MGT301 CSR

MGT301

Corporate social responsibility

1.0 Background of the company

Ben & Jerry is a food processing company established in year 1978 by Mr Ben Cohen and Mr Jerry Greenfield. Company was into field of manufacturing ice cream, sorbet and related products with more than 80 shops in entire USA even after 10 years of establishment which was the evident of slow and steady start made by the company. But due to increasing popularity of this ice cream brand it was popular as one of the premium ice cream brand in the consumer segment in USA. Looking at the increasing popularity and future growth perspectives of the company Unilever acquired it in year 2000 so as to make it a part of Anglo Dutch conglomerate Unilever. Company headquartered in Vermont, USA and is positioned as premium ice cream manufacturing brand in US market. Now it is a subsidiary of Unilever NV and manufactures sorbet, ice cream, yogurt and ice cream novelty products.It has presence in more than 25 countries around the world including some of the major food processing markets such as UK, USA, Australia, Germany, Japan and Switzerland etc. Company has a sound brand name in the national and international market developed through its CSR initiatives.

Ben & Jerry is known for its number of CSR initiatives which were adopted by the organization so that company can develop a healthy market reputation by leveraging on the CSR activities promoted by the company. Some of the vital CSR initiative supported by Ben & Jerry includes usage of energy efficient freezers, participation in community service projects, support for marriage equality, global warming and waste recycling to generate energy (Webb & Mohr, 2008). In order to carry out the social responsibility projects Ben & Jerry has its own foundation named “Ben & Jerry’s foundation”. Ben & Jerry projects itself as one of the most socially responsible organization and driven by key values of the organization. Value led business model of the organization communicates adoption of business strategy where organization shows high level of responsibility towards people and society.

2.0 Challenges/problems/legal limitations

One of the major challenges faced by Ben & Jerry was related with the remuneration policy of the company in early 80s. In order to develop economic equality among the employees working in Ben & Jerry at different level company has made a policy that there can be maximum salary of five times given to any employee considering lowest salaried employee as base. This created problem for the company as salary of the upper management level people was not competitive to their counter parts working in other organization due to unique remuneration policy of the company (Schwartz & Carroll, 2003). Competitors of Ben & Jerry were not having any such rigidity in their salary policy and upper management people in the competing organizations to Ben & Jerry were getting 90 times the salary of lowest paid employee. This creates a huge gap between the salary received by top management in Ben & Jerry and its competing organization. Further salary for the lower level management and mid-level management was very attractive in Ben & Jerry as compared with its competing organizations. This resulted into problem of getting top management level people from outside the organization due to lower remunerations offered by Ben & Jerry. Another problem which aroused within the organization was lack of interest shown by middle level management people to get promoted. By getting promotion middle level management people would be having huge number of responsibility while their salary would not increase to a significant amount. Hence the corporate social responsibility activity promoted by Ben & Jerry resulted into a huge problem for the organization.

Another major challenge faced by Ben & Jerry adopting the CSR initiative named fair trade ingredients where in company was not able to get proper supply for the raw material through fair trade supplier (Maignan et al, 2009). There was abundance of suppliers in the US market but by imposing the condition of fair trade suppliers it become really difficult for the company to get raw material at low prices which was initially obtained by the organization. Hike in prices would resulted into another problem for the organization as it was committed to provide competitive prices in the market and prices of Ben & Jerry were 20% lower in comparison to the competitors of the company. Legal limitations of the challenges confronted by Ben & Jerry was in terms of creating monopoly in the marketplace where in suppliers were decided by the company based on their subjective criteria leading to a complete monopolistic supply chain which was against the free trade policy in the market (Nielsen& Thomsen, 2007).

3.0 Recommendations

In order to deal with the two issues faced by Ben & Jerry, i.e. issue of remuneration policy and fair trade policy present section provides probable solution. In order to deal with the problem of remuneration policy Ben & Jerry needs to analyse situation confronted by them and accordingly there needs to be some level of flexibility in policies & procedure developed by the organization. Hence 5 to 1 ratio needs to be enhanced by organization so as to make it either 7 to 1 or 8 to 1 so that the top level employees can be recruited from outside the organization basis attractive remuneration offered by the organization (Morsing& Beckmann, 2006). This would also sort out issue of unwillingness by middle level management to get promoted as at higher positions they would get compensation in accordance with the responsibilities. Another issue of fair trade need to ensure by the organization by backward integration or acquiring the organization for supply goods so that fair trade rules can be ensured for the employees working in these organizations.

References

§  Webb, D. & Mohr, L. (2008). A typology of consumer responses to cause-related marketing: From sceptics to socially concerned. Journal of Public Policy and Marketing, 17(2), 226-238

§  Schwartz, M.& Carroll, A. (2003). Corporate social responsibility: A three-domain approach. Business Ethics Quarterly, 13(4), 503-530

§  Nielsen, A. & Thomsen, C. (2007). Reporting CSR – what and how to say it? Corporate Communications: An International Journal, 12(1), 25-40.

§  Morsing, M. & Beckmann, S. (2006). Strategic CSR communication. Copenhagen: DJF Publishing.

§  Maignan, I., Ferrell, O. &Hult, G. (2009). Corporate citizenship: Cultural antecedents and business benefits. Journal of the Academy of Marketing Science, 27, 455-469