Tony’s Chocolonely: Strategies to Meet Business Objectives

Summary

Tony’s Chocolonely is a Dutch chocolate company incorporated in Amsterdam in 2006. Tony’s was started by Teun van de Keuken, a well known Dutch TV personality, who investigated the labor conditions of the cocoa industry and discovered that most of the chocolate in the global marketplace was harvested by child slaves. Teun started Tony’s, a company whose purpose was to be 100% slave- and child-labor free. To make change happen they were to create awareness, lead by example, and inspire to act. Tony’s became very successful as a business over the decade, however, regardless of their many steps in the right direction to attain their goal, the industry has yet to change.

Analysis

1. Tony’s had three overarching goals: to create awareness, lead by example, and inspire to act. The first two goals were successful, but only in a business sense, and the last is still in progress. Exhibit 1 presents a chart with their three goals, the processes in which they took to achieve them, and the outcomes of those processes. While the business was profitable, they empowered farmers through education and paying premiums, and put a lot of pressure on the biggest companies in the industry. However,  their ultimate mission was to address slavery in the chocolate industry, they have failed. 2. Tony’s Chocolonely was a successful company in terms of financial profits and expansion (Exhibit 2). A comparison between whether Tony’s has been successful or not is shown in Exhibit 3. If we define success as being a healthy growing business, Tony’s is very successful, but if we look at Tony’s mission, it’s easy to see their goals weren’t attained. Although they are making a difference, Tony’s individual progress isn’t making the global impact on reducing slavery that they hoped. 3. Tony Chocolonely is in the take-off stage of growth. This growth stage is characterized by managers facing the decision to make it big or sell at a profit, and replacing the leadership who brought the company to the previous stage. Henk was contemplating his departure in 2017 and although he was brought on to lead initially, Henk said the company's growth was exceeding his capabilities, but he didn’t want to sell out- indicating a plan to be replaced and the option to sell at a profit. As Tony’s attempts to scale up, the main challenges are to find adequate leadership with the skills to sustain rapid growth while still preserving Tony’s values and purpose of social responsibility. An additional challenge of most businesses in the take-off stage is obtaining adequate financing for growth, but with €44.9m in revenue (2017) Tony’s has the financing to overcome this challenge. 4. We would not choose to partner with Amazon, as it is not an ethical decision. Exhibit 4 shows the ethical analysis of each ethical theory and all except egoism conclude that it would not be an ethical decision. Although a partnership would provide more money to invest in the supply chain, the money is obtained unethically if Amazon’s suppliers are used. Amazon would not impact Tony’s ability to reach their goals as Tony’s is not short of profit, and could continue to achieve their goals and without needing to scale up in an unethical way and compromise their own ethical standards.

Exhibit 1

Intent	Processes	Outcome
Create Awareness	Teun and his partner Maurice aired (on TV) the discussion of slavery in the chocolate sector. Continuously on the phone with reporters and consumers. LinkedIn interview with US Sales manager Peter Zandee explaining how the company was shaping its supply chain “Good News” campaign to support retail price increases to pay additional premiums to farmers	Several retailers called to offer to distribute Tony’s products. High-level of public exposure generated -- did not have to spend any money on advertising. Consumers express their delight, and younger audiences were especially supportive.
Lead by example	Purpose-driven and creates benefits for stakeholders at large-- not just shareholder’s Meet with the highest standards of verified social and environmental performance, public transparency, and legal accountability. Help secure company values from farmer to end-consumer in a holistic way and provide a tangible stimulus to all involved stakeholders to keep raising the bar Trace where cocoa comes from. West Africa- main production area ~70% of global production (Ivory Coast and Ghana earn most export revenues thru cacao) Invest in long-term partnerships with cocoa farmers, make fairer price agreements and train cocoa farmers to improve their crop yields and their organizations. Bean-to-bar project which established long term relationships with 2 cocoa cooperatives in Ghana and Ivory Coast.	Became a B- corporation. Help farmers become more productive and educate them. Educate on child slavery. Training and investing in farmers. Long-Term partnering agreements to buy cacao beans dirrectly from farmers, pay fair premium price for product to combat child slavery. (pay 25% more than what price is on world market) A third cooperative in Ghana was added to the supply chain of Tony’s to increase their impact to over 1,200 farmers. Tasty chocolate, great brand, long-term cooperation with and better prices for cocoa farmers proved possible to be commercially successful.
Inspire to act	Actively look for partners to follow their model Increasing pressure on industry through dialogue with politicians, NGOs and science. “Shame them and they will fall in line”	Global awareness of corporate social responsibility increased among investors and consumers, spurring large multinationals to increase their sustainability program efforts. 2017- most big players in the chocolate market haad started addressing the slavery topic with renewed vigor. Barry Callebaut, Chocolat Frey, Chocolats Halba, Lindt & Sprungli, Mondelez and Nestle all consider themselves as being in transition to sustainable cocoa sourcing. All except Lindt & Sprungli source certified cocoa besides having developed their own corporate sustainability programmes. By June 2017 banks were also helping to develop a more sustainable cocoa supply chain Companies like Barry Callebaut commited by 2025 to: Eradicate child labor from supply chain; Lift more than 500,000 cocoa farmers out of poverty; Become carbon and forest positve; Have 100% sustainable ingredients in all of our products

Exhibit 2

Exhibit 3

Successful

Not Successful

●        Growth in net revenue from $1m in 2009 to $44.9m in 2017 ●        Sales grew 50% year on year ●        20-25mil bars have been sold ●        Second largest chocolate bar brand in ND since 2015 ●        Sold in 6 countries ●        Became a B- Corporation ●        Long-Term partnering agreements to buy cacao beans directly from farmers, pay fair premium price for product ●        Added third cooperative (to the two they already had) in Ghana was added to the supply chain of Tony’s to increase their impact to over 1,200 farmers.

●        Only ¼ (2015) of cocoa farmers are being paid a fair price (10 years after the origination of Tony’s) ●        At MOST, ½  of the farmers on the two cocoa farms they built long-term relationships earn enough to rise above the poverty line ●        Half the cocoa mass and cocoa butter come from the two farms, but the other half is unknown ●        90% of all cocoa farmers in West Africa are living below the poverty line of $2/day ●        Increase in child labor in cocoa sector (2 million do dangerous and illegal work) ●        Harkin-Engel protocol pushed back to 2020 (from 2005) and original goal of total elimination of slavery is now eliminate 70% of worst forms of child labor

Exhibit 4

Collin’s Ethical Framework: Should Tony’s partner with Amazon?

1.)    Who are all the people affected by the action? (Stakeholder Analysis) Amazon, Whole Foods, Tony Chocolonely (employees and investors), farmers of the supply chain and their labor force used. 2.)    Is the action beneficial to me? (Egoism) Yes because Tony will have great financial gains, obtain an efficient supply chain, and have the resources of Amazon to help tackle their business challenges. 3.)    Is the action supported by social group? (Social Group Relativism) No, the employees and investors of Tony’s would not want to compromise their values by using unethical sources, as this contradicts the purpose and mission of the company 4.)    Is the action supported by national laws? (Cultural Relativism) No, a product made from illegal child labor is a violation of the same laws that Teun turned himself in for in order to begin the movement 5.)    Is the action for the greatest good for the greatest number of people? (Utilitarianism) No, although Tony’s and Amazon would benefit greatly, there would still be a negative effect on the farmers and laborers that aren’t being treated ethically, even though it would allow more funds to be invested back into the supply chain 6.)    Does the action treat every stakeholder with respect and dignity and is the act something everyone should do? (Deontology) No, the farmers, children, and forced laborers would not be treated with respect if they are making below the poverty line wages, and being forced into labor. 7.)    Is this how a virtuous person would act? (Virtue Ethics) No, it goes against moral character as it would not be fair to the unethical sources that would have to be used and wouldn’t allow Tony’s to be fully transparent as they wouldn’t want this information to be in the public eye since it contradicts the company’s purpose. To partner with Amazon would go against the virtues of honesty, compassion, respect, and fairness; as Tony’s would lack honesty in their transparency and would lack compassion, respect, and fairness towards the suppliers that aren't meeting their standards.