Chicken is the number one choice of meat for the island. Delite Meats is the number one consumer rated meat producer on the island.
Delite Meats was in the media recently when it was accused of discharging untreated effluent into the island's main waterway and fishing area in contravention of environmental law. The company has to pay a fine of 1.5 million and spend considerable time, effort and more money correcting the problem, making restitution to fishermen, publicising their remedial action and proving to the environment agency that they had in fact corrected the problem.
The last three years of consumer surveys have indicated that consumers are increasingly leaning towards products that are organically grown, this has put a small but increasingly growing dent in Delite Meats' profits. In particularly consumers are asking questions about how their meat is produced and if the meat contains GMO's and antibiotics. Consumers between the ages of 18-35 seem to be the persons driving the questioning and a social media campaign, # Name + Shame Inhumane Meat! Producers, now has 10,000 followers.
The board of directors is very concerned that the situation could turn into a Public Relations nightmare and affect the organization's share price in the short terms, as happened to United Airlines when a male passenger was dragged from a flight.
The Vice President Advertising & Public Relations is of the opinion that if the company pumps some cash into advertising and PR the issue would "blow over as millennials are not noted for their attention span". He does not feel that the identified shift away from Delite Chicken products will affect the bottom line.
The rest of the management team is not so sure and the CFO is of the view that the issue is like a sword of Damocles hanging over Delite Meats.
Research & Development was asked to investigate what the change to more humane, no antibiotics and GMO would mean.
They have outlined the following:
1. It would be beneficial to be the first in the market to make the change.
2. The island's Humane Society, would welcome collaborating on such a project
3. Massive changes to farming processes would be required, including reducing the use of antibiotics, providing more natural light and changing the way animals are slaughtered. This will be a major investment and require at least 3 years to complete.
The Chairman of the board is wondering if the increased sales would compensate for the increased costs. He is confident that by going along with what customers want, the company will be successful.
You are required to
A. Examine the contrasting views expressed in the case and discuss these against the background of your learning about corporate social responsibility and its effects on organizations.
B. Propose a solution and provide justification for the elements of your solution.