Fiji water. david soriano mc guinness


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Fiji water. david soriano mc guinness

  1. 1. MASTER IN BUSINESS STRATEGY COURSE 2010-2011 Fiji Water and Corporate Social Responsibility: Green makeover or ‘Greenwashing’?MODELS FOR STRATEGIC ANALYSIS Case Study David Soriano Mc Guinness
  2. 2. Introduction Fiji Water is a natural artesian water bottled at the source in Viti Levu (Fiji islands)founded by David Gilmour in 1993. It is sourced from this artesian region of the Fiji Island,packaged, shipped and sold to distributers across the world in various sizes. In 1997 it wasintroduced to the US in the California and Florida markets. Today, its headquarters are locatedin Los Angeles. With more than 500 employees in 11 countries, Fiji Water became the nation ofFijis leading exporter in 2008, and its operations are vital to Fijis economic development.More than 300 Fijians are employed at the plant in Yaqara, holding some of the highest-paying manufacturing jobs in the country. Fiji Water is committed to quality and excellence in its product, people, profitabilityand strategic partners. The company is also dedicated to communicating the passion andunique properties of its brand to consumers worldwide. [3] [4] [5] The aim of this report is analyzing the stakeholder mapping of Fiji Water, assessing andmapping the level of interest and power of each one in order to understand better the mainstakeholders that could affect Fiji’s strategy. This stakeholder analysis will help to the identification of the Stakeholders interests,identify who are the Key people to be informed about the project, which are the potential risksand who are negative stakeholders as well as their adverse effects on the project. 1
  3. 3. 1. Who are the main stakeholders whose interests are influenced by the international strategy of Fiji Water? Analyze their level of interest and power. Analyzing this case study, we can identify a large group of stakeholders whose can affect orbe affected by the Fiji Waters actions, objectives and policies. Moreover, we can classify themwhether they are internal or external stakeholders to the business, 1. Internal Stakeholders, Employees: Fiji Water employs more than 500 employees in 11 countries; in addition more than 300 Fijians are employed at the plant in Yaqara. As employees, they do have a very low power although they are really interested about Fiji’s strategy, so we can spot them as a players who must be keep informed to get the best of them. In this case, we have to take account the fact that most of them are people unemployed before Fiji water hired and trained them, so the relation between the company and the Fiji’s inhabitant are very close. Shareholders/Owner: David Gilmour, who founded Fiji Water in 1993, sold the company to Roll International Corporation in 2004, since then, Fiji water belongs to this privately corporation with diverse interests including agriculture, consumer [4] packaged goods, floral services and more. Roll International has many investors around the world, whose have high power and are very interested people, it is important keep these people effectively informed and try to satisfy them as best as possible. Clients: Fiji Water sells their water bottles in more than 40 countries, concretely in the world main markets such as USA, Canada and Australia. The main clients of Fiji are from Restaurants to wholesalers and drugstores. Competitors, Fiji Water copes with many competitors across the world depending on the sector or the country where Fiji operates, such as o Soft drink companies, Fiji competes indirectly with companies such as Coca- Cola, Pepsi-co and Nestlé, which had entered the water bottled market with their own proprietary brands. 2
  4. 4. o Island chill, dispute between the two companies in U.S.A and Australia because of similarities in bottle shape and label design. Island chill is a very important stakeholder, as an example, Fiji water use Island chill as a lever of success in different markets like Australia, where Island chill entered it before Fiji water. Moreover, Island chill has very high interest but low power to influence on Fiji Water’s Strategy, even they have several disputes about the bottle shape and label design.Consumers: consumer preferences have been very important to explain why hadchanged the trend from traditional beverages to “New age” products; Consumers noware fitness oriented and very health conscious. Consumers have low power, but theyare interested in Fiji’s strategy, o VIP customers: Even within general consumers we can differentiate another type of consumers such as Hollywood celebrities and popular singers; I would say that they have more influence over Fiji’s Strategy than normal customers.Suppliers: Such as “Golden manufacturer” which is the company who made thecartons for Fiji, their power is very low because they depends on Fiji water productionand his level of interest is middle, the more production from Fiji, the more benefits tothe suppliers.Distributors: Enable the brand to be well placed, the product was sold by numerousdistributors from wholesalers to drugstores in contradiction of the product’s luxury, in2000, exclusive distributorship agreement with Cadbury Schweppes was crucial in theU.S market. For this reason, distributors have a high power and his level of interest ishigh as well, so we can classify them as key players to Fiji’s success.Subsidiaries: The different subsidiaries that Fiji water has in different countriesallowed Fiji to sign exclusive distribution agreements. Fiji must keep their differentsubsidiaries informed and involved in their strategy. 3
  5. 5. 2. External Stakeholders, Environmentalist and conservation groups: They took up the war against bottled water and formed by political leaders and government officials. These kinds of groups have high interest and also have influence over Fiji strategy, so we can identify this group as a key player due to Fiji’s strategy it is fully oriented to be environmentally friendly, therefore Fiji must keep committed with its project as a partners. Some of these groups against Fiji Water are, o World wide fund for nature: Publishing a research study, which found that bottled water is environmentally unfriendly and a waste of money. o Corporate accountability international, with his campaign called “Think outside the bottle”, promoting tap water. o Greenwash brigade: Examining Eco- friendly claims by companies. o Conservation groups Media: From Newspapers to TV channels and so forth were against the company. They are very important players , because they have high interest and maybe not direct power but it was confirmed that they have strong influence in all the customers (e.g. Media caused the backlash in the U.K market) o Advertisements in favor of bottled water as a healthy alternative to soft drinks. o BBC was also against bottle water. o Several news articles, claimed that they were not convinced that every drop is green. o Study of the cost of bringing a litre of Fiji water to America expose Fiji Water. o A research study called “The true cost of water” showed the complexities about transfer pricing. Governments: There is doubtless that the governments are key players in Fiji’s strategy, depends on the government Fiji’s success. Fiji’s government has a strong power on the Fiji’s strategy because they have the control of its strategic resources and they are very interested people as well. we can differentiate an unequal behavior among them, 4
  6. 6. o UK government wanted to turn to tap water instead of bottled water on all mineral water exports, because they claimed that tap water was among the highest in the world. o U.S conference of mayors, which represented some 1.100 American cities, they are promoting the consumption of municipal tap water. o Fiji government: on July 2008, imposed 20 cents per litre export duty to stimulate conservation of their natural resources. After that, on 25 July 2008, they drop the new tax but In November 2008, Fiji government re-introduced the water tax in a different form (water resource tax) a progressive tax depending the amount of water extracted. o FIRCA (Fiji islands revenue & customs authority) decided to take action against Fiji, they claimed that Fiji was selling the water shipments produced in Fiji at a very low price to the company headquarters in Los Angeles. o Chicago Mayor Imposed a five cents bottle tax on plastic bottles to compensate for the financial burden bottled water. Industry Associations: Consisted of ten bottled water companies, which mounted a campaign against the new tax imposed by Fiji’s government. This new industry association has a very high power and also is interested In Fiji’s strategy. Other influential groups: Moreover, there are other influential groups, not so large to affect Fiji’s strategy individually but they are also important such as, o Key decision makers, trade unions and local chiefs o Village leaders: there are five neighboring on the island. Most of its workforce is from these villages. o Members of the military council, who were against the FIRCA. Once we have identified all the stakeholders who are in contact with Fiji, we can displaythem graphically in the tables above according to their impact on the action and the impactthe action will have on them. While map A represents the most likely situation, Map Brepresents the company’s most preferred situation. 5
  7. 7. Figure 1: Fiji Water’s Stakeholder Mapping.Source: Self-made We are showing advocates and supporters in green, critics in red, and others who areneutral in orange, through this way we can differentiate graphically all the stakeholdersinvolved in Fiji Water Strategy. 6
  8. 8. Referring to Map A and as a conclusion, we can observe how the likely situation it isnot so beneficial from now on, where several powerful stakeholders are located as a keyplayers and also are against Fiji’s Strategy. There is a huge danger keeping these stakeholdersin the same position; the main priority is to change their orientation or at least get a neutral oreven positive orientation toward Fiji Water. In the case of Map B, we have presented as the preferred situation, so, comparingboth maps, and taking a look the mismatches between them, we can see the main concerns,Fiji government, who is considered the main stakeholder and who is capable to affect thewhole Fiji’s strategy Is situated against Fiji but in a desirable situation this stakeholder islocated as a partner, collaborating with Fiji. Others stakeholder against Fij such as Chicago andLondon Mayors are in the same situation however, the preferred location for them is a playerswho must be informed. Overall, the desirable situation is where Fiji Water counts on the support of the mainstakeholders or at least where their opponents are in neutral situation.A brief summary of all the stakeholders could be found in figure 2.Figure 2. Stakeholder summary. Stakeholder Level of power Level of interest Internal Stakeholders Employees LOW HIGH Shareholders MEDIUM HIGH Competitors LOW HIGH Costumers LOW LOW Suppliers LOW LOW Subsidiaries MEDIUM-HIGH LOW External Stakeholders Environmentalist groups MEDIUM- HIGH HIGH Media MEDIUM MEDIUM-HIGH Governments HIGH HIGH Industry Associations HIGH HIGH Other influential groups LOW MEDIUMSource: Self-made 7
  9. 9. 2. How can these stakeholders affect to the interests of Fiji Water? Depends on the type of stakeholder that we have identified in the former question, we candifferentiate or grade them on the basis of the level of impact that they have with Fiji Water. As we can see along all the case, there is doubtless that the main stakeholder would be thedifferent governments, specially the Fiji government at first and therefore all thesegovernments which they are against Fiji Water strategy. For instance, Fiji government imposed to Fiji water a water tax therefore this actionchanged the whole Fiji water’s strategy. The power of the government to affect Fiji wasenormous. We can sum up the different ways that the stakeholders have to affect the interests ofFiji Water, o Governments may constrain or restrict Fiji Water’s actions through water taxes or export barriers. o Media is a very powerful force, they could influence customers to not buy Fiji water due to their high carbon footprint or on the contrary positively influence on customers. o Shareholders could increase or decrease their investments in terms of his willingness to believe in Fiji’s strategy. o Environmentalists groups can keep more pressure on Fiji o Unless they do not come to an agreement, FIRCA could halt the Fiji’s exports. o Government mayors could influence customer to tap water consumption in favor of bottled water. 8
  10. 10. 3. What is your assessment of the response of Fiji Water to the stakeholder’s pressure? To face the stakeholder’s pressure Fiji water had implemented several actions to copewith these attacks against them. The most important action that Fiji water had taken in response all of this was hisfamous campaign “Carbon negative” which it’s means their commitment to the environmentreducing its carbon emissions across every stage in the product lifecycle. The result of this marketing campaign it was not the desirable, severalenvironmentalist and conservationist groups started to claim against this Fiji water promotionbecause they consider that it was not reliable, there was a clear mismatch between the actionand the stakeholder’s expectations, consequently to Fiji Water was an unwanted result. There is another important response that Fiji water carried on in the past, when Fijigovernment imposed to the company a water tax, the firm tried to reduce the new tax impacttrough reducing the transfer price between its subsidiaries in order to reduce the amount ofmoney to pay. It is beyond all doubt that this response was just a measure of pressure.Nevertheless it had strong negative impact over Fiji Water, transmitting a very adverse imageoutward. Thus, any of the responses that Fiji Water had taken in the recent years had not theexpected result. 9
  11. 11. 4. What will be the main stakeholders that Fiji Water will need to consider in the next future? What would you recommend Fiji Water? Firstly, it is clear that the Fiji government will be the main stakeholder for years to come,considering Fiji government as the key on Fiji Water strategy, is doubtless that Fiji hadcontributed to the economic and social growth on the island, hiring inhabitants from Fiji totheir factories, because of this reason, I would recommend Fiji water to get better relationswith the government, trying to balance company and government interests such ascooperation agreements to hire or expand touristically the name of Fiji, for instance, puttinglabels illustrating different parts of the island in exchange of less taxes and a better treatment. It is very clear that the lifestyle had changed in the recent years and it will keep changingto more health conscious and fitness oriented in the coming years, for this reason, customerswill be the key to promote this change and absolutely match with Fiji’s strategy. Another aspect that Fiji must work on it, it is the fact that consumers do not believe inFiji green, in spite of all the marketing efforts made by Fiji water in recent years, people keepthinking if is it real or just a Greenwashing1 campaign. Fiji water needs to reduce the gapbetween his current CSR and the stakeholder’s expectations. In order to face new challenges in coming years, there are some recommendations toFiji water: o Commitment with recycling in order to keep committed with the environment preservation. o More transparency with all stakeholders is needed in order to achieve reliability among them. o It is essential get better relations with Fiji government through investments in local economy, contributing to the local communities and Fiji’s economic development. o Fiji had put in practice several programs related with protect the environment in order to balance the damage that they would be causing to the environment o Take advantage of the new lifestyles and the exponential growth trend in bottled water to promote bottled water consumptions instead of carbonated soft drinks among customers.1 A superficial or insincere display of concern for the environment that is shown by an organization. 10
  12. 12. o Try to reverse the negative relations with Fiji Government to cordial and positive as at the beginning, otherwise, they would be forced to abandon his production on the island and transfer it to other countries.o Better industry agreements in order to get more bargaining power just in case another “Water bottled crisis”.o Negotiate a new balanced tax with Fiji government, where both sides be profited of it.o Keep taking care of its Fiji inhabitant’s workforce, because they are its main human capital. 11
  13. 13. References and bibliography [1] Scholes, K. (1998). Stakeholder mapping: A practical tool for managers. [2] Ambrosini, V. et al. (1998): Exploring Techniques of Analysis and Evaluation in Strategic Management, Prentice Hall. [3] Reference for business 2010, “Fiji water description”. Available at: [Accessed on 23 of December 2010] [4] Roll International available at: [Accessed 28 of December 2010] [5] Case resolution: Fiji Water and Corporate Social Responsibility: green makeover or ‘Greenwashing’? Available at: [6] Stakeholder mapping template, Available at: [Accessed 28 of December 2010] [7] Alternative channel 2010, “Fiji Water a green role model for bottled water companies” Available at: ed_water_companies/ [Accessed 2 of January 2011] [8] Janet Larsen, “Bottled water Boycotts, “Earth Policy Institute” 2007 Available at: [Accessed 4 of January 2011] [9] Cover logo: Available at: 12