Why is it that Ferrero bought the US confectionery business of Nestle for $US 2.8 billion? Specifically we have: Chocolate-related businesses Butterfingers
Raisnets Sweets-related businesses Sweetarts
Nerds In 2017, it acquired Fanny May Confections Brand US 115 million and Ferrara Candy for an undisclosed amount. These last two are some of the most famous and well-established in the US confectionery business. The ethical, environmental and social goals associated with these acquisitions are questionable and the targets for a sustainable future are hard to envision based on such acquisitions. By acquiring such businesses Ferrero will become the 3rd largest confectionery business in the US, country in which we all know obesity and health-related issues to be problematic and the food consumption path unsustainable under all points of view. However, what would happen if Ferrero entered this market using a new approach developed with the question in mind “How can I transform my business to make it sustainable and socially valuable for the areas of the world that I work with?” This question could be looked at as an extension of putting clients’ first, thinking about the environment in which they live and the health of the individual and of the community. Today, consumer’ demands are shifting rapidly not only because of the visible consequences of an unhealthy food consumption but also because of the environmental disasters that it causes. Indeed, Ferrero Group has already seen complaints from UK NGOs and customers who are dissatisfied with the amount of plastic and aluminium present in the Ferrero Rocher Collection Box (about 89%) making packaging around 42% of the total weight of the product  . Disruptive technologies such as blockchain could inform customers about their products’ supply chain, increasing their power, trust and loyalty in Ferrero’s standards and procedures. At the level of image and reputation, the interrogation goes to the core identity of the company: to what extent are social and ecological goals parts of its mission or culture? Ferrero’s efforts to comply with stakeholders’ and NGOs demands have been an incentive for Ferrero to take action on the sustainability matter. Indeed, it now dedicates a whole website to their Corporate Social Responsibility. After the extensive public pression to only use sustainable palm oil and raw materials, Ferrero demonstrates in their F-ACTS their efforts to satisfy customers (see below). In fact, they are proud to be the first food industry in the world for their reputation  . Besides, Ferrero has said to be using renewable energy and energy efficiency methods and has said to be on the path of reducing their environmental impact as all businesses are forced to do so for the environment but also as a strategy for their business’s survival and success. Although the positive news that this brings about, the majority of Ferrero’s emissions come from Raw Materials, Packaging and Supply Chain (in total accounting for 90.8%). To tackle pollution and play an active role in diminishing its activities’ environmental impacts while generating new opportunities for the business as well, Ferrero could redesign their manufacturing and packaging division. Ferrero still uses lots of plastics in its packaging which if not up-cycled, recycled or in any way re-used is not only highly polluting but is effectively a missed opportunity cost. If Ferrero’s objective was to attempt to purchase the materials for packaging once and then through a smart design re-using them, what will be the gains? (Economic, social, environmental). To facilitate the design step, it could partner with different start-ups throughout the different geographical locations where the waste materials is to be found. The many upcycling and recycling startups as well as the ones specialising in plastic reuse are rich of innovative and creative designers. This could not only support the growth of sustainable practices which could allow Ferrero to be more transparent about their complete product supply chain for the benefit of consumers, but it would also mean interesting and new opportunities for Ferrero such as creating a potential new business line or finding new sources for cost reduction in materials’ use. If this sounds impossible, have a look at the many upcycling startups which partner with multinationals like McDonald’s, IKEA and many others. One example is DekoEko in Poland which connects multinationals such as the ones I just mentioned and designers working successfully on the B2B line. Initiatives launched in 2013/2014 by Ferrero such as Ferrero4Future and FER-Way-Ferrero Environmental Responsibility Way are meant to support and promote the development of a circular economy, an economy planned to self-regenerate and erase the linear model of production-consumption-waste. One of the four areas of work precisely concentrate on waste management. At the end of use in the supply chain, Ferrero’s website shares tips for customers to recycle effectively each of its products explaining which materials the packaging is made of  . However, as Ferrero’s total production amount to 1.265.950 t more effort needs to be taken. The opportunities are there, the goodwill is what seems to lack. At the efficiency level, Ferrero needs to ask: How can embedded sustainability contribute to greater savings along the lifecycle value chain? Many sustainability and green advocates in the business press would define Ferrero’s approach to sustainability one that is bold on rather than built in (or embedded). Embedded Sustainability is the incorporation of environmental, health, and social value into the core business with no trade-off in price or quality – in other words, with no social or green premium  . The decision to acquire some of the ‘worst’ brands within the US confectionery business shows an interest from Ferrero’s management board to expand their market share in US but with which goal in mind? This acquisition was expensive for Ferrero and those brands will need some complete rethinking in order to be sustainable throughout the supply chain. Do the circular economy initiatives taken by Ferrero in 2013/2014 align with the board decision to acquire Nestle’s brands in 2017 and 2018 for $2.8 billions? Or are the circular economy initiatives a marketing strategy to create an appealing brand? Ferrero is on a tricky line, where their board needs to take a strong decision. In Ferrero, unlike in Unilever or General Electric, sustainability is not the core strategy of the business. Instead, Ferrero’s approach to produce CSR reports and demonstrate care and effort for the environment and people suggest to be considering sustainability as a cost rather than an opportunity, missing the point. Superficial efforts will satisfy stakeholders and consumer in the short term, but with other businesses embedding sustainability as their core strategy, Ferrero will struggle to keep up with competition in the long term if continuing this business-as-usual strategy. Building sustainability in the core strategy of big businesses is challenging but the ROI shows to be positive and exponential for the century into which we are heading. However, Ferrero seem to have chosen to be victims of the tsunami as it quickly reaches the shores rather than riders of the new wave.  https://www.greenstyle.it/ferrero-rocher-nel-mirino-delle-associazioni-uk-confezione-poco-riciclabile-283535.html  Page 12, https://s3-eu-west-1.amazonaws.com/ferrero-static/globalcms/documenti/2804.pdf  https://www.ferrerocsr.com/planet/you  Page 38, https://www.iedc.si/docs/default-source/Publications/embedded-sustainability---a-strategy-for-market-leaders.pdf?sfvrsn=0 SOURCES ⁃ https://www.mergentindustryreports.com/latest-blog-posts/ferrero-buys-nestles-us-confectionery-business
What is ethics? Ethics are the moral standards constituted by values and judgements with respect to right and wrong. It is the study of morality and its application of reason to depict specific rules and principles that determine right and wrong for any given situation.” What is the difference between right and wrong and how do we determine it in our actions? The origins in ethics have historical value from multiple cultures (different cultures have different points of view), religions (moral/spiritual guidelines/rules), and society (increasingly important; reaction to globalization/environmentally). Ethics and self-interest are not mutually exclusive where self-interest is not a comprehensive guide to ethical behaviour. The short-term and long-term requires consideration as they encompass the consequences of our actions. “morality is the persisting norms, values and beliefs that are embedded in social structures defined by right and wrong per individual and community.” In business, this would require owners to evaluate their activities and decisions on the basis of right and wrong, but the values that are used can be relative to the geographical location. Judicial locations differ, for example common law in North America has a different ethics and morality structure than that of Sharia law . Decisions could be legal but not ethical, or ethical and not legal. Business ethics is incredibly important for corporate governance has changed the landscape as the responsibility of business to society has increased. Businesses have the power to influence society as they create economic value for its citizens, and have potential to provide major contributions to society, but also have the potential to inflict harm. There are increasing demands from stakeholders to incorporate corporate governance to combat any lack of business ethics education or training that may or may not have caused occurrences of ethical infractions. There are many ways to evaluate the different ways of managing ethics with rewarding benefits. The morally and ethically “correct way of acting” is based on normative ethical theory that is used as like an antidote, whereas descriptive ethical theory requires ongoing decisions actually made by the business. Some perspectives of ethics for corporate governance take a stance of absolutism where claims are eternal and universally applicable, the vice versa being ethical relativism that applies contextual dependent and subjective rationale. Some societal examples would include feminism, nationalism, patriotism, pluralism, and protectionism – on a scale from relative to absolute , where do you think this fall into? Emerging Issues In Business Ethics When multiple cultures meet, their ethical frameworks collide and there are competing values that ensue: Gift giving in Japan Child labor in Pakistan Facilitation payments in the Congo Gender issues in the Persian Gulf These multiple forces must be acknowledged and respected in order for the world and business to move forward successfully. There are two lenses through which we may interpret emerging issues so that we can evolve our ethical structures, which lends to the importance of evolving corporate governance. The "Lexus" is our power over technological futures and our drive for modernization. The "Olive Tree " represents the importance of our sense of identify, geography, ethnicity and our past. This evolution has been attributed to two major types of societies: progressive (tech and innovation, economic wealth distribution, and globalization) and traditional (cultural, religious, and linguistic). A holistic measure relates to respecting all cultures as a means of relativism , which is the belief that all cultures are equal in sovereignty with no international rights and wrongs. If an activity is believed to be acceptable within a specific culture, then it is void of ethical implications from other cultures. This is more true in international law because each country reverts to its country’s sovereignty. Ethical Issues In Intl Business There are proactive vs. reactive management types that can address key ethical issues if the business operates internationally so that corporate governance has embedded business ethics. Strategies to tackle theft of intellectual property (unique and individual ideas), bribery and corruption (e.g. Lockheed scandal ), intentionally selling dangerous products (pharmaceuticals in Africa, Nestle baby formula), and intentional misrepresentation in negotiations (bait and switch, hidden costs, requests for facilitation payments). Political issues can take precedent depending on the severity. Sanctions have taken precedent in the past 30 years in South Africa, Iran, Iraq, Cuba, and Burma. Even when the sanctions are not to or from the nation you reside, such as sanctions on Russia by the US, there can be repercussions on Canada, the UK, and Australia due to Free Trade Agreements (FTAs) that Russia is part of (add FTAs Russia is part of). This affects corporate governance because businesses should be weary of unethical behaviour during politically and internationally unstable times. Unethical behaviour such as profiting from war, selling weapons to both sides (i.e. the Rothchild and Rockefeller families). Doing business with regimes that are unethical such as Saddam Hussein. Major questions ensue: Should corporations sell to governments that are corrupt? Or that violate human rights? Or that actively pollute? Should corporations sell to companies that are attached to “evil” regimes. What would you do if your supplier participates in child labor? Minimum wage or living wage? Would you take a bribe? Would you allow your products to be produced in a sweatshop? What if you had no other choice? What if your business partner lives in a nation that hangs gay men? What do you do? There is a cost-benefit analysis to every aspect of business, not just in the negotiation stages. Sending employees to dangerous locations is a predicament many companies have and there requires a company structure that can protect them or bring them home swiftly. Corporate governance is the structured approach to conducting your business ethically with every decision, or at least always aiming to. Union Carbide in India, also known as the Bhopal disaster , is an example of missing the mark in terms of local skill levels were not high enough to ensure safe use of technology and using the appropriate protection of India’s citizenry and their environment. Environmental pollution is another example of how businesses today are working to make change, to engage itself and its employees to participate in education of environmental affairs around the world. Disposal of hazardous materials (e.g. PCPs in Nigeria, or asbestos in Ukraine); research what standards a nation has is part of a businesses corporate governance and due diligence. Make sure to note which standards apply – home or foreign. Other key information a business must educate itself on is gender issues, social customers, and animal rights. A business’s ability to perceive interdependence while thinking ethically and responding effectively will produce a valuable trust between customers, employees, leadership, and other businesses. Corporate Social Responsibility & Corporate Citizenship Business keeps evolving, and as society’s expectations evolve with it there are particular aspects of corporate social responsibility (CSR) and corporate citizenship that must be acknowledged – legality and ownership. Although corporations are legal entities or “artificial persons”, and owned by shareholders, they act independently. According to Milton Friedman , businesses only have responsibility towards profit. Except businesses such as Patagonia and Google show how vigorous a company can be to thwart Friedman’s perspective so that there is a higher moral compass to be responsible for human being, to have a shared value beyond that of shareholders, and address economic, social, and environmental issues (the triple bottom line of sustainability) of a community. These are the particular corporate governance activities that create an atmosphere of transparency that help businesses connect with society. There is a level of responsibility that is shared to society about the actions of the business, and although there are long and complex debates on business etiquette, some even argue of “information overload”, which is too much information about company activities, that society is now bombarded with company information that is too complex to navigate and acts as a means for business activities to disappear into a sea of data. Ethics And Corporate Governance A company is built to address issues through their shareholders who can ultimately influence managers into decisions. Except there are monitors that balance this dynamic such ad a board of directors, auditors, analysts, bankers, credit agencies, and attorneys. It is a common understanding that if a company with reputable ethical behaviour and high levels of corporate social responsibility must also have effective systems of corporate governance. These systems should be stated in the company mission, vision and values. Legal requirements should also be followed along with industry standards. Other issues arise that can affect ethical decisions depending on the acceptable levels of ethics in a country. Some possible signs of unethical behaviour could include: shirking work responsibilities nepotism excessive perks high risk Culture and Corporate Governance Companies must have an integral motivation to search out culture. Enculturation is the non-intentional process that includes learning valuable information in a new environment. This can be culture shock when entering a new country. Primary socialization is the intentional learning of new cultures and subcultures to develop and understanding of ethnic groups’ backgrounds, language, religion and other characteristics from the majority population. Secondary socialization happens after the primary socialization and helps to equip people with knowledge, skills, and behaviours for successful activities with other cultures. There are 3 main levels of understanding culture: artefacts: surface level, visual manifestations; easy to observe and hard to decipher beliefs and values: explicit level, normative, focus on what is judged to be important underlying assumptions: difficult to reach, integrated, unconscious perceptions Strong cultures tend to persist over time and are difficult to change once many people have assimilated to its norms. Some issues may arise such as tyrannical leaders, who are many times also charismatic. They can cultivate autonomy and decision making in themselves and their citizens, and act as if they are a member of an ideal kingdom of ends that justify its means. They envision a future while energizing and enabling followers into fervent loyalty. Some examples are Adolf Hitler and Josef Stalin. These are also examples of “transformational leaders” who can create basic structures to operate and are capable of amplifying response, reshape focus, and direct loyalty by putting emphasis on “mutual empowerment”, that they are able to liberate their citizens out of whichever strife they are facing. These types of people are usually enamored by their own visions, but usually begin in the “ Bathsheba Syndrome ”, which is when leaders make ethical errors in a downward spiral during high success. They are obsessed with positive benefits and become privileged and controlling. Corporate governance is sometimes about employees spotting bad leadership and helping to correct the problem. The following can help to pinpoint the Bathsheba Syndrome: leaders in a position of power who should be focusing on doing what is right for the company but are never where they are supposed to be and doing what they are supposed to be doing. Temptations can be a serious issue for a leader. Know what can tempt a leader and keep an eye and open ear. Leaders who frequently place greater emphasis on personal gratification If it is difficult or “impossible” to act unethically A leader who tries to cover-up activities that may otherwise seem ethical without close analysis A leader who doesn’t get caught for smaller unethical activities may be self-deluded into getting away with larger unethical activities. A leader that has dissatisfaction for a company or progression, and is unmoved by the destruction a company and its employs may face for unethical behaviour
Ecosystems To better understand how ecosystems work you must know the terms: Energy Nutrients Food chains Producers Decomposers Primary producers Secondary producers Tertiary consumers Trophic levels Energy provides power for life and moves through communities within ecosystems through a one-way flow . Nutrients on the other hand pass as atoms and molecules derived from the environment and cycle within and between ecosystems. Energy flows through a process called " photosynthesis ", and passes nutrients through food chains of decomposers, primary and secondary producers. Light energy comes from the sun, which is our main source, a reaction of thermonuclear conversion of matter such as hydrogen into helium. Photosynthesis ables energy from light to convert to chemical energy from the 1% of radition from the sun that reaches the earth. This conversion is depicted in the picture below. Finally, a small amount reaches the earth in waves of energy: heat (low energy), visible light (usable energy), and UV light (high/dangerous energy). Made up of atoms and molecules from the environmental, nutrients pass through organisms that require them for survival. Nutrients cycle through ecosystems - land, water, air, and make their way through the food chain. Harnessed energy into biological matter - invertibrates, mammals, fish, and birds. Dead organisms, or " decomposers ", carry energy and nutrients just like consumers that is passed on to future organisms. Producers are the bottom of the food chain, they are our plants that harness energy from the sun, water, and air through a process calleed " photosynthesis". Our primary producers are capable of producing complex organic compounds from simple substances by consuming plants. Most common primary producers are herbivores. Secondary producers cannot harness energy from light or other sources, so much "feed" on primary producers. These are omnivores and carnivores. Lastly, we have our tertiary consumers , such as larger mammels, fish, and birds. There are many interconnected food webs, in the picture below you can see the lion and the hawk at the top of the food chain as tertiary consumers, while producers, primary producers, and secondary producers underneath share energy for other creatures. Trophic levels describe the position of energy in food chains and webs. To better understand the percentage of energy distribution will help better understand the issues of populations of animals (average number of animals per species) in an ecosystem, and the seriousness of population changes. Energy is transfered in the form of nutrients, and 90% is actually lost during the conversion pyramid. The image below shows the distinct percentages per stage and the changes as energy converts and transfers. Trophic cascades is the changes in population that happen so quickly that it makes a large change on an ecosystem. This is a domino effect that causes serious changes in other populations. An example would be killer whale populations failing because of salmon populations depeleting due to over-fishing. Tracing population changes is extremely difficult and requires ongoing assessments to determine ecosystem changes. The picture below depicts life distribution across the globe. Find your current location and do some simple research of the ecosystems in your area so that you have a better understanding of what creatures live in it, how it has changed over time, and what you can do to help conserve it.