BUSINESS SOCIETY MANAGEMENT

Dole: Carbon neutral fruits

..................................3 DIFFERENTIATORS................ LABOR ISSUES AND RESOLUTION STRATEGY ............................................................3 3................ ........ . 8 7.............................7 7.. .... ........ 11 REFERENCES.....2 ARENA .................. ..........................................4 VEHICLES .......................................... .......... .................. ........... PLAGIARISM ................. 5 5............ .......................... 9 7............... .. 2........2 OPERATIONS ............................................. ................... ........................... .....................2 EXTERNAL FACTORS ........... 4 4............................................. 9 8......... ......... .. ........ ..................1 STRATEGY ....... .......................... CARBON NEUTRALITY ....... ERROR! BOOKMARK NOT DEFINED........5 5............ ... .... ............. ........................ ..................................... CARBON NEUTRALITY ...................................................................................... ............................. 11 APPENDIX 1 ...................... ........................................................................... .................. ........... ....................................... ....................................................................IMPACT ON COMPANY ..................................... .. 9 7........................... .............................. ......................... 10 APPENDIX ...... ................................. ................................... .. ............3 PRICING ................................... ... ........................ ..... .................. ...... 3 3........ .............. .............................................................. .............................4 MARKETING ......... ............................... .. .........RECOMMENDATIONS ................... ..Table of Contents: 1............. ................... 6 5... BACKGROUND .................. ......................... . 6 6.......................8 7..........................................1 STAGING.............................. ... VALUE CHAIN ..... ......................................................... .......... 3 3............... DRIVING FACTORS ............................................ ......... ...... .. 6 5.......................................................................... .......... 14 2 ............................................................................................................................................................ ................................................................................... ........4 5................................................................. ............................. .................................................. ...................... .. ...................................................... ................ ............................ .............. ...................... ................................................... ........................................................ ..................... .......1 INTERNAL FACTORS................ CONCLUSION ................................................ ............ ......

Dole believes that environment awareness is key factor that would differentiate Dole with their competitors. Dole Food Company (Dole) has a long history and rich experience in fruit and vegetable industry that lead themto become world leader in fresh fruit. 3. Driving Factors There are several factors that are impacting the internal strategy and planning of Dole and motivating them to become completely carbon neutral in their production. fresh vegetables and freshcut flowers industry.000 employees all over the world. Focusing on innovation through high investment in research and development activities. 3. Background Founded in 1851.1 Internal Factors 3 . Dole CSR activity focuses on their employee welfare and surrounding environment.2. Dole is also known for their Corporate Social Responsibility (CSR) activities. Dole successfully promotes their brand worldwide. With 80. which they support in all of their operating companies in more than 90 countries around the world. These factors have been categorized into Internal and External factors as discussed below.

under the various international protocols such as Kyoto protocol countries have to reduce their carbon footprint to a very minimum amount and for which government will further pressurize the organizations to follow this strategy. implementing carbon neutrality will help Dole promote their dedication towards their CSR more effectively. Dole should be responsible and use their financial and bargaining power to make sure that all employees that are related with Dole¶s product get appropriate rights as per Dole¶s policies by introducing an audit system. Moreover. this can be also profitable in the long-term strategy of the company. Moreover. NGOs have been consistently criticizing Dole about their CSR although they are doing a better job than most of their competitors.wide plan to achieve carbon neutrality by 2021. The criticism from NGOs is now majorly focusing about labour rights for contract workers and employees from other plantation that are supplying product for Dole. As customers are becoming more and more aware about the environmental issues Dole would be able to pioneer the market by differentiating their products in the market from their competitors. So. Also. with the premium pricing of the fruits. this will not only help Dole get an edge over its competitors but also will enable them better in responding to NGOs¶ criticism about Dole¶s CSR. which is driving the carbon neutral strategy for Dole. Laborissues and resolution strategy For labour issues. By following the carbon neutral strategy Dole would be further strengthening its position in displaying their dedication towards their CSR strategy and mission.2 External Factors Dole Costa Rica¶s carbon neutral plan also relates to the Costa Rican government¶s nation. providing competitive wages and benefits and protecting the environment. This strategy of course will be an additional cost 4 . Additionally. by quickly implementing the carbon neutral strategy Dole would be able to create a distinction for their products in the market. Dole already has a strong commitment to ensure that all Dole¶s employees get their rights as stated in Dole¶s company policies. Dole has always been active in following their corporate social responsibility through enhancing community growth and employee health. some portion of extra margin can be spared extra for the farmers¶wages. Secondly. 4.Corporate Social Responsibility strategy is one of the major factors. That means that sooner or later company will have to implement carbon neutral strategy but it will be most beneficial from all spheres to implement this strategy as soon as possible. 3. In this matter.

Dole also need to increase the awareness of their customer by giving them knowledge what is exactly benefit of fair trade or organic product. not only for customer but also for all people involved in production. so that they can manage their position and brand in better way: Continue Awareness and Internal Action One important strategy that Dole must have is a specific system that should be able to capture the whole picture of the labor issue and then provide a set of actions to improve its operation internally. Dole also needs to consider below strategies to deal with labor issues. but on the other hand data shows that the demand for fair trade product especially in .1 Strategy 5 .Impact on company 5. Carbon Neutrality .for Dole. This mechanism will help Dole to continuously improve their operation by aligning its internal activity with external dynamic.has also increased significantly in the recent year (The Fairtrade Foundation. 2011). Communication and Education Effective communication with all stakeholders will be the key factor to convince them that Dole already has a specific action to handle labor and environmental issue. 5. Alignment with NGOs For some extend it is also important for Dole to align and communicate with some key NGOs to exactly understand their concern. Dole could also go for an internationally accepted SA8000 certification that would help them reassuring NGOs officially that they are trying to follow the best practices for the labor involved in their operations. such as introducing an audit system. Europe. This strategy also will allow Dole to quickly anticipate any concerns from NGOs and prepare themselves with appropriate action for those concerns. So there can be a bigger compensation for Dole if theymanage the demand for fair trade product with increasing labour cost. Along with all this. so Dole can take action and provide those NGO with a balanced information.

3 Pricing Dole would be able to charge a premium price to its customers for the carbon neutral fruits. This would certainly help Dole to be on track while implementing carbon neutral strategy and help them maintain conformity to the required standards. Dole would also pay a part of premium price to its labors to improve their condition and get an appropriate certification. there should be 6 .After successfully identifying the target market where they will be getting high demand for carbon neutral products. Allocation of emissions compensation cost wouldthen be established between Dole and the partners associated with Dole. Moreover. Also. This premium price will help in covering the cost increase forcarbon neutrality.2 Operations To begin with. Dole would be setting up a method to calculate and verify the total amount of emissions from their operations. Without the support from all the suppliers it won¶t be possible to achieve the target of becoming totally carbon neutral. Details for cost structure are present in Appendix 1. Dole would be bearing the extra cost of carbon neutrality but subsequently as the product will gain good reputation among customers Dole would be better able to negotiate with various parties involved on division of carbon emissions cost. they need to increase customer awareness towards carbon neutral products by conducting campaigns. as it will be highly priced (up to 15%) than the normal products in the same category. it would be easier for them then to redefine the cost between all the players involved. Along with movement towards Gold Standard from VCS as Dole progresses in market share with carbon neutral strategy. 5. Dole would also need to get a certification to prove authenticityand effectiveness in its efforts towards carbon neutrality. The target market will be described as people with high social consciousness and certain amount of disposable income. Dole will see some changes in the organization structure of Dole worldwide to get this idea spread to all units in the best possible way.4 Marketing It¶s important for Dole to successfully identify the target market for their premium product. 5. Initially. Dole.First and foremost Dole will have to align all their business units and partners with the Corporate Social Responsibility vision of Dole.Secondly. shipping company and distributor would then decide on how the costs will be divided between them for following the carbon neutral strategy successfully. Also. along with getting high involvement from retailers. 5.

6. and each of them has different economic incentives. Retailers are likely to be reluctant to cooperate in the strategy especially as for Banana. farm owners and shippers may show negative attitudes toward ole¶s carbon neutral strategy if introduction of the strategy would require extra efforts and result in additional costs to them. ir trade) on t e ole products so t at customer easil identi ies t e di erence. R i orest lli e. they have little incentive to achieve carbon neutrality. since increase of banana price would lead to a change in Bananas¶ position as ³loss leaders´ in stores. 7 . the carbon neutral strategy. partly because they have not been often exposed to strong exte rnal pressure from governments and s. majority of them are actually price seekers. consumer power has become stronger than ever before so as to drive many companies such as ike to implement social responsible policies. social awareness and even mood. l h i Multiple roup of stakeholders are involved in the value chain of Banana and ineapple distri ution. s seen in the chart above. n implication of this is that in implementing ole needs to incorporate them by offering new incentives or motivating them to play a significant role in the social responsibility strategy. specially for shippers. Consumer is the trickiest player in the value chain. evertheless.proper l eli i e. Consumers change their behavior easily depending on economic situations. ach player¶s major incentives and estimated price allocation in the carbon neutral strategy are as follows. and each player¶s responsibility for carbon footprint is not yet clarified. lthough many studies have shown that more and more consumers are willing to reduce their environmental impact by paying premium price for environmental friendly products. hipping business involves numerous multinational players.

Timeline for Dole should be as follows.Recommendations As Dole is going from becoming a commodity to a premium product they should follow a multilayered strategy to implement carbon neutrality in the Dole. Carbon Neutrality . Dole should implement carbon neutrality for their company step-by-step rather than implementing in one go for whole organization. while implementing to the rest of the company. y y y First: Complete implementation in banana/pineapple in Costa Rica within 2~3 years Second: Broaden to fresh fruit business segment within 7 years Third: Expand to all products in global market within 10 years Reasoning of this staging is that Dole should maintain its position as the first mover in their business field.7. and in reference to the fact that Costa Rican government set a target of achieving carbon neutrality by 2021.1 Staging Defining staging is one of the most important steps in implementing the carbon neutral strategy. 7. This would also help them analyze their approach towards carbon neutrality and revise strategy. 8 . if necessary. Dole should first of all implement carbon neutrality completely in their Costa Rica operations and then move further towards other producing plants. All the parts of the suggested strategy are covered in more detail below. Dole should be able to reach an ambitious corporate wide goal in 10 years.

In our opinion Dole should initially choose VCS standard in their approach and depending upon customer response should further more to Gold standard. Dole should also buy carbon credits from the government or other organizations to fulfill the extra production of carbon dioxide.3 Differentiators Dole should be able to create an image of their product in the market as a premium product and not just a commodity.e. 7. Gold standard would further help them building a better branding and consequently a better relationship with NGOs. Dole should also take care of following vehicles during implementation. 7.2 Arena As customer awareness is increasing. before reaching any decision of how to compensate carbon neutrality cost Dole could also see the cost of planting extra trees. Whichever. 9 . Dole can promote their fruits to their customers as healthier food products than other products in same category. Dole needs to first identify the markets where they can earn maximum profits. Also. raising awareness. Moreover. which is out of their control such as carbon dioxide produced during shipping. Dole should use their approach towards environmental issues for promoting their fruits along with maintaining a fair transparency so that customers can easily distinguish Dole from other products and not consider their approach merely as ³greenwashing´. demand for carbon neutral/organic/fair trade foods is increasing all over the world. which will also help Dole in the carbon neutral approach. Dole shouldfollow some international standardsfor VERs to confirmtheireffective and standardized impact. alignment with NGOs and cooperation with partners. This would help them promote their fruits better in the emerging markets and Dole proper promotions will be a key factor in these markets. of two methods seems more feasible and cost effective should be implemented. as customer is highly aware of carbon neutrality in those places and then move further to markets where customers have lower information on the same.4 Ve icles Along with the points mentioned under labor issues i.7. This is very important for the success of Carbon Neutral strategy. It¶s very important to keep all the stakeholders involved and informed for successful launch of this strategy.

Conclusion Related to Carbon Neutral strategy. 10 .Internal organizational restructure is also important for all the involved bodies in the organization to fully follow the company¶s vision. Dole needs to develop a pricing and cost allocation scheme that maintains the partners¶ profit as much as possible. To keep the trading partners and other units motivated to follow carbon neutrality. it will be easier for Dole to continue developing their brand image and differentiating them from their competitors. This framework will also be one package of Dole¶s planning to communicate and explain internally and externally how their strategy will be in future. This framework should be covering all Dole strategy in dealing with labor and environment issues. Dole should be able to align and integrate all strategy related with labor and environment in one framework. 8. By putting it all in one framework.

0066 $0. As we are not aware of the total Dole percentage in the Costa Rica market.00910 Pineapples $0.0017 $0.0008 $0. Kg per box is different for Banana and Pineapple.0083 Table 1 Cost per kg increase for Banana VCS Carbon Credit of Pineapples Production Shipping Distribution Total Cost Per Box $0.01375 Table 3 Total cost increase including 10% increase for labor cost (Labor Compensation Fund = 10% of Carbon Credit Cost) Dole should as of now use VCS certification to adopt carbon neutrality.12 $0. Cost increase per kg is not too high so Dole could implement it easily. This would also help Dole tackle labor issues more effectively and efficiently.15 C Cost Per Kg $0. education etc.00125 $0.02 $0.01250 $0. cost increase has been shown for various market share pe rcentage shares depending upon total Banana and Pineapple export from Costa Rica. 11 .15 C Cost Per Kg $0. Moreover.01 $0.12 $0.0125 Table 2 Cost per kg increase for Pineapple Incremental Cost Carbon Credit & Labor Compensation (USD / kg) Carbon Credit Labor Fund TOTAL Bananas $0. Image on next page displays the total cost increase due to VCS standard adoption including 10% increase for labor cost.01 $0. which is resulting in different costs per Kg. we have also suggested that Dole should charge 10% extra of carbon neutrality cost to both Banana and Pineapple as that amount will be contributed towards supporting the labor by providing them better housing.0006 $0.00827 $0.02 $0. Total cost increase per box is 15 cents USD for this level of certification.0100 $0.00083 $0.Appendix Appendix 1 Carbon Credit Cost Summary of Bananas & Pineapples (VCS) VCS Carbon Credit of Bananas Production Shipping Distribution Total Cost Per Box $0.0011 $0.

592 746.935.909 496.786 3.547.000 358.194.837 298.000 477.655.728.776 2.862 272.960 3.678 636.817 993.572 6.559.631 727.000 597.796 373.279.638.836 550.545 660.731.171 9.000 179.490.921 7.100.181 827.674 597.623.878 223.895 13.159.963 880.763 8.539 909.381 1.Export mount tons) of Bananas & ineapples by Export Amounts (tons) Costa Rica to Europe (Y2006) Bananas Pineapples 2.463.000 417.168 7.186.717.200.247.453 1. (Refer to below table) ¤ ¤ ¤ ¤¤ ¥ £ ¥ ¤ £ ¢ ¢ ¡  .144 5.533 11.545 662.254 770.090 Cost of Carbon Credit (USD) Labor Fund (USD) Bananas Pineapples TOTAL Bananas Pineapples TOTAL 2.090 1.633 671.095.903.736 5.000 1.239.179 from Costa Rica to Europe) Dole Costa Rica Export Share % (Costa Rica) 15% 20% 25% 30% 35% 40% 45% 50% Export Amount (tons) Bananas Pineapples 330.000 537.985.448 6.324.726 1.770 454.809 8.367.585 818.672 990.755 447.224. w can have ifferent cost of carbon credit summary accordingly.329 6.276.970.478.977 5.257 14.552 4.954 12 ¤ Assumi ha D l acc unts for iff r nt shar of xport from Costa Rica to Europ .457.000 238.714 522.619 16.382 4.086 4.362 1.000 298.967.724 545.816 363.359 9.591.368 2.127 440.

01375 Impact on Price (USD / kg) Dole (43%) $0.01250 $0.Export Share % (Costa Rica) 15% 20% 25% 30% 35% 40% 45% 50% TOTAL Incremental Cost (USD) Bananas Pineapples TOTAL Assuming that total increase in cost done by Dole is as mentioned in above charts for implementing carbon neutrality than below is the overall cost impact till the product reaches the consumer through retail chains.00846 $0.00360 $0.01279 $0.02115 $0.00125 $0.03198 13 ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ 3 001 654 4 002 205 5 002 756 6 003 308 7 003 859 8 004 410 9 004 961 10 005 513 2 462 994 3 283 992 4 104 990 4 925 988 5 746 986 6 567 985 7 388 983 8 209 981 § 5 464 648 7 286 197 9 107 747 10 929 296 12 750 845 14 572 395 16 393 944 18 215 493  §¦ Dole Cos Ric ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨  ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ © .00910 $0.01375 Distributor Retail TOTAL (17%) (40%) $0. Cost Impact on alue c ain ( etail Price) of bananas Dole Plantation Plantation Worker Owner 2% 10% 43% International Trading Company 31% Others Distributor 17% 57% Retailer 40% TOTAL 100% 100% Incremental Cost Carbon Credit & Labor Compensation (USD / kg) Carbon Credit Labor Fund TOTAL Bananas $0.00827 $0.00083 $0.00544 $0.00910 Pineapples $0.

2011  Dole Food Company. 2011 14 .ukfg. Inc. Annual Report Form 10-K For the Fiscal Year Ended January 3. Inc..pdf April 11. also accessed http://www. 2009.com/phoenix. 2011. Corporate concentration from farm to consumer. November 2003.uk/press_office/press_releases_and_statements/february_2011/fairt rade_sales_soar_to_well_over_1bn_showing_the_uk_still_cares_in_tough_times.zhtml?c=231558&p=irol-reportsannual April 9. Inc. Annual Report Form 10-K For the Fiscal Year Ended January 1.zhtml?c=231558&p=irol-reportsannual April 9.uk/docs/UKFG-Foodinc-Nov03. 2011  Bill Vorley. Annual Report Form 10-K For theFiscal Year Ended December 29.org. Standard Fruit de Costa Rica. also accessed http://investors. also accessed http://investors..org. February 28 2011. June 2009  Dole Food Company. Inc.dolecsr.References  INCAE Business School. 2011  The Fairtrade Foundation. 2011  Dole Costa Rica.dole.aspx April 10. also accessed http://www. Fairtrade sales soar to well over £1bn showing the UK still cares in tough times. 2007. also accessed http://www.com/DoleWorldwide/DoleFreshFruit/CostaRica/tabid/442/Default..com/phoenix. Food.aspx April 8. Dole: Carbon Neutral Fruits. 2011  Dole Food Company.com/phoenix.dole.zhtml?c=231558&p=irol-reportsannual April 9.dole. also accessed http://investors.fairtrade. UK Food Group.