Today, Ferrero can be called one of the largest companies in Italy. The company has been recognized more than once as an excellent place to work and has a significantly high business reputation. Its products are well-known and in demand among consumers around the world. Before achieving these and many other successes, the company went from a small confectionery in an Italian town to a world-famous brand. Studies of its main success factors and difficulties on the path of the giant can serve as valuable information for start-up companies.
- One of the main aspects that help a company stay in the market is its standards and goals. The central values of the Ferrero Company are high quality, the freshness of the products used, explicit and high-quality selection of raw materials, and respect for customers. Undoubtedly, the firm adheres to the corporate strategy of related diversification: it produces many different types of products, but all of them are somehow related to food and chocolate. Customer demand is the thing that helps the company determine the direction of development and maintain a leading position. In addition, loyalty to customers helps the company because consumers begin to buy constantly and more often and promote the company among their friends and acquaintances. However, in addition to focusing on customers, it is necessary to remember about employees. So, Ferrero also prioritizes training and other assistance to its employees. Ferrero has been recognized as the best employer in 17 countries (Kittilaksanawong & Curcuraci, 2021). This indicator attracts more and more specialists, both young and experienced.
Such advanced technologies as the Internet contribute to the growth of the company’s popularity and popularity due to its global nature. As the authors write, “through the websites, the company engaged customers in several initiatives and provided visitors with a complete brand experience.” (Kittilaksanawong & Curcuraci, 2021). Any modern company needs Internet promotion and advertising if managers want to increase the percentage of their sales and grow. This process gives the opportunity to advertise products, make a company known to the world, and gradually build up the online customer base.
The following important factor of the company’s success is the careful quality control of the manufactured products. In 2006, Soremartec Italia Srl was established to create new products that improve health, safety, quality, and nutritional value (Kittilaksanawong & Curcuraci, 2021). The company also advertises not its products but the quality and safety of its products. All information about the production of goods and ingredients is publicly available and accessible to anyone. Sponsoring sports events and collaborating with chefs around the world cannot go unnoticed either. Such actions are aimed at promoting Ferrero products and are a very successful business move. - One of the main challenges now for chocolate producers is the shift to a healthier diet. People are increasingly choosing to buy healthier alternatives to chocolate. This trend is reflected in slower company growth and declining sales. However, Ferrero, which promotes usefulness and quality in every possible way, can avoid a crisis from such a trend. The products must correspond to the lifestyle of people who are willing to pay for compliance with naturalness and taste. Therefore, it is necessary to select the ingredients carefully and honestly inform customers about the energy value of the finished product.
As in any other field, there is competition in the chocolate industry. Companies compete for sales, customers, and the title of best manufacturer. The main competitors in the American market for Ferrero were Hershey and Mars (Kittilaksanawong & Curcuraci, 2021). The main opportunity to gain success with consumers for the company was the introduction of an innovative product. In addition, the decline in prices for such an ingredient as cocoa has become a problem for companies as a result of the high level of competition (Kittilaksanawong & Curcuraci, 2021). Cocoa is the main component of any chocolate product. Improper cultivation of it and insufficiently educated farmers who plant it can cause a decline in the productivity of the company. In order to avoid negative consequences, Ferrero educates farmers from different regions of the world, providing them with the necessary information and skills. - Vertical integration can help companies effectively reduce costs and improve efficiency. However, it is sometimes more efficient for a company to rely on the accumulated experience and economies of scale of other suppliers than to become vertically integrated. In Ferrero, vertical integration is used in relation to its supply chain. Kittilaksanawong and Curcuraci (2020) mention that the company “acquired the hazelnut suppliers to gain better control over the supply chain.” This move was made to maintain the sustainability of the company’s products.
The use of a vertical strategy was a positive factor for Ferrero. Becoming a member of the Supply Chain Initiative and Behaviors to support farmers towards a sustainable supply chain of farm values has helped develop and improve the company (Kittilaksanawong and Curcuraci, 2021). A vertical strategy and involvement of the parties at all stages can help to reduce the company’s dependence on the external environment and consolidate the company in the dominant positions. - Many companies seeking further growth often use the transition to publicity as a necessary way to expand their business. Some analysts suggested that Ferrero Company would also take similar actions and go public, but the CEO denied these assumptions (Kittilaksanawong and Curcuraci, 2021). If the company did decide to do so, there would be several advantages. Therefore, Ferrero would be able to increase the financial benefit of raising capital. The increased capital would go to various researches in the confectionery industry connected with improving raw materials and sustainability, training and paying employees, or more expensive ingredients. In addition, publicity would lead to increased public awareness of the company. As already mentioned, the more customers a company has, the stronger it can hold its leading position. One of the company’s goals for 2020 is to increase the number of women by 5% (Kittilaksanawong and Curcuraci, 2021). Publicity and special training would help attract the female population to work in the industry.
However, when going public, the company may face additional pressure in the market, which may lead to the fact that the focus of the business may change to short-term results rather than long-term growth. As statistics show, the first place in the list of thriving confectionery industries in 2015 is occupied by Mars, which in turn has been a private company for four generations (Kittilaksanawong and Curcuraci, 2021). Therefore, publicity cannot always guarantee great success. Besides, in such a scenario, the company may lose complete control over the enterprises due to an increase in shareholders. - The corporate social responsibility (CSR) of the company is based on the principle of voluntary assistance of business managers at all levels to the social development of their employees, the arrangement of public life, and the implementation of measures to protect the environment. The main objective of the company within the framework of CSR is long-term support and attention to all involved parties. Kittilaksanawong and Curcuraci (2021) note that this strategy is “the integral part of the entire value chain and was considered the most effective tool in managing the complexity of the chocolate industry, addressing the scarcity of raw materials, volatility of prices, and slow growth.” This management principle ensures the stability of the enterprise and is the basis of the company’s corporate social responsibility.
Environmental protection should be an integral part of the development process. Ferrero’s corporate social responsibility is reflected in its material sustainability and nature conservation policies. In 2014, Ferrero signed a declaration on forests to halve the rate of deforestation by 2020 (Kittilaksanawong and Curcuraci, 2021). The company’s management adheres to the principles of environmental friendliness, reducing carbon dioxide emissions. The company also founded Energhe, which offered services in the industrial sector to maximize economic efficiency while minimizing environmental impact (Kittilaksanawong and Curcuraci, 2021). The presence of such modern eco-friendly technologies allows to modernize production, reduce costs or increase the profitability of the enterprise.
Analysis of the weak aspects of corporate social responsibility is necessary for every company. After conducting such a study, Ferrero indicated that the safety and quality of products and ingredients and the responsible search for raw materials should be prioritized (Kittilaksanawong and Curcuraci, 2021). The irrevocable conduct of actions to pursue their goals has borne fruit even before the scheduled date. So, Kittilaksanawong and Curcuraci (2021) say that “the goal for as sustainable and segregated palm oil was reached in 2014 as certified by the Roundtable for Sustainable Palm Oil”. Thus, it can be concluded that the environmental management system, thanks to the means that are integrated into all aspects of the organization’s activities, forms the basis for improving the effectiveness of the organization’s environmental responsibility.
However, the use of environmentally friendly materials for the manufacture of products is not enough; the company must also take care of the comfort of its employees, as this is one of the main tasks of corporate social responsibility. Ferrero strongly supports the people involved in the company. The business enables employees in different countries to receive daycare for their children and college scholarship programs (Kittilaksanawong and Curcuraci, 2021). In addition, the company conducts ongoing training activities for its employees. This focus on the parts of the company involved helps Ferrero avoid crises within the company and fit in as a leading business, which justifies all costs.
Ferrero is a company that has managed to establish itself in the world as a manufacturer of unique products. At the same time, it was able to create a uniquely human context within its structure, based on the principles of corporate social responsibility and values that then became an integral part of its culture. The company was able to combine a strong entrepreneurial spirit and a high sense of cohesion that was established in the mind while creating a natural and deep connection between Ferrero and its employees. This is precisely the factor that has given Ferrero an extraordinary look and holds a leading position among confectionery manufacturers.
Reference
Kittilaksanawong, W., & Curcuraci, O. (2021). Ferrero Group: Achieving sustainability through supply chain integration. Ivey Publishing.