From bean to bar - the production process
A Nestlé case study

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Page 2: Resources needed for production

All goods and services depend on resources for their production, these are known as factors of production. One key factor is enterprise: the risk-bearing associated with any business. In the past, many firms owed their existence to perhaps just one person, who set it up. Nowadays, with the growth of companies, business risk tends to be born by shareholders, whilst managers exercise day to day control.

Manufacturing, marketing and distributing a product for worldwide consumption involves a huge amount of careful planning.

A second major resource is the land: cocoa trees grow on it, chocolate factories are built on it. Cocoa is grown in Central and South America, the west coast of Africa and more recently in South East Asia. Eight countries - Ivory Coast, Ghana, Indonesia, Nigeria, Brazil, Cameroon, Ecuador and Malaysia supply 88% of world output. Over 40% of the world's supply comes from Ivory Coast, where cocoa is grown mainly on over 600,000 small, family-owned farms. Most cocoa farms occupy between one and three hectares.

Labour is another key input. Small farmers (who are entrepreneurs in their own right) have developed the skill of producing a high yielding, top grade product. Cocoa production is often their only source of income. They may also grow subsistence crops such as yams or palms, but they typically rely on the cash from cocoa to pay for extras such as health services and educating their children. Raw materials are another important resource within the production process. Besides the cocoa beans themselves, raw materials for the chocolate industry include sugar, milk and wrapping/packaging materials e.g. paper, foil and card. Another input is the buildings, plant and equipment required for manufacturing and distribution e.g. factory premises, complex machines and fleets of trucks. These items are known as capital.

Nestlé | From bean to bar - the production process