Business and stakeholder analysis

  I will upload the instruction in a word document. There are two questions that you have to answer , and you do not have to write any introduction or conclusion , you only have to answer the question directly. In this two questions, you have to answer the question from a perspective of an employee in government writing to the head of government about the vanilla industry in Madagascar (lets say president). You have to do some research such as news report or government website to support what you wrote in the answer. You might need to quote some stakeholder theories in the answer if needed. a. A detailed analysis of the Malagasy vanilla production supply chain (from plantations to end consumers); (500 words) b. A detailed analysis of the social and environmental issues arising from or reinforced by the production of vanilla and vanilla’s entire supply chain; (500 words) It is important to write in a clear way, with explanation of what you stated in the answer. no waffling Instruction . Do some preliminary research on vanilla production in Madagascar (complementing the above introductory information). Make sure to find information on social and environmental issues in the supply chain. . The quality of the research based one the depth and breadth of the research you undertook; (2) how coherent, relevant, and critical your analysis is; and (3) how realistic. . Reference book: Business & society: ethics, sustainability and stakeholder management Archie B. Carroll, Ann K. Buchholtz, Dawsonera 2015 Donaldson, T. & Preston, L. E. 1995. The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1): 65-91. Freeman, R. E., Wicks, A. C. & Parmar, B., 2004. Stakeholder theory and “the corporate objective revisited”. Organization Science, 15(3): 364-369. Jones, T. M. 1995. Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review, 20(2): 404-437. Mitchell, R. K., Agle, B. R. & Wood, D. J. 1997. Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4): 853-886. BACKGROUND – THE VANILLA INDUSTRY IN MADAGASCAR Vanilla is the second most expensive spice after saffron. Existing originally only in Mexico, it was imported in Madagascar in the 19th century, and is now extensively produced in this country – the world’s largest producer of vanilla. Vanilla exists in three different species, all of them symbiotic with a specific bee. These pollinators have to be substituted by humans for large-scale production. Each flower must be hand-pollinated within 12 hours of opening: the worker has to transfer the pollen into each flower and has to collect it. Such technique makes the harvest extremely difficult, and highly labor intensive. Moreover, once vanilla is harvested it must be carefully prepared: first, scalded at 65°C, then sweat and sun-dried. It then must be cured in wooden boxes, measured and graded (for different vanilla qualities and bean lengths) and finally packed. The Malagasy vanilla annual production can vary from 1’000 to 10’000 tons depending on the season’s weather and other natural conditions. This has a major impact on certain areas of Madagascar that can allocate up to 87% of their crops to vanilla (such as the Antalaha region). Being a family-based production, the weather dependency of vanilla can greatly affect the welfare of local communities. In Madagascar, 80’000 farmers produce vanilla, and the vast majority is concentrated in a specific area, the Sava (North East) region. Vanilla is not only highly sensitive to natural, but also to market factors. First, there is a synthetic substitute: the chemically produced vanillin. However, vanillin is but one of 171 identified aromatic components of natural vanilla fruits. Consequently, real vanilla retains high commercial value. Second, the market was highly regulated. In 1995, the Malagasy government abolished price restrictions on vanilla, and in 1997 removed taxes on exports, spurring growth in the market. Following such liberalization, the average price for raw vanilla has been stable around 30 USD per kg until 2012. Third, vanilla prices are now highly volatile. Since 2012, the price has grown extremely rapidly, with an average price in 2016 of 250 USD/kg. Since then, in vanilla price has set record levels to attain approx. 600 USD in May 2018. However, there are high variations to vanilla price during a given year. Fourth, the increase in price has paved the way for new producing countries to enter the market, for example India, Indonesia or China – posing a challenge to the Malagasy economy as a whole. The supply chain for the Malagasy vanilla industry is usually structured as follows. Farmers, organized by family, produce vanilla on their plantations. Some of these farmers are sometimes organized in cooperatives, much like for cocoa or coffee production. Once vanilla is harvested, it has to be prepared as described above. Some farmers do it, but collectors and preparators – that buy raw vanilla from farmers – also prepare vanilla themselves. Exporters usually buy prepared vanilla from collectors and preparators, but sometimes also directly from farmers. In limited cases, exporters also prepare the raw vanilla they buy. Exporters then ship vanilla to countries of destination (mostly the USA and Europe). Exporters put vanilla on the market, where traders (brokers) manage financial transactions to deliver it to end- users. End-users are large manufacturing firms in the food and beverage industry (such as Unilever or Nestlé), in segments such as chocolate, baking, or flavor. Flavor end-users supply most of ice-cream makers with vanilla aroma. All end-users use natural vanilla to improve the quality of their products as compared to those using 1 artificial vanilla. Finally, after vanilla is transformed and integrated in a final product, end-users sell these vanilla-based products to retailers and supermarkets, where consumers can finally buy them. Figure 1 illustrates this value chain. A number of other stakeholders gravitate around the main economic actors outlined above. First, the Malagasy government regulates the industry. Second, local NGOs, sometimes run by foreigners, but mostly by local people, often care for working conditions in vanilla plantations and fair income. International actors, including international organizations (e.g. the IMF or ILO) and large international NGOs (e.g. Amnesty, Greenpeace, etc.) also oversee some of the operations in the vanilla supply chain – given their interest in different social and environmental issues. Figure 1. Malagasy vanilla supply chain (Answer question A based on this graph with detail explanation and some evidence to support) YOUR ROLE The Government of Madagascar dialogs with the first three stakeholders down the supply chain: farmers, collectors, and exporters. After the new constitution of the 2010 and few coups, the country has becoming more democratic, with acceptably free elections held in July 2015. However, the country is often witnessing unrest and challenges to the government in power at the time. Until the early 1990s, the production and export of vanilla were highly regulated by Malagasy law. In 1957, the Caisse de commercialisation et de stabilisation des prix de la vanilla (Fund for vanilla commercialization and price stabilization) was put in place to set the price for the product, and worked along with a heavy tax on exports. In 1995, this mechanism was abolished and exports were liberalized in 1997. Currently, the role of the government is two-fold. On one hand it has to regulate the seasonality of harvesting, making sure that vanilla beans are not collected too late or too early, as this would have damaging consequences both on quality and on the following years’ harvests. On the other hand, the Malagasy government has to protect vanilla producers on the world stage, as the economy of the island is heavily reliant on this industry: farmers, collectors, those involved in ‘curing’ and preparing vanilla, exporters, are all highly affected by world demand and price for natural vanilla. Instruction . Do some preliminary research on vanilla production in Madagascar (complementing the above introductory information). Make sure to find information on social and environmental issues in the supply chain. . The quality of the research based one the depth and breadth of the research you undertook; (2) how coherent, relevant, and critical your analysis is; and (3) how realistic.