Business Ethics Cadbury Final

• Aniket Bose RMM 03

• Akashdeep Singh Godara RMM 18

• Pruthiraj Pradhan RMM 22

• Harkiran Baweja RMM 28

• Deepti Manohar RMM 31

• Puja Pabari RMM 54

Group 6

• History.

• Organizational Structure.

• CSR Initiatives.

• Corporate Governance Practices.

• Lesson Learnt.

Flow of Presentation

1948The Company

was Incorporated

1964Undertook

Cocoa growing in

India

1967Introduced

Five Star and Gems

brands

1981Received

certificate to manufacture

2,200 tonnes of chocolates at

Indori.

1997Launched

Crackle followed by

Perk and Bournvita

2003Poor packing

issue and restructurin

g.

SWEET HISTORY

ACHIEVEMENTS

• Asian Marketing Effectiveness Awards 08• Ranked 7th Great Place to Work in India 2008 & 2007• Bournvita won the Emmvie Gold for the

Best Media Innovation - TV. 2007• Cadbury Dairy Milk & Bournvita crowned as Consumer

Superbrands 2006 & 2007• Cadbury- Ranked among India's most respected

companies • Cadbury wins the Effies 2006• Suraksha Puraskar Award – 2005 & 2009

• Two structures – Store and Company• Simple structure in stores i.e. Store manager and workers• Regular hierarchy in the company i.e. MD, Directors,

Managers, Subordinates & Workers.• Has removed lots of it’s managers recently.• Current managers look after many employees• Increased span of control• Maintenance and market research outsourced

ORGANIZATIONAL STRUCTURE

Anand KripaluMD – Cadbury India

Atul BhatiaDirector R&D

C VenketashanDirector Choco & Strat

J PhilipsDirector Opr

Rajesh GargDirector Finance R Ramanathan

Director HR

Sunil SethiDirector Sales & IB

N SundaramanDirector Gum & Candy

• Sustainability is fully integrated into the Cadbury business

strategy

• Clear roadmaps and goals established in the form of

Sustainability Commitments

• Creation of new significant, leading edge programmes in

‘Purple Goes Green’ and the ‘Cadbury Cocoa Partnership’

• Specific training in sustainable business practices for

colleagues and key suppliers

CSR ACTIVITIES

“Corporate Responsibility is one of the things that makes

Cadbury special. It’s been integral to our business for nearly

200 years since the Cadbury family first sought to be a

‘force for good in troubled times’. That sense of ambition

remains at Cadbury today.”

- Todd Stitzer

CEO Cadbury

IMPORTANCE OF CSR

• Vision - ‘Working together to create brands people love’

• Outlook towards CSR-

– Positive contributor to our competitive strategy

– Doing responsible things profitably

• CSR strategy – Five Pillars of CSR: marketing, food and

consumer trends; ethical sourcing and procurement;

environment; quality, health and safety; human rights and

employment standards; and community investment

CSR VISION AND STRATEGY

• Migratory birds stop over at their Bangalore factory

– Construction of check dam

• Pioneering cocoa cultivation in India

– Research in collaboration with Kerala Agricultural

University• Bangalore factory: the sun shines at night…

– Use of solar panels to light the streets outside the factory

during the night

COMMITMENT TO THE ENVIRONMENT

COMMITMENT TO THE ENVIRONMENT

Non-formal school for children of migrant workers in

Baddi (HP)

In association with an NGO called SAHYOG

Key areas addressed are village health, sanitation,

education & water harvesting.

GROWING COMMUNITY VALUE

• Sarvam Program Working in partnership with a local charity on a five-year project, Cadbury is

contributing to the redevelopment of two villages in the costal region of

Pondicherry

The project addresses education, health, economic development, vocational training,

organic farming, water harvesting and attitude changes including the empowerment of

women.

• Cadbury India supports the building of a Neo-natal ward Supported to build this ward at the Thane Municipal Hospital

Caters to specialized and intensive care for premature and critically ill newborns


Cadbury launched a corporate social responsibility Web site

called DearCadbury.com, which provides consumers information on ethical

sourcing, responsible consumption and the environment.

The site features Cadbury’s 2007/08 Corporate Responsibility and Sustainability

report highlights-

Reduction in carbon emissions by 4 % till date; Aiming for a 10% reduction by

2010

As part of Cadbury’s “Purple Goes Green” program, the company committed to

a 50% absolute reduction in carbon emissions by 2020

Reduction in water wastage by 10 %.

DEARCADBURY.COM

• Cadbury publishes a CSR report every two years, highlighting

all of its CSR activities.

• Total involvement of top management shows how serious the

company is about its CSR activities

• The launch of dearcadbury.com signifies that Cadbury has

dedicated a whole new website to its CSR

• This shows genuine efforts on the part of Cadbury to make CSR

initiatives an integral part of their day to day working

CSR INITIATIVES PLANS

• Director qualification standards, • Director responsibilities, • Director access to senior management and, as necessary

and appropriate, independent advisors, • Director compensation, • Director orientation and continuing education, • Management succession, • Annual performance evaluation of the Board of Directors

CORPORATE GOVERNANCE

I. Director qualification standards a) Personal qualities: • Non-executive Board members represent a broad range of

experience from a variety of industries and professions • Diversity of background, gender, ethnicity, age and

experience • Proven record of integrity and good character, exhibit high

standards of ethics and possess independence of mind, objectivity and the ability to challenge and stimulate management


I. Director qualification standards B) Board and Committee independence • Majority of the directors non-executives who meet the

independence criteria of the UKLA Combined Code and the NYSE

• The Company’s Audit Committee, Nomination Committee and Remuneration Committee composed entirely of independent non-executive directors, with the exception of the Chairman’s membership of the Nomination Committee


I. Director qualification standards C) Membership of other boards:• The Chairman shall not serve on more than 2 other public company

boards other than in exceptional circumstances, and with the approval of the Board

• A non-executive director may not serve on the boards of more than 4 other public companies, or 5 such boards if they are not an executive director on any of those boards

• An executive director may not serve on the board of more than 1 other public company

• No director shall serve on the board of a significant competitor or one of the Group’s nominated peer companies


I. Director qualification standards D) Time commitment:• Directors - commit sufficient time and effort to Board matters in

order to ensure constructive and independent participation at Board and Committee meetings

• Expected to attend all meetings of the Board and of the Committees


I. Director qualification standards E) Term limits :• No term limit for executive directors • Non-executive directors will not, without detailed consideration by

the Board, and without the approval of shareholders at the next Annual General Meeting, serve for more than three terms of three years each

F) Size and composition of the Board:• The number of directors on the Board shall not be less than 2 nor

more than 20


II. Director responsibilitiesA) Principal obligations:• The Board is the ultimate decision making body of the Company,

except for those matters reserved to shareowners • In forming the judgment the directors are entitled to rely in good

faith on the honesty, integrity and expertise of the Company’s senior executives, its outside advisors and auditors


II. Director responsibilitiesB) Decision making guidance:• The Chairman and Company Secretary, in consultation with

the other directors, responsible for establishing an agenda of matters for consideration by the Board

• The Board review compliance with all aspects of relevant corporate governance regimes, especially in the UK and US but not necessarily limited to those countries, and agree on any necessary or desirable actions to correct any shortcomings identified


II. Director responsibilitiesC) Board interaction with third parties:• The Chairman speaks for the Board• Senior management speak for the Company • Communications about the Company or Group with

shareowners, analysts, the press, media or other interested parties are handled by senior management in most cases


III. Director access to senior management and independent advisors

• All directors have access to senior management and other employees if necessary

• Senior Management will attend meetings of the Board and its Committees at the request of the Chairman

• Each Director and each Board Committee is authorised to obtain outside legal or other independent professional advice


IV. Director compensation• A non-executive director (with the exception of the

Chairman) may not receive any compensation or benefit from the Company or any of its subsidiaries other than directors’ fees

• Non-executives are encouraged, but not obliged to, elect to receive part or all of their fees in shares, purchased quarterly on their behalf

• Each executive director is expected to hold shares to the value of at least four times their basic salary


V. Director induction and continuing education• Company provides a comprehensive induction programme

for all directors• Induction programme usually completed over a period of 6

months after the director joins the Board • The Company pay the costs of any director attending an

accredited director education programme • Directors also required to educate themselves with respect

to industry practices, general management, strategic planning and international business issues


VI. Management succession• A comprehensive presentation on management development

and the identification of high potential or experienced managerial candidates to succeed present senior management and executive directors discussed annually by the Board

• The Nomination Committee review director succession planning on an annual basis


CORPORATE GOVERNANCEVII. Annual performance evaluation of the Board• The Board has a formal annual self or independent evaluation • Evaluation will always include a consideration of corporate

governance, strategic planning, Board structure and role • The Board reviews the results of the evaluation and identifies

steps and actions necessary to enhance its performance and ability to manage the Company

Worm controversy hit Cadbury in Oct 2003. Fungus layer on portions of its chocolates. A swarm of tiny white worms crawling out of the chocolate nuggets State Food Laboratory at the Public Health Institute said“ the chocolates were insect-infested and unfit for eating’’. FDA began seizure of the chocolate not only from all outlet across the state but also from the Talegaon Plant. FDA also ordered inspection of Stock at company’s Mumbai Plant. Peak Season Sale and outsourcing model affected due to controversy.

TURNING POINT

The heat of negative publicity melted Cadbury's sales by 30 per cent, at a time when it sees a festive spike of 15 percent.

Net profit in 2003 dipped 37 per cent to Rs 45.6 crore as compared to a 21 per cent increase the previous year.

Retailer stocking and display dropped, employee morale especially that of the sales team was shaken.

The Company had to shelve its plans of becoming a major sourcing hub for British Chocolates and beverages giant Cadbury Schweppes.

The largest impact on sales has been seen in Mumbai, Pune and Nagpur in Maharashtra, Cochin in Kerala, Bangalore and Hyderabad.

EFFECTS

REASONS Aggressive marketing by Company while neglecting on the

Quality of Retailers

Lack of efforts to Educate Retailers and ensure adequate hygienic storage conditions at retail outlets

Poor quality in packaging of product

Issues related to transportation of product

No Norms in terms of Storage for Chocolates

STRATEGYPhase 1: Presenting Cadbury’s view (October-

December 2003)• The agency set up a media desk to ensure that

no media query went unanswered.

• The Cadbury’s Managing Director addressed consumer concerns

• Project Vishwas (Trust)

• Editorial Outreach Program with 31 media editors across affected cities

Packaging:• New ‘purity sealed’ packaging ( Jan 2004) - investment of

Rs 15 crore on imported machinery• Metallic Poly-Flow was costlier by 10-15% but Cadbury

didn’t hike the Pack Price• Investment of millions of Dollars leads to achieve a

production process in 8 weeks, that would normally take 6 months.

Phase 2: Packaging Change and Communication(January – March 2004)

STRATEGY

Advertisement Weapon:• Brand Ambassador to reinforce

the credibility

• Amitabh Bachchan, a legendary Indian film star, was chosen, as he embodied the values of Cadbury as a brand.

Phase 2: Packaging Change and Communication (January – March 2004)

STRATEGY

• Media Conference to compare the old and new packs with an innovative comparison kit

• A VIDEO news release with packaging shots and factory shots was given to television channels

• Audio-Visual ... series of sales conferences to enthuse and reassure salespersons

• The announcement of the new pack --a testimonial advertisement on TV called ‘Sincerity’.

“ Consumers respected the brand for not skirting the issue,

but acknowledging it and giving a solution to the problem

’’

STRATEGY

• Attention to business ethics has substantially improved society.

• Ethics programs help maintain a moral course in turbulent times.

• Ethics programs cultivate strong teamwork and productivity• Ethics programs support employee growth and meaning• Ethics program are an insurance policy – they help ensure that

policies are legal.• Ethics programs help avoid criminal acts “of omission” and

can lower fines.

LESSONS LEARNT

• Recognize that managing ethics is a process.• The bottom line of an ethics program is accomplishing preferred

behaviors in the workplace.• The best way to handle ethical dilemmas is to avoid their

occurrence in the first place.• Make ethics decisions in groups, and make decisions public , as

appropriate• Integrate ethics management with other management practices• Use cross-functional teams when developing and implementing

the ethics management program.• Value Forgiveness

LESSONS LEARNT

Business Ethics Cadbury Final

Documents

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