Sustainable Development Approaches in the Food and Beverage Industry

Sustainable Development Approaches in the Food and Beverage Industry

A Comparison Between Nestlé SA and Kraft Foods Inc

eBook - 2014
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The purpose of this study is to demonstrate the necessity and implementation of sustainable development in business. Thereby, the study focuses on the food and beverage industry, and uses the examples of Nestlé SA and Kraft Foods Inc. First, the literature review builds the theoretical framework of sustainable development. On the basis of secondary data, the drivers for sustainability, the triple bottom line approach, the shareholder theory, the stakeholder theory, and the stakeholder groups are examined. The case study methodology that relies on public company resources is used to analyse, evaluate, and compare the specific industry drivers for sustainability, and the companies' approaches of sustainable development. To conclude the study, the author draws his conclusions out of the analysis.   Auszug aus dem Text Text Sample: Chapter 3.5.3, Employees: Employees are the central component in the process of value creation and are denoted as the human capital of a company. For business success good-quality staff is essential (Hopkins 2004). Especially knowledge intensive and service-based industries are reliant on the commitment and contribution of employees (Simmons 2008). Thereto, Hopkins correctly mentions that human capital is not always well maintained like tangible capital whereas it is very bit as important as physical capital (2004). It is questionable, to maintain this circumstance because a few arguments suggest a consideration of employee claims. First, the attraction of highly skilled employees is described as an increasingly major challenge for companies and often paraphrased as the war for talent (Tansley, 2008). Second, retaining employees is required in order to decrease employee turnover and increase returns on personnel investment. Third, enabling employees to achieve their best performance is essential for success. Sustainable
development approaches these considerations and addresses employees' concerns about working climate, economic security, health and safety in the workplace, labour condition, compensation, and personal development (Schaltegger et al. 2003). Improvements in social and environmental labour conditions, compensations, career development, flexible work practises, training, profit sharing, incentives schemes, and employee participation are potential measures to take employees as stakeholder into account (Hopkins 2004). Additionally, introducing sustainability in business produces a feeling of doing good and contributing something to others that creates a strong motivational effect on employees and acts as a multiplier across the entire organisation (Andersen 2004). Attracting, retaining, and developing employees are powerfully supported by sustainable development and becomes increasingly important as a competitive advantage (PricewaterhouseCoopers 2007). Several researches show that a company's financial performance and productivity is linked to the company's ability to attract and retain employees (Galbreath 2010, Hopkins 2004). These are results of the diminished employee turnover and higher returns on personnel. Additionally, Bae et al. Reveal that employee treatment is an important determinant of the company's capital structure (2011). Employee-friendly companies have a lower degree of leverage (Bae et al. 2011). Altogether, it is obvious that employees not only play a central role in the process of value creation but also are essential for the success of sustainable development in business. The food and beverage industry is not necessarily as attractive as other industries and requires a wide range of qualifications from farmer through to food scientist, and thus are required to attract, retain, and develop employees successfully. 3.5.4, Suppliers:
In many business cases companies are embedded in networks of suppliers which are often the real producers of goods and services behind the companies and brands. It is the result of gaining cost reductions and strategic flexibility by out-sourcing non-core activities (Millington 2008). Companies are the customers of suppliers, therefore suppliers expect timely payment for goods and services delivered, especially those with limited liquidity, predictable business relations for long-term planning, and, to a greater degree, transparency in dealings (Andersen 2004, Hopkins 2004). Companies are free to make business with suppliers who appropriately answer their needs. In this process the social and environmental obligations are devolved to those suppliers (Millington 2008). However, the focus on low cost production in many sourcing decisions may decreases the environmental and social standards in the value chain (Preuss 2001) because manufacturers in developing countries or the like cannot afford the same standards achieved by companies in industrialised countries (Hopkins 2004) and are subjected to deviating institutional, cultural, and legal environments (Millington 2008). Hall erroneously states that the purchasing companies have limited responsibility towards the supplier's negative impacts on the environment and society (2000). Regarding the legal responsibility it is true, but the supplier's impacts are associated with the purchasing company (Frenkel and Kim 2004) and are increasingly considered as a risk to the company (Rao 2004). Therefore, the implementation of sustainability in a company requires an extension of ist suppliers. Indeed, suppliers usually do not come in contact with the company's stakeholders and are rarely forced by external stakeholders to introduce sustainability in their business. It could be argued that the suppliers are
encouraged to introduce sustainability by the purchasing companies as their customers. However, the degree of encouragement of the purchasing company on suppliers depends on the considerable power-dependence relationship between them (Millington 2008). Power derives from the ratio of sales and profits from the contributing party, (Frazier et al. 1989), availability of alternatives, switching costs to alternatives (Porter 1980) and the economic dependency for a proper utilisation of capacities (Pfeffer and Salancik 1978). Consequently, four types of power-dependence relationships exist. The market dependence type includes a buyer-supplier independence with low interdependence and neither have the power to impose on the other. Two power imbalance types with either buyer or supplier power over the other unilateral depending party exist. Type four is characterised by a mutual interdependence between buyer and supplier with balanced power (Millington 2008). It is comprehensible that at least in the case of market independence the supplier perhaps acquiesce in the demand for sustainable development, in the case of buyer power the supplier probably accepts the buyer's demand for sustainability, or in the case of mutual interdependence both parties negotiate the implementation of sustainability in business (Millington 2008). Merely, in the case of supplier power an approach to sustainable development is unpromising. Recapitulatory, the extent on which suppliers are forced to consider sustainability in their business is limited to the power-dependency relationship. In terms of the food and beverage industry, Ionescu-Somers and Steger analysed that the switching costs to alternatives are low for the food and beverage companies and an increased vulnerability of commodity suppliers (2008). The strong fragmented supplier networks with complex supply chains
results in buyer power-dependence relationships including low supplier power (Ionescu-Somers and Steger 2008). Therefore, a eased implementation of sustainability in supply chains is possible.   Biographische Informationen Lars Siegert, LL.B. und B.A. (Hons), schloss sein Studium des Wirtschaftsrechts an der Fachhochschule Osnabrück im Jahre 2010 mit dem akademischen Grad Bachelor of Laws ab. Im Jahr 2011 erwarb der Autor, gefördert im Rahmen des Bachelor Plus des DAAD, den Bachelor of Arts with Honours im Studienprogramm Business Management with Law an der Edinburgh Napier University in Schottland. Im Wintersemester 2011 nahm der Autor das Masterstudium des Management & Business Development an der Leuphana Universität auf. Vor dem voraussichtlichen Masterabschluss im Sommersemester 2013 befindet sich der Autor zum Auslandsstudienaufenthalt an der Wroclaw University of Economics in Polen. In 2010, Lars Siegert graduated with a bachelor of laws degree in business law from the University of Applied Sciences Osnabrück, in Germany. In 2011, he received a bachelor of arts with honours in business management with law from the Edinburgh Napier University, in Scotland. In the winter term 2011, the author has begun his master studies in management & business development at the Leuphana University, in Germany which he will presumably complete in summer 2013. Currently, the author spends a semester at the Wroclaw University of Economics, in Poland.
Publisher: Hamburg : Diplomica Verlag, 2014
Edition: 1st ed
Copyright Date: ©2014
ISBN: 9783954895762
Branch Call Number: Electronic book
Characteristics: 1 online resource (53 pages)
Additional Contributors: ProQuest (Firm)


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