Florida Ice & Farm Co. Case Study

FIFCO Case Analysis Report

Priyanka Pincha

MGMT 531: Strategic Sustainability and Models

Professor: Blair Schoenborn

“In accordance with the Business School’s Code of Ethical Behavior, I attest that I have not engaged in any acts of plagiarism in completing this assignment.”

Executive Summary:

This case involves the efforts of Florida Ice & Farm Co. (FIFCO), Costa Rica’s leading beverage company, to adopt a “triple bottom line” for measuring its performance not only in financial returns to its shareholders but also in social and environmental responsibility to society. This initiative was adopted at a time of financial crisis, severely testing the resolve of the company’s leadership.

There were radical changes in 2003 to bring FIFCO’s productivity into line with the world industry leaders. In the first phase, from 2004 through 2006, the CEO focused on operational excellence, increasing efficiency and improving financial returns. In the second phase, he challenged the company to double sales and earnings in two years, which was achieved through a combination of internal growth and new acquisitions in foods and beverages. Having achieved this goal, CEO presented his executive team with a new challenge: to perform with excellence in the social and environmental, as well as the economic sphere.

There was five-step process designed by the company to implement the "triple bottom line" strategy. Additionally, the three of the twelve objectives set by the company management were: becoming "water neutral" in 2014; changing the cultural of alcohol consumption in Costa Rica; and the "Choose to help" volunteer program implemented at the organization.

The company have two options now either to continue to consolidate the triple bottom line within FIFCO internally or spread the philosophy to his business partners in other parts of the value chain as a long term next goal to achieve.

The company have shown a great strength in targeting the goals and successfully achieving them, also since they have already taken steps of developing manual of social responsibility for suppliers, code for responsible suppliers and evaluated 90 suppliers with sustainable business practices, it will be impactfully for the company to target the goal of spreading the philosophy of triple bottom line among the business partners.

Problem Statement

The challenge for FIFCO is to consider and implement the next great goal. There are two options with the company either to extending the Triple bottom line to other business partners in the value chain (going externally) or further consolidating this strategy inside the company only first (going internally first). After considering the options in all parameters and their overall impact the decision is to be made as to which option should be set as next goal and further deciding next necessary steps to be taken in achieving the targeted goal.

Situation Analysis

FIFCO carved out three goals over next few years: (1) cost-cutting by reducing the number of workforce and/or reducing the hours/week, (2) doubling the sales revenues and profits in two years, (3) the triple bottom line.

During the first year when McKinsey was hired, they reduced the workforce from 2480 to 2025, saving $16 million. An alternative to massive lay-off in 2010-2011 was to decrease the number of working hours, reducing everyone’s take home pay. This option was better as it involves less number of layoffs, which will help in sustaining trust of the employees.

The implementation of triple bottom line involves many alternatives such as sustainability scorecards with indicators from the three dimensions that were relevant to their individual responsibilities. The three strategies were carved out: (a) responsible consumption, (b) “choose to help”, and (c) water neutrality.

For “responsible consumption,” the “designated driver” campaign is considered to be a successful program internationally in which the group of friends going to party at night would select one of their numbers to not consume alcohol and hence drive them back safely. This could work as both positive and negative: positive as it improves the company’s image as being responsible and negative as it affects the business.

In the “Choose to help” program, the employees of the company need to bill 2 days or 16 hours for community service. This could include any voluntary work during the office hours. This helps increasing the identification of the employees with the company values. Since the allocated time was only 2 days, there is no such disadvantages associated with this program.

Regarding the third bottom line, “becoming water neutral,” the company can take measured to reduce its water consumption by “measure-reduce-compensate” which helped the company to reach a 4.72:1 consumption ratio. For compensating, either the company can adopt community initiative for water consumption such as the construction of Gavilan Canta or the company can compensate through a national program of environmental services through which payments were given to         private owners of forest areas who undertook conservation projects.

These above-mentioned points state that the company have set their mission and vision statements and further formed short term goals and strategies to achieve them. These strengths of the company can be used to set another long-term goal and achieve them. Successful implementation of Triple bottom line is the driver to set another important goal.

Discussing of the next goal to be set as already mentioned in the problem statement above there are two options with the company, one is to go Externally (promote Triple Bottom line among company’s suppliers and Distribution channels) and other one is to go Internally first (consolidating the strategy inside the company first).

Seeing the company’s history, it is clear that over past few years company have shown great effort and success in implementing triple bottom line and achieving its targeted goals with proper strategies. Also, company have some key strengths like it maintains its corporate values of innovation, responsibility, passion, recognition, and teamwork.  Seeing all these strengths and achievement the company can target the goal of spreading the philosophy of triple bottom line among the business partners and achieve them.