SABMiller is an African brewery company which has become one of the largest brewery companies in the global market with famous brands such as Pilsner Urquell, Miller Genuine Draft, Peroni Nastro Azzurro and Grolsch under its belt. Its portfolio also includes local brands such as Aguila, Miller Lite, Castle, Snow and Tyskie. The company also bottles Coca Cola brands, having 50 top brands under its belt. The company is large by utmost means and operates in an industry which has key players such as Heineken and Brasseries Kronenbourg making the industry a highly competitive one (SABMiller, 2010). The industry trends involve heavy influence of economic, social, technological, political, legal and environmental influences which the company has to deal with to sustain long term profitability by utilizing at an optimum level its internal capabilities (SABMiller, 2010). The company makes effective use of strategic planning and incorporates corporate social responsibility in corporate governance and accountability in order to deal with social external factors. How it aligns these social responses with its financial and profitability goals to serve the shareholders is a challenge for the managers.
The main strategy of the company is to cut its costs of production, and increase its market share across the world. This is being so through worldwide company acquisitions and relying on small holders sourcing programs to source the raw materials for the manufacturing of the brands to sell worldwide. These smallholders belong to Indian and African states which offer cheap but skilled labor. This strategy incorporates both the financial objectives of the company as well as the management’s need to take into account the social forces that are affecting the company. Through this practice, the company is employing a corporate social responsibility campaign whereby providing more job opportunities for the unemployed and is successfully reducing the level of unemployment in Africa and the other countries such as India, Ukraine, Uganda, etc where it has set up its plants recently (SABMiller, 2010).
SABMiller enjoys market leadership in Africa and with its recent successfully executed mergers and acquisitions in European countries; it has entered the global market and is competing successfully there too. SABMiller is a major contributor in the brewery industry in Africa towards the economy which has met with constant growth and provides numerous job opportunities for the unemployed Sub Saharan laborers, the government provides a very lenient attitude towards it. The company keeps a very strongly held organizational culture in the organization which pertains directly to its corporate strategy. Each employee is engaged in the same direction where quality and customer service are never compromised. Through SABMiller’s major operations are in Africa where there is a majority of unskilled labor, the company employs an effective and international quality human resource management system which ensures effective and standardized training and performance management and enhancement of the employees. This human resource strength has enabled the company to venture into acquisitions of foreign companies and enter into foreign markets (SABMiller, 2010).
Customers are increasingly switching local unbranded beers to more marketed, attractively packaged and commercialized brands due to the retail and advertising influence. Those companies and those states are seeing positive growth trends in the brewery industry where there is extensive expenditure in advertising and promotion and the commercialization of the alcohol and beer brands. The Sub-Sahara African states offer cheaper labor opportunities for the company but unskilled labor which can be educated and trained, compared to the expensive labor found elsewhere. Also, Indian states also offer the same cheap labor opportunity for the company (SABMiller, 2010).
The competition is highly aggressive with rising competitive advantages. The market share is threatened as well as the position, as other brewery companies continue to expand across the world searching for new market opportunities. Customers are now switching to cheaper brands and have become less brand-loyal and more price conscious. This trend is now challenging the expenditures on marketing and promotional activities to attract and retain customers. Most importantly, the social move towards ‘anti-drinking’ culture to reduce the amount of diseases and health problems that they face as a result of alcohol abuse is affecting the performance of the company (SABMiller, 2010).
According to business ethics authors, commitment towards socially responsible behaviour should be a long term strategy as its benefits are more in future than in the present (May, 2008). The starting point is making the individuals and the teams in the organisation ethically sound in their behaviour and actions so that together as a group, the entire organisations puts forwards a responsible and morally strong behaviour (McElhaney, K2007). Once the entire workforce is committed to morality and socially responsible behaviour then can only he company implement a long term strategy for sustainable value, which calls for commitment at individual as well as holistic level in order to bring forth benefits in future. In order to inculcate a culture of moral soundness and responsibility, the leaders have to first analyze and understand the different backgrounds the employees belong to and establish commonality in beliefs and values in order to enable the employees to produce an ethical fit in the conduct which is similar for all and minimum conflicts occur. Ethical training is also common nowadays in order to explain to the employees the importance of their moral conduct and how well they can serve the company as well as the society through practicing ethically strong behaviour. With this commitment can only the company successfully practice social responsible behaviour and become ‘good’ in the eyes of the society.
SABMiller has strategically aligned its corporate social responsibility and ensured a strong sustainable development for the company to take place. It has linked its cost reduction and profitability measures with its corporate social responsibility where the company enjoys profits but also allows the society to benefit from employment and income and an improved standard of living making the society feel that the business that they gave birth to is growing and benefiting them in return. The cost savings that result from this move allow the company to invest in acquisitions and mergers and training the human resource to counter challenges that wait (McElhaney, 2007). Companies looking to operate in the global markets can no longer function with sole responsibility towards their shareholders as their survival requires them to take into account the sustainability of the environment they operate in. sustainable development or sustainability orientation of companies is an emerging direction which global companies are finding hard to ignore. The concept brings forth the idea that the business does not have only responsibility towards the primary shareholders of the company but the other stakeholders also need to be benefited or else the business will fail in the future.
On the other hand, having benefited the larger group of shareholders, the company finds its profits sustained for a long time in future. This happens as the potential negative influences from the society reduce or diminish once they are satisfied with the returns from the company. However, having dissatisfaction from the company will result in the negative image of the company which will only harm its sales and reputation (SABMiller, 2010). Sustainable performance requires investments and heavy costs to bear no doubt, but it ensures a healthy profitable future and in turn helps the company to better service the shareholders. In the long run that should be the business’s aim and direction, but in the short run the larger group of shareholders has to be taken into account. The company or a business is the produce of the society which cannot operate in isolation from the members of the society which work for the business to grow. They have to be given return for their services and for allowing various opportunities for the business to exploit. If the society is benefited from the business then only do the business finds more opportunities to grab or fails to establish a strong position in the society and eventually declines (Laszlo, 2007).
Corporate Social Responsibility Issues
The corporate social responsibility issues that SABMiller faces fall under three broad categories: responsibilities to the general public, responsibilities to the employees and responsibilities to the customers (SABMiller, 2010).
The responsibilities to the general public include dealing with public health issues, protecting the environment, and developing the quality of workforce. Additionally, many would argue that businesses have responsibilities to support charitable and social causes and organizations that work with greater public good. In other words, they should give back to the communities in which they earn profits. Such efforts are called corporate philanthropy (Blowfield, 2008).
Public Health Issues
One of the most complex issues facing business as it addresses its ethical and social responsibilities to the general public revolves around public health. Central to this debate is the question of what business should do about products that are inherently dangerous, like tobacco, alcohol, and handguns. Tobacco products represent a major health risk, contributing to heart disease, stroke, and cancer among smokers. Families and coworkers of smokers share this danger as asthma, and respiratory infections.
Substance abuse, including alcohol abuse, is another serious public health problem worldwide. Motor vehicle accidents are a major killer, and drunk drivers cause many serious crashes. Alcohol abuse has also been linked to serious diseases such as cirrhosis of the liver. Other risks to public health and safety come from fatty foods, television violence, and motorcycles.
Of particular concern is the impact of such products on vulnerable groups. Alcohol ads appeal to teenagers. Absolute vodka ads have even become collector’s items for many teens, raising concerns that the company is encouraging underage drinking. Many consumers view alcohol advertising, whether aimed at adults or young people, as socially irresponsible. Some brewers have tried to counter these views by sponsoring advertising campaigns that promote moderation (Crane, 2006).
The onslaught of AIDS has forced companies to educate their workers about how to deal with employees and customers who have the deadly disease. Health care for the AIDS patients can be incredibly expensive, straining the ability of small companies to provide health care coverage (May, 2008).
Protecting the Environment
Businesses consumer huge amounts of energy, which increases the use of fossil fuels like coal and oil for energy production. This activity introduces carbon dioxide and sulfur into the earth’s atmosphere; substances that many scientists believe will results in dramatic climate changes during the 21st century.
Responsibilities to Customers
Consumerism is based on the belief that consumers have certain rights.
The Right to be Safe
Contemporary business people must recognize obligations, both moral and lega, to ensure the safe operation of their products (Kotler and Lee, 2008). Consumers should feel assured that the goods and services they purchase will not cause injuries in normal use. Product liability refers to the responsibility of manufacturers for injuries and damages caused by their products. Products that lead to injuries can have disastrous consequences for their makers (May, 2008).
Many companies put their products through rigorous testing to avoid safety problems. Still, testing alone cannot foresee every eventuality. Companies must try to consider all possibilities and provide adequate warning of potential dangers (Blowfield, 2008).
The Right to Be Informed
Consumers should have access to enough education and product information to make responsible buying decision. In their efforts to promote and sell their goods and services, companies can easily neglect consumers’ right to be fully informed. False advertising is a violation of the Wheeler Lea Act. In addition, the FTC and other federal and state agencies have established rules and regulations that govern advertising truthfulness. These rules prohibit businesses from making unsubstantiated claims about the performance or superiority of their goods and services. They also require businesses to avoid misleading consumers. The responsibility of business to preserve consumers’ right to be informed extends beyond avoiding misleading advertising. All communications with the customers – from sales peoples’ comments to warranties and invoices – must be controlled to clearly and accurately inform customers (Crane, 2006).
The Right to Choose
Consumers should have the right to choose which goods and services they need and want to purchase. Socially responsible firms attempt to preserve this right, even if they reduce their own sales and profits in the process (McElhaney, 2007). Other companies are not as ethical about protecting consumer’s right to choose, though. Some credit card companies have a policy of charging higher rates to customers who ask to close their accounts. The company says the higher rate is fair, because customers who close their accounts are less likely to keep up with their payments. Consumers do not always realize they can protect themselves by paying off the card before they cancel the account (Kotler and Lee, 2008).
The Right to Be Heard
Consumers should be able to express legitimate complaints to appropriate parties. Many companies expend considerable effort to ensure full hearings for consumer complaints. The eBay auction website assists buyers and sellers who believe they were victimized in transactions conducted through the site. It deploys a 200 employee team to work with users and law enforcement agencies to combat fraud. The company provides all users with insurance coverage of up to $200 per transaction, with a $25 deductible. It operates a feedback forum, where it encourages users to rate one another (Holmes, 2007). The auction sire operates a software program that tracks individual’s bidding performance, looking for patterns associated with fraudulent behavior. And when it receives complaints of fraud, eBay forwards them to the FTC. So, although, eBay cannot prevent all instances of fraud, it does provide an environment in which buyers and sellers feel protected (Blowfield, 2008).
Responsibilities to Employees
One of the most important business resources is the organization’s workforce. Companies that are able to attract skilled and knowledgeable employees are better able to meet the challenges of competing globally. In return, businesses have wide-ranging responsibilities to their employees, both here and abroad. These include workplace safety, quality of lie issues, avoiding discrimination, and preventing sexual harassment and sexism (Holmes, 2007).
A century ago, few businesses paid much attention to safety of their workers. In fact, most business owners viewed employees as mere cogs in the production process. Workers – many young children – toiled in frequently dangerous conditions. In 1911, 146 people, mostly young girls, died in a fire at the Triangle Shirtwaist Factory in New York City. Contributing to the massive loss of life were the sweatshop working conditions at the factory, including overcrowding, blocked exists, and a lack of fire escapes. The horrifying tragedy forced businesses to begin to recognize their responsibility towards workers’ safety (Blowfield, 2008).
The safety and health of workers while on the job is now an important business responsibility. The Occupational Safety and Health Administration (OSHA) is the main federal regulatory force in setting workplace safety and health standards. These mandates range from broad guidelines on storing hazardous materials to specific standards for worker safety in industries like construction manufacturing and mining (McElhaney, 2007).
Quality of Life Issues
Balancing work and family is becoming harder for many employees. They find themselves squeezed between working long hours and handling child care problems, caring for elderly parents, and solving other family crisis. A “sandwich generation” of households whose caring for two generations – their children and their aging parents – has arisen. As the population ages, the share of American households providing informal care to a relative or friend age 50 years or older is expected to double – from one household in five in the mid 1990s to more than two in five in the early years of the 21st century. At the same time, as married women spend more time working outside the home, they have an average of 22 fewer hours per week to spend on family. The employees juggling work with life’s other demands aren’t just working mothers. Childless couples, single people, and men all express frustrations with the pressures of balancing work with family and personal needs (Kotler and Lee, 2008).
Helping workers find solutions to these quality of life issues has become an important concern for many businesses, but finding answers is not always easy. Some companies offer flexible work arrangements to support employees. Other firms offer benefits such as subsidized child care or on –site education and shopping to assist workers trying to balance work and family.
Ensuring Equal Opportunity on the Job
Business people face many challenges managing an increasingly diverse workforce in the 21st century. By 2050, ethnic minorities and immigrants will make up nearly half of the U.S. workforce. Technological advances are expanding the ways people with physical disabilities can contribute to the workplace. Businesses also need to find ways to responsibly recruit and manage older workers and workers with varying lifestyles. In addition, beginning with Lotus Development Corp. in 1982, companies have begun to extend benefits equally to employees, regardless of sexual orientation. In particular, that means the company offers benefits like health insurance to unmarried domestic partners if it offers them to spouses of married couples. Companies that now offer these gender-neutral benefits include Boeing, Citigroup, Disney, General Mills and Prudential. This treatment reflects the view that all employee groups deserve the right to work in an environment that is non-discriminatory (May, 2008).
Sexual Harassment and Sexism
Every employer has a responsibility to ensure that all workers are treated fairly and are safe from sexual harassment. Sexual harassment refers to unwelcome and inappropriate actions of sexual nature in the workplace. It is a form of sex discrimination that violates the Civil Rights Act of 1964, which gives both men and women the right to file law suits for intentional sexual harassment. More than 15000 sexual harassment complaints are filed with the EEOC each year of which about 12 percent are filed by men. Thousands of cases are either handled intentionally by companies or never reported (Lazlo, 2007).
Sexual harassment is often part of the broader problem of sexism – discriminations against members of either sex, but primarily affecting women. Some examples of sexism are blatant, as when a woman earns less than a male colleague in the same job or when a male employee gains a promotion over better qualified female.
Partnering with NGOS for CSR Projects
It is proposed that SABMiller uses the services of NGOS to outsource its corporate social responsibility initiatives and attain cost advantages and efficiencies as an outcome. The conventional business practices are fast changing due to the changing environmental conditions they operate in. leading companies are now developing new business models to sustain their market positions and profitability. On the other hand, non-government organisations that have been established to address different and various social and environmental issues are finding it difficult to create lasting and widespread impacts based on their limited funding and resources. These requirements and difficulties have given birth to the partnerships among private companies and NGOs. Various multinational companies such as FedEx and Kodak have been engaged in effective partnerships and are beneficial. CSR objectives are best achieved via partnerships with NGOs (Austin, Gutierrez, Ogliastri and Reficco, 2007). There are various factors that create difficulties and risks in fulfilling the objectives of the partnerships.
Despite of the problems, the benefits are various. To achieve maximum effectiveness from the partnerships, a framework has to be developed that allows reducing the impact of potential risks and problems and companies can successfully address all social and environmental issues and benefits in return (McElhaney, 2007).
Despite the obvious facilitation of corporate social responsibility objectives, companies enter into partnerships with NGOs mainly for the following reasons. According to Austin, Gutierrez, Ogliastri and Reficco (2007), the partnerships with NGOS allow companies to converge risks and costs. They allow companies to reduce environmental and social risk factors which help in reduction of costs and facilitate market development and penetration strategies of the company having enhanced value of the existing brands of the company along with improvement in the overall supply chain.
Brooks, Forbath, Kalaher and MacCormack (2007) say that NGOs allow companies to better adapt to the environment changes which gives them competitive edge over other companies. Companies may not have expertise in various social issues which NGO do and this helps companies in meeting their CSR issues and test effectiveness based on the findings of Manga and Shah (2004). Corporate image is radically improved once with NGO’s corporation and partnership social and environmental issues are met. This helps in attracting potential customers and sustaining the existing ones. It has been out that NGO is a third party, the involvement of which, in the company’s projects to sustain the environment, in a way validate and authenticate the company’s efforts to address socio-economic problems.
Porter and Kramer (2006) further state that NGOs allow companies to achieve long term sustainability objectives while they are engaged in accomplishing short term priorities which are also of utmost importance.
Based on the findings of Ostrower (2005) and Meehan, Kilmer and O’Flanagan (2004), there are two main sources of hindrance in establishing an effective partnership framework between private companies and NGOs. These sources are the organizational structures and cultures and the different operational and strategic orientations to deal with stakeholder interests.
Leading private companies are extensively large and have various divisions and departments with geographic, customer or divisional structures. NGOs on the other hand are comparatively smaller organisations with minimum divisions and their mains style of structures is either team based or functional. Due to this difference in structures where there are separate lines of authority and flow of communication, coordination among the two organisations is hampered with a lack of clear communication channels. This creates lack of trust and produces various misunderstandings. Evidence of this has also been found by the Global Environmental Management Initiative (GEMI)’s report on private partnerships with NGOs (2008).
Due to the different orientations of the two forms of organisations, where the primary stakeholders of the company are its shareholders, employees and customers, and of the NGO, the society, the goals and objectives differ tremendously. Profitability is the primary goal of the company whereas social benefit of the NGO. According to Silverman and Talietno (2006), what businesses do not know about NGOs is that they have long term orientations like companies but while they want immediate cost effectiveness and impact of profitability from each venture and NGOs find it difficult to produce monetary results and impact of the activities being undertaken as they work on intangible goals. This creates a source of disruption in effectiveness of the partnership as mutual goals, and roles fail to be established.
Evaluation and Conclusion
SABMiller has strategically aligned its corporate social responsibility and ensured a strong sustainable development for the company to take place. It has linked its cost reduction and profitability measures with its corporate social responsibility where the company enjoys profits but also allows the society to benefit from employment and income and an improved standard of living making the society feel that the business that they gave birth to is growing and benefiting them in return. The cost savings that result from this move allow the company to invest in acquisitions and mergers and training the human resource to counter challenges that wait. However, the current corporate social responsibility strategy ignores the need for health safety. In order to address health concerns associated with alcohol abuse, which requires specialized expertise, the service of NGOs can be taken by the company.