Ethics and Corporate Social Responsibility
By xolani Mabaso 221001247
Management 2 FT
DUE: 25 APRIL 2022
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TABLE OF CONTENTS
Pioneer foods………………………………………………….. P3
Effects on stakeholders………………………………………..P3-4
Ethical approach………………………………………………..P4
Remedial actions……………………………………………….P4
Pioneer food corporate social responsibility…………………p4
References………………………………………………………P6
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1. Pioneer foods
Pioneer is a company that was established in 1997 as a subsidy under PepsiCo.
Pioneer is one of the large food and drinks producers in South Africa. They focus on
three different product range namely;
• Essential foods
• Groceries
• International
Familiar and trusted consumer products in Souh Africa that Pioneer produces
include Sasko bread, weet-bix, Liqui-Fruit and Spekko rice. Pioneer exports food to
more than 80 countries. Pioneer Foods. (n.d.). Company Profile. [online] Available
at: https://pioneerfoods.co.za/about/company-profile/.
Unethical Act
Collation is when big companies fix prices of their product or service to limit
competition while increasing their profits in the expense of the consumer.
Collusion is illegal and punishable by fine which will be imposed by a board
called the competition tribunal. On the year 2007 Pioneer food was found
guilty of collusion within its bread division Sasko.
Over the years the price of Pioneer Sasko bread kept on hiking up along with the
other bakeries Tiger (Albany), Premier (blue ribbon) and Foodcorp (Sunbake). After
an investigation was ran by the competition commission, it was then concluded that
Pioneer was a cartel leader of a collusion in the western cape province. The four
bakeries have a market share of 60% within the bread industry, this making it easier
for them to fix the price of bread. This left consumers spending more on bread as all
substitute brands were pricing the their bread the same amount.
During 2007 bakeries Albany, Sunbake and Blue Ribbon negotiated agreements to
pay fines with the competition commission for their unethical act while Pioneer food
optioned take the case further with the competition tribunal. On February 2 2010
Pioneer food was finned R195 million by the competition tribunal for its unethica act
of collusion. The Mail & Guardian. (2010). Pioneer Foods fined R195m for cartel role.
[online] Available at mg.co.za/ [Accessed 25 Apr. 2022].
2. Pioneer foods collusion effects on Stakeholders
When a big company such as Pioneer that does not only deliver goods to consumers
but also employees a number of employees does mistakes that costs the business
financially, it ends up affecting both internal and external stakeholders.
External stakeholders
External stakeholders are inviduals who are not directly part of the organisation but
affected by the actions taken by the organisation. In this case Pioneer food external
stakeholders who were affected by this are their :
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•
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Customers, because of the price hikes across all bakeries customers were
forced to pay a large amount for the price of bread as a basic need.
Shareholders, Pioneer was finned 10% of its 2006 turnover on the Sasko
bread division in western cape and 10% of its 2006 national turnover on the
Sasko division excluding western cape which in total amounted to R195
million finned by the competition tribunal. This fine affected profits of the
company therefore also affecting the dividends to be paid to shareholders.
Internal stakeholders
Internal stakeholders are those who are directly involved and also affected by the
company’s actions. In this cas the internal stakeholder of Pioneer that were affected
are;
• Employees, fines imposed by the competition tribunal are an extra expense
to the business which also may cause financial distress which may lead to.
Retrenchment of staff.
• Representatives of company, Pioneer managed was placed on the zone
where they had to answer to the public
3. Ethical model approach
Pioneer food should use the Utilitarian model approach.
• This approach focuses on the number of people will benefit from actions
taken. In his way Pioneer. Food would have picked up that pricfixing only
benefits the owners and not all its stakeholders.
• Utilitarian model favours what benefits a larger group of people as opposed to
the small group. This also helps in bringing other peoples concerns into the
actions that the organisation may take.
4. Remedial actions by Pioneer foods
After te fine was imposed the competition tribunal, Pioneer food agreed to pay it and
also withdraw from taking part in any collusion practices.
Pioneer food also dropped its price of its bread Sasko and its flour. It reduced its
price of bread by 30cents per loaf while it reduced its price of flour by an average of
R350 per toon. TimesLIVE. (n.d.). Pioneer Foods cut bread price by 30c. [online]
Available at:www.timeslive.co.za/Pioneer-cutsprices [Accessed 25 Apr. 2022].
5. Pioneer food Corporate social responsibility
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Communities
Pioneer foods have invested their funds in educating youth from less privileged
families. According to… pioneer food launched ther Pioneer food education and
community trust (PFECT) which supports community and educational programmes.
The bursary is aimed at helping young youth complete their studies whil also offering
them job opportunities within Pioneer foods.
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6. Bibliography
admin (2015). Our Stakeholders. [online] Pioneer Foods. Available at:
https://pioneerfoods.co.za/sustainability/stakeholders/#:~:text=As%20a%20responsi
ble%20corporate%20citizen [Accessed 25 Apr. 2022].
TimesLIVE. (n.d.). Competition Tribunal fines Pioneer R196m. [online] Available at:
https://www.timeslive.co.za/sunday-times/business/2010-02-03-competition-tribunalfines-pioneer----r196m/ [Accessed 25 Apr. 2022].
The Mail & Guardian. (2010). Pioneer Foods fined R195m for cartel role. [online]
Available at: https://mg.co.za/article/2010-02-03-pioneer-foods-fined-r195m-forcartel-role/ [Accessed 25 Apr. 2022].
TRIBUNAL IMPOSES PENALTY OF R195 MILLION ON PIONEER. (n.d.). [online]
Available at: http://www.compcom.co.za/wp-content/uploads/2020/05/TRIBUNALIMPOSES-PENALTY-OF-R195-MILLION-ON-PIONEER.pdf [Accessed 25 Apr.
2022].
TimesLIVE. (n.d.). Pioneer Foods cut bread price by 30c. [online] Available at:
https://www.timeslive.co.za/news/south-africa/2010-12-14-pioneer-foods-cut-breadprice-by-30c/ [Accessed 25 Apr. 2022].
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