Nestle faces the risk of adverse consequences to the company due to the possibility of discontinuing some programs. As a result of the companies’ amendment Act passed by the Indian government, the corporation is in a cross road situation since it necessitates additional 2% spending on corporates social responsibility which should be above the company ordinary program. The risk faced entails deciding on the programs that have relation and those that have no relation to the ordinary operations of the company. Making inappropriate decision on extending non related programs is risky since it may lead to negative consequences to the company. The shareholders of Nestle include; private investors, academia, employees, the public customer and the government and other governmental bodies, various industrial associations
Since the Nestle is one of the globe largest food and Drink Company it is no doubts many people have interest in the operation of the business. The stakeholder’s customers such as the breast feeding mother depend on the corporation for the wide range of baby products that they offer. Besides, the government also will monitor the operation of the organization to ensure that safe products are offered to the consumers. Nestle, should take corporate social responsibility in the following key areas; empowering women and promoting gender equality, elimination of poverty, promoting co-curriculum activities such as sports, art and culture, environmental conservation, promoting learning and initiating various development projects.
Corporate social responsibility is a corporation approach that is aimed at various sustainable developments by delivering environmental, social and economic benefits to all stakeholders concerned. Creating shared value is entails such responsibility of corporations to address the needs of the society using various business models. It goes beyond sustainability and corporate social responsibility. On the other hand, sustainability is the deployment of various initiatives and program by the organization which are aimed at meeting the requirements of the present operations without compromising the future operations of the company. The difference that exist between CSR, CSV and sustainability is that, corporate social responsibility and sustainability is majorly perceived as a cost center and not a profit making center, while on the other hand, creating shared value is concentrated on new opportunities that’s makes the organization to identify new markets which in the long run improve competitive advantage of the organization. CSR is centered toward responsibility while CSV is about value addition to the organization.
Q2 Planning Social Responsibility Activities for Next Year
Through its vice president of corporate affairs led by Khajuria, Nestle should first evaluate the risk involved in the activities that need to be done in the following year. The existing corporate social responsibility of Nestle including nutrition, water and rural development has a small span and the corporation what more CSR initiative to be included. Besides the government has also created an amendment that necessitates additional spending on CSR. Therefore, Nestle should critically analyze all its existing projects and then make a decision which activities that should be further incorporated. Therefore next year’s activities should have significant relationship with the daily operations of the business and thus should be extended in the next year. Notably, Nestle should not abandon ll its existing activities. This is because its current activities are significant including water, nutrition and rural development. These activities are close to the company’s interest and therefore should not be abandoned. Hence Nestle should abandon such activities that are not closely related to the interest of the stakeholders to accommodate the activities under the new law in the next financial year.
Essentially, the company should undertake both CSR and CSV since these activities are both important for the long term survival of the company. Corporate social responsibility is a mandatory for all companies and Nestle is not an exemption, while CSV is essential towards the society. Moreover, there exist some surplus that arises from both CSR and CSV that may be ploughed back to enable the adoption of both activities.
Q3. Making Representation to the Government
Ideally, Nestle should not make a representation to the government, therefore the merging CRS and CSV should not be represented. The new law passed by the government has significant consequences on the company hence appropriate approach should be integrated to avoid adverse long term effects to the company. First, taking CRS activities as CSV activities can be beneficial to the corporation since the corporation will avoid double spending; this will in turn save the corporation finance to be used in other productive activities. Moreover, the social activities that are part of the primary function of Nestle will be part of corporate social responsibility budget. Therefore all the work that the corporation has undertaken with farmers of rural developments will be included in CSR. However, this approach will pose a weakness to the organization. The corporation reputation will be damaged and hence can lead to negative consequences like reduced revenue. The company will be prompted to stop some of the programs that have be built for years and those that have led to the long terms sustainability of the company. For instance, the farmers need nestle help and in turn the company also depends upon this, through the supply of high quality milk products and other agricultural products.
The other approach involves taking CSR activities as separate with CSV activities. The advantage of this approach involves the company continuing with its programs that it has built over the years. Moreover, the corporation will not be affected since some of the CSV activities are some of the areas that Nestle is involved globally. Therefore, the company’s reputation will not be affected and the mutual relationship between the company and the community will continue to exist for a foreseeable future. Moreover, the company can clearly define both its CSR and CSV activities and ascertain those that are purely CSV and those that can be integrated as CSR activities. Consequently, this approach will at some point make the corporation to have a huge budget since they would incur double spending by spending additional 2% set out by the new law and as well continuing with the current creating shared value activities
Q4. Long Term Business Responsibility Strategy
Being widely recognized for as good food good life company, the company should aim at creating long term enhancement of quality and contribute to various social responsibility initiative to benefit it stakeholders. This will earn trust among consumers and also lead to financial sustainability besides maintaining market leadership. Due to its significant strengths which keeps it on top of many food companies, the corporation should establish deep roots with the local customers which will enable it to understand their needs. Besides, the corporation should increase its growth through the incorporation of various CSR and CSV activities which will in turn create long term value to the organization. Moreover, the company should give priority and ensure that government compliance is always at stake with reference to corporate social responsibility.
Having a good increased growth strategy, will enable the company to be more relevant to the consumers and in the long run it will enable the organization to expand its budget allocation on CSR and CSV activities. Moreover, the corporation should invest on social responsibility areas such as environmental concerns. This will further improve the process of creating shared value. Creating shared value is significant and is a long term strategy for the company since most companies have survived through incorporation of value between the society and other stakeholders. With this move organization benefits and positive societal effects will be mutually reinforcing to the organization.
In specific terms the organization products must be capable of providing nutritional benefits to the community. Besides, the development of local communities should also be taken into consideration where the organization operate and preserve the environment for the future generation through resource stewardship. The steps that the company should undertake to implement this strategy include; establishing a value proposition which wil sustain long term growth, second, identification and taking customers into consideration, third is the definition of key indicators, forth, is the verification of the budget and revenue streams then evaluation of the competitors strategy , focusing on the strengths and finally implementing the strategy.