SUPPLY CHAIN DEPARTMENT

Respicio, Linaza, Ybanez

Name: Kakaw de Davah

SWOT ANALYSIS

Strength:

Economies of Scale
This strength also empowers the company to maintain competitive advantage based on
extent of market reach and production capacity to address market demand.

Strong Brands
Strong brands are a strength that supports competitiveness in terms of customer loyalty
and the attractiveness of its chocolate products. Cocoa from Malagos Chocolate is known to
provide one of the best chocolates in the industry. With this, products made from Malagos
cocoa earn more positive response from consumers compared to any other brands.

Weakness:

Bureaucracy in organizational structure and culture

Bureaucracy is a major weakness that needs to be addressed. Such bureaucracy is
responsible for limitations in the company’s flexibility in responding to issues in the external
environment

Opportunities:

Innovation
Kakaw de Davah are made from Malagos Cocoa which is the best in the country. The
chocolate products will also be vegan and organic making it very attractive to people of all ages.

Threats:

High Level of Competition

The chocolate industry has a high level of competitive rivalry. This situation threatens the
company’s business performance.

Disruptive potential of new technologies

In the global arena, there is much more advanced technology that can contribute to
better quality of their chocolate products.
SUPPLY CHAIN DEPARTMENT - PORTER FIVE FORCES

● The threat of New Entrants

- New entrants in the chocolate industry determine how easily it can affect company
profitability due to new competitors putting pressure on our company. With these, the
Supply Chain Department could deal with these competitive forces through 1.) in the
manufacturing of our Vegan and Organic products, the supply chain department
should see to it through selecting a good supplier/s of cocoa to ensure quality and
taste, 2.) in addition, access and establishing good distribution channels through
creating a network of buyers and competitive advantage on shelf spaces in
stores/malls, and 3.) developing value propositions to the customers such as
establishing our brand name (through the quality of our product), product
differentiation, and customer loyalty to improve the company’s market share.

● Bargaining Power of Suppliers

- Since the company will be manufacturing chocolate from raw materials that will likely
come from cocoa suppliers, the cocoa industry has significant supplier bargaining
power due to the fact that there are limited suppliers (mostly in the Davao region)
and no substitute products in the creation of chocolates. With these, our company
should be able to enhance its supply chain in terms of raw materials by 1.)
establishing a supply chain with several cocoa suppliers in Malagos, 2.) transferring
easily from one supplier to another if raw resources in the present supplier
increased, and 3.) forming committed suppliers whose business is dependent on our
company through creating our differential and chocolate advantage, wherein the
supplier will depend on our company and will greatly limit the supplier's bargaining
power.

● Bargaining Power of Buyers

- Given that our company sells chocolate, which is not a commodity like cocoa,
customers will not see a need to buy and will seek lower prices on chocolate
products. In order for us to improve our supply chain up to the end customers, we
should 1.) ensure that we build a good (but not excessive) volume of supply to our
buyers to reduce bargaining power, 2.) as mentioned in the previous forces,
developing our product differentiation will give our product an advantage over other
competitors, and 3.) furthermore, if our product is differentiated, our products are
more likely to be sold, and our supply chain should ensure that our products will give
profits to our buyers (such as partner stores/malls) rather than low profits so that our
 buyers will not be price-sensitive and shop around our competitors which can also
limit the bargaining power of buyers.

● Threat from Substitute Products

- As new products emerge throughout the pandemic such as substitutes for chocolates
available for customers, there is a risk that our company's potential returns may be
affected in the future. To address this, our supply chain should 1.) improve good and
timely supply of products in order to compete on the product supply in the market, 2.)
there are flavor and snack substitutes for chocolates in the markets, and our supply
chain should ensure and compete through supplying new chocolate products 3.) take
advantage of seasons and celebrations (e.g Valentines, Christmas, Birthdays,
Anniversaries) by introducing/producing specialty organic chocolate products to gain
product edge.

● Rivalry among the existing players

- Intense competition among industry competitors may result in price wars, advertising
competitions, and the creation of new product lines which creates intense rivalry.
This could affect the overall profitability of the company and the industry. The
company is located in Davao City wherein it is dubbed as the Cacao Capital of the
Philippines and also where there are various chocolate companies in the area. Our
Supply Chain Department could deal with this competitive force by 1.)
improving/moderating switching costs in order to lessen the circumstance of intense
competitive rivalry in the industry through product differentiation (the quality of our
product, ensuring that it is vegan and organic), 2.) improving product branding and
reputation (such as timely delivery) in relation to differentiation, and 3.) establishing
strategic relationships with other business units.

Problems in the Chocolate Industry

1. Deforestation and loss of biodiversity

The abuse or excess of pesticides and artificial fertilizers in many cocoa fields
significantly impacts the quality of local water supplies, contaminated soils and further
diminishes biodiversity.

2. Threat of climate change

These adjustments translate into reduced income and uncertainty in the cocoa
market that most farmers are not prepared for. In order to establish more resilient
livelihoods and farming systems, farmers and stakeholders alike must begin to adapt to
climate change.

3. Lack of access to finance and inadequate infrastructure

The shortage of funds hinder training so that farming techniques can be improved.
Insufficient road infrastructure makes harvest transport more costly and further affects
producers' incomes. Furthermore,in many cocoa- producing villages the availability of
adequate drinking water and sanitation is insufficient.

4. Poverty and Inadequate living conditions

Most of the cocoa producing households live in terrible poverty. Cocoa farmers suffer
high productio expenses and lack access to bankin services. Cocoa farmers confront poor
living circumstances and dfficulty in meeting basic necessities with low incomes and limited
economic resilience.

Also, most Filipinos especially in Mindanao are minimum wage earners thus buying
chocolates is not a necessity for them. They tend to prioritize food and things that are
essential in their daily living. this is a problem of the chocolate industry because chocolate
products seems to be not affordable for all families.