Stakeholder Analysis - Business Society & Ethics

Introduction

Carrefour is a publicly traded French multinational retailer headquartered in Boulogne Billancourt, part of the greater area of Paris. Carrefour is the fourth largest retailer chain in the world in terms of revenue, and the company is third largest in terms of profit. Carrefour is currently finding itself in the midst of an ethical dilemma as the French National Assembly recently voted unanimously to pass legislation that will bar supermarkets from deliberately spoiling unsold food. This law severely impacts Carrefour because the company must find means, both monetary and logistical, to preserve and distribute its excess food supply to charities. Economics tells us that, since Carrefour has limited resources, any additional costs in one area will lead to a decrease in costs in another area− meaning that Carrefour may reduce its labor force. Furthermore, this movement against food wasting is gaining momentum globally. However, although food wasting will only be illegal in France with the current legislation, Carrefour has actually taken some initiative against food wasting globally by implementing a food waste reduction program in 11 of the countries in which it operates and setting up special food waste awareness and prevention programs for consumers and employees. The company is also pioneering the extension of the “Best before” label on products. How Carrefour handles the food waste prevention movement, especially in countries where supermarkets are hypercompetitive such as Italy, will be a watershed decision for the company.

The following is a list of Carrefour’s stakeholders in Italy, followed by an analysis of each stakeholder. The stakeholder analysis addresses the stakes and attributes of each stakeholder and the responsibilities that Carrefour owes to and type of action Carrefour should undertake in addressing each stakeholder.

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Stakeholders

Carrefour’s Stockholders and Board of Directors

Stakes: Carrefour is a publicly traded company. The stockholders of publicly traded companies own their respective companies. In addition, because these people have invested in the company, they are rightfully stakeholders in the company and are interested in the company’s operations. Yet, the Board of Directors is who actually controls the operations of the company. The Board of Directors may consist of stockholders, but they may also be an outside party brought in to manage the company. The stockholders check members of the Board of Directors through their power to elect Board members. In the case of Carrefour, the Board of Directors is a mix of both stockholders and outside parties. Therefore, the members of the Board of Directors who are also stockholders possess the same stakes as the other stockholders. The members of the Board of Directors who are from outside parties have an interest and right in the company, but they do not have ownership.

Attributes: The stockholders and Board of Directors have a legitimate stake in Carrefour because they legally own and run the company. The Board of Directors possesses power through their decision-making on company operations, and, in turn, the stockholders have power through their ability to elect and vote out the Board of Directors. Stockholders are urgent stakeholders because any decisions made by the company directly impact the stockholders financially. The Board of Directors is an urgent stakeholder because they must be informed so that they may address any urgent situation immediately.

Responsibilities: As investors and decision makers, the stockholders and Board of Directors are owed an economic responsibility by Carrefour. The company must make its best effort to flourish so that it may bring value to its stockholders and recognition to its Board of Directors. Carrefour also has a legal responsibility to its stockholders and Board of Directors. The company must disclose all information regarding the company’s status to its stockholders. In addition, the company has a legal responsibility to be under the jurisdiction of the Board of Directors. Carrefour also has ethical responsibilities to its stockholders. The company should be honest and open with its stockholders so that they are aware of how their investments are being used. Carrefour must ethically communicate with and follow its Board of Directors so that the Board may have full knowledge in its decision-making. In another aspect, if the Board of Directors is making unethical decisions, the company has a responsibility to direct the Board back on an ethical path.

Strategy: Due to the power and legitimacy of the stockholders and Board of Directors, Carrefour should collaborate with these stakeholders in its decisions on food waste management in Italy. The new allocation of revenue needed to distribute unsold food, thus decreasing profits, will most likely decrease the value of Carrefour’s stock in the short run. Therefore, Carrefour should communicate its plans to and collaborate with its stockholders and Board of Directors on their endeavors in Italy to deliver the most value possible to its stockholders, while allowing the Board of Directors to do their job and deliver that maximum value.

Charities

Stakes: With the current situation of the new legislation in France and the momentum of the food waste prevention movement, charities in Italy have an interest in Carrefour and they soon might gain a right as stakeholders. Charities in Italy are interested in the company because they will have to respond to the amounts of food donated by Carrefour so that they may not be the side wasting the unsold food. If the charities in Italy are unprepared for the donations from Carrefour, Carrefour’s efforts will be in vain. Charities in Italy may actually have the highest interest of any stakeholder in Carrefour.

Attributes: Charities have no power as stakeholders because they have no control over Carrefour. However, the nature of charities due to their mission of feeding the hungry makes them urgent stakeholders. Charities are urgent because their beneficiaries desperately need food. The synergy between charities and Carrefour must be efficient in order to properly manage the donations of unsold food. If Carrefour contracts with charities in Italy, these charities will gain a legitimate status as stakeholders in Carrefour because they are now legally connected to Carrefour.

Responsibilities: Carrefour has ethical and philanthropic responsibilities to charities, and they soon may have a legal responsibility to the charities. Carrefour must be ethical in its philanthropic efforts with charities because if Carrefour does not make a genuine effort to donate its unsold food, its efforts overall may be worthless. If the unsold food is not distributed judiciously with corresponding charities, the efforts of the benevolent actions by both Carrefour and potential legislation will be wasted. It would be unethical for Carrefour to distribute spoiled food or donate food that will not be able to be sufficiently preserved to charities. While Carrefour has no legal responsibility to charities in Italy currently, the company owes them an ethical philanthropic effort.

Strategy: Charities are a minimal threat to Carrefour even with the legislation. Yet, Carrefour should involve charities in Italy because the charities will support the company. Carrefour should take its current initiative in food waste management even further and partner with charities in Italy because Carrefour would be viewed as a big-hearted company. Also, with the current momentum of the food waste management movement, any initiative taken by Carrefour to involve charities may prepare itself for the future, when legislation could require the company to involve itself with charities in Italy. A voluntary effort in Italy by Carrefour would be a positive action overall for the company.

Food Distribution Companies

Stakes: Food distribution companies in Italy will partner with Carrefour to deliver Carrefour’s unsold food to charities. This will give food distribution companies a right as stakeholders in Carrefour because they will be partners. Currently, food distribution companies have an interest in Carrefour with the current situation because they potentially will gain work. This interest in Carrefour will continue when Carrefour expresses a desire to be partners.

Attributes: Food distribution companies will have legitimacy as stakeholders in Carrefour when they partner to deliver unsold food to charities. Food distribution companies also have power as stakeholders because Carrefour must negotiate a deal with the distributors in order to become partners. If the food distribution companies are unwilling to reach a deal with Carrefour, Carrefour’s ability and willingness to expand its food waste prevention movement into Italy will decrease significantly. Furthermore, if legislation is passed that would require Carrefour to donate unsold food in Italy, Carrefour will be penalized if it is not able to responsibly deliver food to its corresponding charities. Therefore, food distribution companies will have leverage in negotiating with Carrefour. Carrefour’s decision to expand its efforts into Italy will depend on its ability negotiate a deal with the country’s food distribution companies. This significance leads food distribution companies to be urgent stakeholders in Carrefour as well.

Responsibilities: Carrefour has an economic responsibility to food distribution companies because Carrefour must be able to pay the food distribution companies for their labor. Carrefour has legal responsibilities to food distribution companies due to the contract agreements that they will form. Carrefour must be ethical in its negotiations with food distribution companies in Italy because this agreement is an investment for food distribution companies as well. Carrefour can be ethical in its selection of which food distribution company to contract with by not simply picking the cheapest food distribution company. Carrefour should choose a company that will be able to properly transport its unsold food.

Strategy: Food distribution companies are a threat to Carrefour because Carrefour is dependent upon them to deliver its unsold food to charities. Carrefour wants to reach an agreement to deliver unsold food because the company does not want to be sanctioned for being unable to deliver its unsold food. Therefore, Carrefour should collaborate with food distribution companies in Italy. Carrefour should even collaborate with food distribution companies in Italy, before any legislation is passed that would require Carrefour to deliver unsold food, because Carrefour would be more likely to receive a better deal. If new legislation is passed and Carrefour is required to deliver unsold food to charities, food distribution companies would be able to raise their price, with their service now being a necessity. Carrefour should collaborate with food distribution companies in Italy sooner rather than later.

Fédération du Commerce et de la Distribution

Stakes: As a representative of Carrefour, the Fédération du Commerce et de la Distribution has both an interest and a right as a stakeholder in Carrefour. The Fédération du Commerce et de la Distribution is a representation for all of commerce in France, and for this reason, it is interested in Carrefour’s operations. The Fédération du Commerce et de la Distribution was a voice for Carrefour after the legislation in France was passed. The Fédération du Commerce et de la Distribution has an interest in Carrefour because it wants to see Carrefour succeed. In addition, the Fédération du Commerce et de la Distribution has a right as a stakeholder by being a regulating body, ensuring that prices remain competitive, for all supermarkets in France. Carrefour will carry over the governance provided by the Fédération du Commerce et de la Distribution to Italy.

Attributes: The Fédération du Commerce et de la Distribution is a legitimate stakeholder in Carrefour because it is a governing body of commerce. As a governing body over commerce in France, Carrefour’s domestic country, the Fédération du Commerce et de la Distribution has power over Carrefour. It regulates Carrefour’s prices to keep them competitive. The Fédération du Commerce et de la Distribution ensures that Carrefour is maintaining its regulated price and distribution practices.

Responsibilities: Carrefour has an economic responsibility to sustain itself so that it may support the Fédération du Commerce et de la Distribution. Being able to thrive under the Fédération du Commerce et de la Distribution, would justify Carrefour’s operations under the organization, and it would justify the Fédération du Commerce et de la Distribution itself. Carrefour has a legal responsibility because it must obey orders from the Fédération du Commerce et de la Distribution. Carrefour cannot operate outside of the regulations set by the Fédération du Commerce et de la Distribution. Carrefour must also be ethical in operating under the Fédération du Commerce et de la Distribution, not using any loopholes to circumvent regulation.

Strategy: The Fédération du Commerce et de la Distribution was an advocate for Carrefour in France. They defended Carrefour after the legislation requiring Carrefour to make new procedures for food waste prevention was passed. Therefore, Carrefour should graciously respect this relationship and involve the Fédération du Commerce et de la Distribution in its expansion of food waste prevention into Italy. Carrefour should be consistent with the voice of the Fédération du Commerce et de la Distribution because dissent would not look good in the eyes of the public. If Carrefour’s voluntary desires to operate in Italy are inconsistent with the messages of the Fédération du Commerce et de la Distribution in France, then that takes away some validity from both the Fédération du Commerce et de la Distribution and Carrefour. Carrefour should involve the Fédération du Commerce et de la Distribution in its expansion into Italy because the company should take advantage of a valuable advocate.

Carrefour’s Suppliers

Stakes: Carrefour’s suppliers are contracted with Carrefour to provide their products to be sold. This gives them a right as stakeholders in Carrefour. The suppliers earn profits through the profits earned by Carrefour from their ability to sell their products. As a result of this synergistic relationship, the suppliers have an interest in Carrefour. Any break in this relationship would result in a massive shock to both parties. Carrefour’s suppliers are interested in the success of the company because the suppliers’ success is directly related, and vice versa.

Attributes: Suppliers have legitimacy as stakeholders because they have contract agreements to do business with Carrefour. The suppliers have power over Carrefour because Carrefour is reliant upon the supply delivered to earn a profit. The suppliers can express their power by not delivering the quality of products expected by Carrefour or severing the supply completely, if a certain situation arises. As evidenced by these examples, suppliers are urgent stakeholders because any issues that they may experience directly affect Carrefour.

Responsibilities: Carrefour has economic responsibilities to its suppliers because the suppliers’ success is dependent upon Carrefour’s success. If Carrefour does not succeed economically, then it suppliers will not be able to profit either. Carrefour has a legal responsibility to its suppliers through their contract to do business. Carrefour pays for the agreed price and the suppliers sell for the agreed price. Carrefour has an ethical responsibility to its suppliers through its monitoring of the supply chain, ensuring there are no unjust labor practices.

Strategy: Carrefour should collaborate with its suppliers to either create longer preserved food for selling or packaging that would facilitate the transportation of unsold food to charities and preserve it longer for the charities. This innovation within the supply chain would be another step in the company’s food waste management efforts. If Carrefour wisely collaborates with its suppliers now, it will cut costs of donating and transporting unsold food in the long run. If its suppliers are not on board with this concept, then it will be an obstacle for Carrefour to expand its food waste prevention into Italy.

Carrefour’s Competitors

Stakes: Carrefour’s competitors have an interest in Carrefour because they will have to respond competitively to Carrefour’s actions. Carrefour’s competitors like Coop Italia, Conad, Interdis, Carrefour, Auchan and SPAR are all smaller retailers than Carrefour, which would lead Carrefour to have a bit of an advantage over them.

Attributes: Carrefour’s competitors do have some power over Carrefour, specifically in the area of price setting. Following the logic provided by economics, competition prevents large retailers like Carrefour from being able to charge its customers a monopoly price. However, with the size comparison between Carrefour and its competitors, even in a competitive market such as Italy, Carrefour’s competitors do not have much power to exercise.

Responsibilities: While Carrefour does not have any true contract agreements with its competitors, Carrefour has a legal responsibility in competing. Carrefour has a legal responsibility not to collude with its competitors nor may it defame its competitors. The line between Carrefour’s legal and ethical responsibilities to its competitors is thin. Carrefour’s ethical responsibility to its competitors is to not undercut them in any way. Carrefour can be an ethical competitor by conducting business, focusing on making a profit and not erradicating its competition.

Strategy: While Carrefour’s competitors have a genuine interest in Carrefour, they are nonsupportive of Carrefour, and Carrefour should defend itself against them. Competitors are interested in Carrefour because they have to contest with Carrefour for market share. Carrefour needs to consider its competitors when pondering its decision on whether or not to extend its food waste prevention programs to Italy. With increased expenses due to the cost of distributing unsold food to charities, Carrefour is putting itself at a disadvantage, if the company should voluntarily decide to implement a program. Yet, extending charitable efforts into Italy may enhance Carrefour’s brand against its competitors. Nonetheless, Carrefour must at least think about the strategy of its competitors.

Beneficiaries of Charities

Stakes: Beneficiaries of charities are the low income and homeless people who utilize the charities’ resources. These people have an interest in Carrefour and its potential efforts to increase its donations of unsold food in Italy because they rely on the food for daily meals. These stakeholders may have no obligatory stake in Carrefour, but they may have the highest interest in the company’s actions.

Attributes: With the momentum of the food waste prevention movement, the beneficiaries of charities are being highlighted. This emphasis leads these people to be urgent stakeholders. Furthermore, these people’s lives depend on the food. Thus, these stakeholders are urgent because their lives are urgent. These people are the most intriguing stakeholders in Carrefour because they have no power over Carrefour but have an urgent status do to their nature due to their reliance on the company.

Responsibilities: Carrefour has no economic or legal responsibility to the beneficiaries of charities, but Carrefour should exercise its ethical and philanthropic responsibilities to these people. Carrefour is not obligated to provide any of its products for these people, outside of France, but as philanthropy, genuine donations should be made by the company. Carrefour should ethically take on the costs of donating products to these people.

Strategy: Beneficiaries of charities are absolutely no threat to Carrefour, and they will not be able to give much in return to the company. Therefore, Carrefour only has to monitor the people who utilize charities. However, Carrefour should address these stakeholders urgently because both the people and the company will only benefit. Carrefour will be able to significantly positively affect lives and will gain positive publicity in the process.

Carrefour’s Employees

Stakes: Carrefour’s employees have an interest and a right as stakeholders because the company is their livelihood. Under their scope of employment, the employees have a right as stakeholders because they are contracted to work for the company. The employees have an interest as stakeholders, especially with Carrefour’s increased expenses due to having to preserve and distribute unsold food and the potential for further increased expenses, because the increased expenses of having to redistribute the unsold food will lead Carrefour to cut other expenses. The reduced expenses may be the amount workers that the company employees.

Attributes: The employees are legitimate stakeholders due to their status as contracted workers. The employees possess power as stakeholders through their quality of work and their ability to refuse to work. The employees are also urgent stakeholders because any problems involving them must be addressed immediately by Carrefour in order to limit any further damage. Employees may in fact be the most powerful stakeholders of Carrefour because they are the heart of the company.

Responsibilities: Carrefour has an economic responsibility to provide jobs for its workers. Carrefour should attempt to maximize the amount of possible jobs within the company. Carrefour has a legal responsibility to its workers through the contracts that they agree upon. Likewise, Carrefour also has an ethical responsibility to pay these workers fair wages, to not endanger them, and to not overload them with unreasonable amounts of work.

Strategy: Carrefour should collaborate with its employees in its efforts to expand its food waste prevention movement into Italy. Carrefour must consider the consequences for the workers that will arise if the company increases its investment into its food waste prevention programs. While some jobs may have to be cut, more jobs might actually arise through increased work needed to donate the unsold food to charities. Moreover, Carrefour should ensure that it has its employees’ support to extend its food waste prevention movement into Italy because, without them, the program’s success will not be maximized.

European Union

Stakes: The European Union has a stake in Carrefour’s food waste prevention programs because the European Union is feeling the same pressure to be socially responsible as Carrefour. This gives the European Union an interest in what action Carrefour will take in Italy. In addition, as a governing body, the European Union has a right as a stakeholder in Carrefour.

Attributes: The European Union possesses legitimacy and power over Carrefour by being a governing body in almost every country that Carrefour operates. The European Union could force Carrefour to involve itself with charities in Italy and other European countries, or it could force Carrefour to hold off from any action. The European Union is also an urgent stakeholder because any action that it undertakes, relating to the food waste prevention movement, directly affects Carrefour. Therefore, Carrefour should address the European Union and receive its endorsement for its decision on Italy.

Responsibilities: Carrefour has an economic responsibility to thrive so that it may support the nations that are under the European Union. The European Union is better off economically if Carrefour is better off economically. Carrefour, especially with it being a multinational company, mostly operating within the European Union, also has a legal responsibility to follow the governance of the European Union. Carrefour even has an ethical responsibility to not generate any loopholes that would damage the European Union for the benefit of the company.

Strategy: Due to the European Union being a high threat as a governing body and giving low cooperation to individual companies in their day-to-day operations, Carrefour should defend itself against negative actions by the nonsupportive European Union. While the European Union is concerned for the economic well being of large companies like Carrefour, the European Union will go against these same large companies if it believes that it is more beneficial. This is why Carrefour should take a defensive position against the European Union. Nonetheless, Carrefour should attempt to gain the European Union’s endorsement for extending its food waste prevention programs into Italy.

Government

Stakes: When analyzing government as a stakeholder in Carrefour’s possible actions in Italy, the individual governments of countries is being analyzed, and the analysis will be very similar to the analysis of the European Union. Governments are interested in Carrefour’s potential voluntary food waste prevention management because, if Carrefour decides to extend its programs into Italy, it will take pressure off of the French and Italian governments and increase pressure on many other European countries. These governments also have a right as stakeholders because they have the ability to regulate Carrefour.

Attributes: Government is a legitimate stakeholder in Carrefour because they are an authority over Carrefour. This same logic implies that government has power over Carrefour because it can accept, reject, or alter any decision that Carrefour makes. Government is also an urgent stakeholder because any conflicts with the governments would be a major issue for Carrefour.

Responsibilities: Carrefour has an economic responsibility to support the government. Carrefour has the ability to make an economic impact in the countries that it operates because it is a large retailer that sells necessity goods. Carrefour also has a legal responsibility to follow any laws and regulations set by the government. In following these laws, Carrefour also has an ethical responsibility to not bypass any regulations imposed upon it through loopholes.

Strategy: With government is essentially in the same position as the European Union, Carrefour must take a defensive stance in its stakeholder relationship. While government will look out for Carrefour to a certain extent, it will turn its back on Carrefour if its logic is not supported. Carrefour should defend itself from any negative action taken against it by the governments, and the company should look to receive endorsement.

Consumers

Stakes: Consumers have an interest in Carrefour as stakeholders because they use Carrefour’s products on a daily basis to the point where they are somewhat dependent upon them. The consumers may lose their interest as stakeholders in Carrefour by choosing to shop at other retailers. Consumers also are protected by organizations such as the European Union, Fédération du Commerce et de la Distribution, and other trade unions. These organizations help defend the rights that consumers have as stakeholders.

Attributes: Since consumers contract with Carrefour when they make purchases, they possess legitimacy as stakeholders. Consumers also exhibit their power over Carrefour by using their purchasing power. Consumer’s purchasing power allows them to influence Carrefour through their ability to choose to shop at Carrefour’s competitors. This ability to take profits away from Carrefour and give them to a competitor makes consumers urgent stakeholders.

Responsibilities: Carrefour has an economic responsibility to compete and provide products for its competitors. Carrefour has a responsibility to produce for consumers because consumers are dependent upon Carrefour’s products. Carrefour also has a legal responsibility in producing. The company must produce safe products that will not harm its consumers neither physically nor mentally. Furthermore, Carrefour has an ethical responsibility to produce high quality goods at the lowest cost possible, while also demonstrating corporate social responsibility, for consumers. While this is easier said than done, Carrefour has an ethical responsibility to push itself towards these goals.

Strategy: Consumers are valuable to every company because they are what keep the companies alive. Consumers generate revenue, which becomes the companies’ profits. Therefore Carrefour must consider its customers in any decisions involving Italy. Carrefour must consider any changing in pricing that will directly affect its consumers. Carrefour should collaborate with its consumers because they will have valuable needs, opinions, and ideas for any action taken in Italy.

Media

Stakes: The media is interested in Carrefour’s activities in Italy because it is their job to publicize the actions taken by the company. Especially with Carrefour’s status as a large retailer, the media are going to compete to be the first to report on Carrefour’s actions, and therefore they have a high interest.

Attributes: The media have power over Carrefour because they can present any story that they find about Carrefour as either positive or negative. For example, the media will most likely applaud Carrefour for being socially responsible if they choose to be philanthropic in Italy. However, the media could spin the story to express that consumers and employees will be negatively impacted by the increase in Carrefour’s prices due to the philanthropic efforts. This ability to whimsically use this power makes the media a very urgent stakeholder, and Carrefour should remain in constant communication with them in order to ensure that the right message is conveyed.

Responsibilities: Carrefour has a legal responsibility to not infringe on the media’s right of freedom of speech. Carrefour cannot censor anything that the media says about the company. Carrefour also owes an ethical responsibility of being honest with the media and to not defame its competitors through the media. Carrefour also has an ethical responsibility to communicate with media because the media is a means of communicating with the public.

Strategy: The media are nonsupportive of Carrefour. In today’s world, the media are more interested in publicizing negatives than positives. Therefore, Carrefour must defend itself against the media so that its reputation may not be tarnished.

Overall Recommendation and Conclusion

While the move does not make the most sense financially nor competitively, Carrefour should voluntarily extend its food waste prevention programs into Italy because of its corporate social responsibility. The food waste prevention requirements in France and the potential expansion throughout Europe are benevolent movements with even more compassionate intentions. Carrefour should participate further in this movement and should address all of its stakeholders. Yet, there is definitely a hierarchy of which stakeholders should be addressed before others. Carrefour should address its stockholders and Board of Directors first because the stockholders will most directly feel the consequences and the Board of Directors would have the power to make the decision. Carrefour should collaborate with its stockholders and Board of Directors because of their right of ownership and power in the company.

Second, Carrefour needs to address the charities, the food distribution companies, and the company’s supply chain. This is the pivotal step of the operation, after the stockholders and Board of Directors consent. The basis of the strategy involving these stakeholders is collaboration to collaborate with and involve them. The charities must be able to accept the donations from Carrefour, and Carrefour should assist them with this preparation. Carrefour must ally itself with food distribution companies so that the company can efficiently transport and deliver the food to the charities. Carrefour can facilitate the processes with these two stakeholders by working with its supply chain to make the food more transferrable. Carrefour’s entire movement depends upon these three stakeholders’ willingness to join the effort.

Lastly, Carrefour should address the Fédération du Commerce et de la Distribution, the Italian government, the European Union, the company’s employees, and the consumers. Carrefour should have more difficulty working out the logistics with the charities, food distribution companies, and supply chains than gaining endorsement from these authorities. This is why these stakeholders are not higher priorities. While Carrefour should be weary and defend itself from being taken advantage of by the European Union and Italian government, Carrefour should attempt to involve these stakeholders. Furthermore, Carrefour must communicate its plans with its employees and consumers. Carrefour needs to ensure that these stakeholders will not suffer from their philanthropic endeavors, and for this reason, the company should collaborate with and involve them. Carrefour could use the media as a tool to communicate the company’s message. However, Carrefour should make the communication more personal with these stakeholders because of their personal stakes in the company. Carrefour needs to communicate its message that its philanthropic responsibilities to the charities outweigh the marginal benefits of waiting for legislation to require food waste donations and the marginal costs of acting now.