is related to broad global issues of human rights, social justice, environmental
practices, sustainability, corporate social responsibility (CSR), and legislation and other efforts around the
world.
n
While the relevant issues can be considered in greater depth in answer to Questions 2 and 3, the following
tio
are some milestones that are addressed in the Case Study and which address Question 1.
In 1998, Ghana passed reformed and consolidated laws related to children’s rights and child labour.
lu
So
The Case Solution Starts From page 4
HERSHEY PARADOX CASE STUDY SOLUTION
e
pl
m
Sa
SYNOPSIS
The CEO of the Hershey Company (Hershey) was preparing for the March 2023 Hershey Company Investor
Day. Hershey was a Fortune 500 company, was one of the largest chocolate companies in the world, showed
n
a strong balance sheet, and was still headquartered in Hershey, Pennsylvania, where Milton S. Hershey had
tio
founded the business in 1894. Milton Hershey had built the brand image around happiness and caring for
children, and he left a legacy in the form of a school for disadvantaged children. That brand image continued
under Michele Buck, the first female CEO of the company and a parent of three children.
lu
The DEI business and the product most associated with Hershey, chocolate, depended on cocoa beans from
So
The Case Solution Starts From page 4
,ASSIGNMENT QUESTIONS
e
1. What are the characteristics of the chocolate industry and how does it present one example of a global
pl
supply chain?
2. What exactly is the Hershey paradox?
m
3. What risks and disruptions does Hershey’s CEO face? Which are the biggest?
4. Do you believe that CEO Buck is doing some impression management? Explain.
Sa
5. What approach do you recommend for the CEO for a successful Investor Day?
n
tio
lu
So
The Case Solution Starts From page 4
, ANALYSIS / ANSWERS TO THE ASSIGNED QUESTIONS
1. What are the characteristics of the chocolate industry and how does it present one example of
a global supply chain?
The chocolate industry is a specialized segment of the food and beverage industry. With an estimated $103
billion in sales3 and the world’s top 15 chocolate manufacturers headquartered in the United States, Europe,
and Asia4 but suppliers of the key ingredients grown mostly in West Africa, Asia, and Latin America, the
chocolate industry is global (see Exhibit 1). The industry has been very concentrated at the top (chocolate
e
production and sales) and extremely fragmented at the base (with much of the key ingredient, cocoa beans,
pl
grown on and harvested from hundreds of thousands small farms in Western African countries, such as
Ghana and Cote d’Ivoire (also known as Ivory Coast).
m
The chocolate industry and specifically its supply chain have been heavily criticized for the practice of
millions of children working on cocoa bean farms. The issue of child labour used to produce cheap
Sa
chocolate has been raised for decades. This issue of child labour is not specific to one company, product,
or country; and the issue is related to broad global issues of human rights, social justice, environmental
practices, sustainability, corporate social responsibility (CSR), and legislation and other efforts around the
world.
n
While the relevant issues can be considered in greater depth in answer to Questions 2 and 3, the following
tio
are some milestones that are addressed in the Case Study and which address Question 1.
In 1998, Ghana passed reformed and consolidated laws related to children’s rights and child labour.
lu
So
The Case Solution Starts From page 4
