ECSR PROJECT on NESTLE & PARLE PRODUCTS

Gayatri Taneja IMI

Industry brief-FMCG
FMCG sector has a market size of Rs.86 Crore,

constituting 2.15% of Indias GDP. This industry grows at approx. 10%-12% every year. Frequently purchased consumer products like packaged foods, soft drinks, biscuits, chocolates, refreshing drinks, soaps, toiletries, cosmetics etc come in this category According to MGI study titled Bird of Gold, the total consumption in India is likely to quadruple making India the fifth largest consumer market by 2025 Major players include HUL, ITC, P&G, Nestle, Godrej etc. Under the FMCG umbrella comparison of CSR activities

Good CSR: Nestl India limited

CSR worldwide very different from the mundane

approach of many. Nestle calls it CSV which is a very different approach to CSR because it is not focused on meeting a set standard of external criteria or on philanthropy. The idea of winners & losers does not fit this model of CSR. To rapidly build Nestle India as the respected & trustworthy leading Food, Nutrition, Health & Wellness Company ensuring long term sustainable & profitable growth. Focuses on strong links between societal & economic progress. Jointly created value ensuring strategic gains & long term sustainability. CSV- a strategically sound way of most efficiently creating value for all stakeholders & bringing back value

Creating Shared Value at Nestl

Quest to get best quality raw materials at competitive prices

company provides agricultural assistance to farmers around factories Evolution of Nestl milk districts: expertise & technical know-how is freely available to improve milk productivity & estb. of cooling stations to keep nutrition & richness intact. In Punjab & Haryana, the company collects over 12,00,000 kg/day of milk in the peak season! In Punjab & Haryana alone, there are over 110,000 farmers, 2085 milk agencies & 695 milk cooling tanks. Veterinary Services available around the clock, artificial insemination centres & availability of top quality cattle feed. Top quality seeds to farmers, factory visits, educational tours & farmer interactions along with distribution of literature. Environment: Vermi-compost, bio gas generation, silage making & solar energy used at collection centre's.

Value Created
Farmers
Steady incremental

Company
Long term

income Generation of employment Improvement in standard of living Profitable alternative to traditional farming Support system in bad times

relationships based on trust & credibility Mutual economic value & long term sustainability Competitive prices High quality products Ensured supply

Analysis: Burke & Logsdon Framework

CENTRALITY(high)
Milk district model Agricultural assistance Investment in cooling stations Concept of Shared Value: Vision aligned Benefits being captured well-quality & productivity ensured Close connect to core business Developing communities around factories CSV is the next most popular way of doing CSR Ensures sustainability & long term gains Strategically sound; competitive advantage Business healthily grows through growing community DMU is completely internal Employees voluntarily help in workshops Richness of value goes beyond fulfilling

SPECIFICITY(high)

PROACTIVITY(high)

VOLUNTARISM(medium)

Visibility

Bad CSR: Parle Products Limited

Dominant player in the snack foods, biscuits &

confectionary domain. Parle-G is its highest selling brand. Core values at Parle products are quality, hygiene & providing nutrition at affordable prices. Quest for persuasion of core values begins & ends with its products. No kind of investment is seen in developing raw materials or aiding community around plants No measures to ensure sustainability & long term gains have been taken CSR thus pursued has only peripheral & short term value

Overview of CSR Activities

Mohanlal Dayal set up hospitals in Pardi, near Surat:

maintained by charities set up by him. Chauhan Institute of Science: no evidence available for contribution to strategic development Parle centre for excellence promotes & conducts various cultural programs like Golu Galata & Saraswati Vandana. A contest is organized for culturally reviving both of them every year. Six mentally retarded children adopted under the Balak Palak Yojna at the Punarvas Special School in Goregoan, Mumbai Interaction & distribution of gifts to Mother Teresa charitable foundation, distribution of school stationary to village students, interaction or donation of items to home for old age women

 Centre for excellence:

CSR Activities

Takes place in West

Saraswati Vandana & Golu Galata

Sponsoring six mentally

retarded children
Interaction & distribution

of gifts to Mother Teresa foundation Distribution of school stationary, aid to old age women Hand pump & ceiling fans

Bengal & Tamil Nadu respectively-comes under patronage not CSR Not done from plant neighboring area; no strategic value Charity not CSR
Philanthropy not CSR

Minimalistic efforts: no

long term gain, no

Analysis: Burke & Logsdon framework

CENTRALITY(low)
Activities do not contribute to achieving core values in any way. Focus is children but no apt use No connect with core business Philanthropic in nature; value internalized is nil No surety of sustainable future Negligible gains Initiatives synonymous to marketing events-soon forgotten Initiatives dont give any concrete gains presently let alone being futuristic Shadow the old norm of CSR equating philanthropy & accountability as charity Employees voluntarily participate in activities Portions of salary contributed is not mandatory Visibility average for Golu Galata &

SPECIFICITY(low)

PROACTIVITY(nil)

VOLUNTARISM(high)

Visibility

Conclusive Thoughts
CSR being analyzed through the B&L framework bring

clarity in conceptual understanding. Value creation is a cycle & social responsibility should be closely connected to firms business, investment in which should a source of long term profitable growth. Nestle by investing efforts & capital has opted for an inferior choice through CSV Parle unfortunately is collecting social goods with no strategic value. Few suggestions for Parle.