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Stakeholders and CSR (Stakeholder Theory)

Stakeholders have a great impact on product markets as they determine the main trends and product requirements for a future period of time. To decide what a customer means by more colorful, more durable, or stronger, and to build these characteristics into a product, can easily involve misinterpretations. Moreover, needs and desires must be predicted years before the product planning activity can be implemented. Also, the development of a new product may require the creation of new machines, a new distribution system, and new processes and materials. The profitability of capital outlays for these purposes must meet investment criteria. With the time span between the birth of an idea and its development and commercialization, and the uncertainties of market reactions, product development becomes a sensitive activity. Since new products are basic to a company’s growth and profitability, their development is a fundamental activity.

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Shell Corporation is the largest oil company in the world with about 2.147 billion. Shell Corporation is the biggest oil refinery corporation specialized in oil and natural gas products, gasoline, and petrochemical manufacturing. The nature of business demands innovative solutions and new technologies to reduce environmental pollution caused by oil and gas refineries. In this case, the government, the corporation stakeholders, and consumers play a dominant role in strategies and approaches aimed to reduce pollution and introduce environmentally friendly technologies. The stakeholders and policy makers should start a fuel oil substitution for natural gas in power generating plants and the ten most highly polluting industries. They should also be substituting liquefied petroleum gas for leaded gasoline. The second step is to install new systems for combustion and emissions control in vehicles, in manufacturing, and in in-service industries. It is a known fact that annual automobile inspections are now required and are performed in public service stations as well as in private workshops (Shell Corporation Home Page 2009).

The main stakeholders are supplies, customers, the society (community), employees, and the state in general. In the US, the law makes available a repertory of ecological policy instruments of broad coverage and applicability, strong enough to support an integrated planning process comprising the federal government, the federal entities, municipalities, and society itself. This includes the ecological organization of regions and human settlements, the mandatory evaluation of environmental impacts of important projects, ecological planning regulations, steps for the protection of natural areas, research and education, inspection, and mechanisms for social participation. Ecological Balance and Environmental Protection became effective as an integrated legislative response to the environmental problems of the country. The law establishes a broad system of mutual assistance among the federal government, federal entities, and municipalities, decentralizing resources and responsibilities under a coordinated and cooperative framework. The authority should have a right to regulate mobile sources and emissions from businesses and services, parking lot inspections, vehicle traffic management, control over transportation systems and public roads, emission regulations for public transportation, and authority over urban development and land use. The federal regulatory agency has reserved to itself control over industrial sources, determination of technical regulations, and operation of atmospheric monitoring systems (Boddy, 2005).

From suppliers’ point of view, stakeholders determine the conversion of ideas into successfully marketed products. It combines technical and marketing competence and is concerned with strategies of the programmed introduction of new products to markets as replacements for decaying ones. Since it carries out an important mission directed at corporate growth and advancement, product development should report to top management. In some companies, particularly in large ones featuring diversified consumer products, a product manager is charged with directing the marketing effort of specific product lines (Boone and Kurtz 2002). The idea is to establish effective management in multi-brand companies by developing a series of profit centers in which product executives assume responsibility for the total marketing effort for a line. This approach grows out of the inability of one executive to master the intricacies and details of marketing several dozens or hundreds of products. The large drug and soap companies pioneered the concept, and Shell is one of the most successful in utilizing it. Product managers are expected to develop product ideas, nurture their brands, compete effectively within and outside the company, prepare budgets, work with marketing-research and advertising agencies, influence salesmen, wholesalers, and retailers, and generate sales, profits, and larger market shares. They must understand and represent markets, customers, and consumers (Boone and Kurtz 2002). Yet despite these onerous responsibilities, product managers usually lack commensurate authority. Although held responsible for profits, these managers generally cannot control costs of production or prices. Nor can they direct salesmen and advertising, or such supporting services as marketing research, package design, and product engineering. Authority for such activities is vested in others (Bearden et al 2004).

Customers are affected by marketing policies and products proposed by Shell. Product management refers to the adjustment of productive capacity and technology to consumer demand. Technically, it encompasses both product planning and product development, which in reality are synonymous. In consequence, we shall rely on the term product development in its broadest sense. Product development is concerned with offering the right goods at the right time, at the right price, in the right quantities, in the right place. Referring to the process of evolving new products, it is closely associated with market development. It focuses on the future product line, on products that should be added or deleted, on the impact of products on price, promotion, warranty, and service, and on the development of criteria to evaluate product performance. By assessing new or modified products that can be added by acquisition and internal development, product development becomes the lifeblood of a business (Shell Corporation Home Page 2009). Decisions in this area determine the products to be produced and stocked, as well as details concerning their appearance, form, size, package, quantities, the timing of production, price lines, and anticipated market segments. Product development combines the scientist’s function of analyzing, classifying, and organizing information into commercially feasible new products, and the marketer’s function of assessing unsatisfied wants and needs and identifying profitable market opportunities. Usually, this activity necessitates compromise among the engineering, production, marketing, and accounting departments. For example, the high specifications stressed by engineering may push costs above market acceptance. Effective product development adopts a critical but positive posture. Management cannot be satisfied with current products, regardless of how good they are. Such an attitude and expression of expectations achieve an even better match of corporate offerings with consumer expectations (Crawford 2006).

From the government (state) point of view, American businessmen have proven that they are the marketers of the world. They have seized the initiative as advertisers, sellers, product developers, packagers, merchandisers, and perfect of marketing communications systems (Kotler and Armstrong 2006). As a result, American marketing technology is being imitated in other parts of the world. Mass-marketing knowledge and techniques are exportable commodities. Less-developed countries are recognizing that their economies can be bolstered and their economic development stimulated through marketing. The ownership of market position is as important as the ownership of a physical plant, if not more so. In reality, marketing activities are among the most productive management responsibilities, perhaps even more productive than the activities related to shaping and creating products. Actually, expenditures on selling, advertising, sales promotion, and marketing research should be perceived and considered not as mere expenses but as business investments. They are investments in the same sense as expenditures on capital equipment, plant, warehouses, and furniture (Hollensen 2007).

The local community and society influence market demands and product innovations. That product development is a top management responsibility is implied in these observations, and in such statements as top management’s two major responsibilities are innovation and marketing (or innovation and research and development). The establishment of product-planning departments that search for opportunities, recommend new products, and coordinate the efforts necessary to develop them is a recognition of management concern for these critical tasks. Product planning requires considerable lead time for a change, for the addition or deletion of products. It is not uncommon to spend two to four years developing new products, and this requires advanced market intelligence. Before adding a product, however, a company should establish various criteria concerning the size of the available market, the rate of return on investment, the net profit, the patentability of the item, the congruency with current corporate situations, and the impact on the sales organization (Hollensen 2007). These environmental policies are important because they have already undergone experimentation in other countries, have been widely applied, and their effectiveness has been proven. They imply the use of technologies that are commercially available, and the energy they require is available at a reasonable cost. They require adjustment in urban lifestyles and in institutional activities that can be accomplished in a short period, and they have a significant reduction effect on total emissions and on one or more of the major pollutants (Stavins and Haty 2005).

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Staff stakeholders’ interests are really the issue at hand. In the appropriations legislation for foreign operations that must be passed every year, there has been report language and bill language that has addressed these issues. It is useful to separate nature and development in our objectives, argued one participant. It is said that the poor will always be with us, yet the same cannot be said of the environment. The real value in distinguishing between debt-for-nature swaps and structural adjustment lending is that the debt-for-nature swap can buy time until a longer-term solution to the environmental crisis is found. The speaker did not see the two programs in conflict but felt that they should be separated. The policy will be evaluated in terms of its impact on the environment and improve environmental conditions around the Shell’s manufacturing and refinery facilities. On the other hand, in its current form the environmental policies followed by Shell also poses a risk, indeed a threat: if environment and natural resources concerns are not taken into account in the plan and in adjustment conditions of the multilateral banks, then the net effect may be to increase the pressures on developing countries to unsustainably overexploit their resources (Boddy, 2005).

In sum, all stakeholders determine the market needs and demands. Stakeholders may shift their tastes radically, or technological developments may automatically force product decisions. Profitability analysis often leads to the dropping of products. Information from consumers, dealers, and other middlemen, as well as data concerning costs and actual and potential revenues, must be reviewed. If a new product is to be added, management faces the decision of developing the product internally or adding a product by acquisition. Internal development requires a considerable period of time, investment in research and development, and an effective supporting marketing and production program. These limitations, plus income-tax situations, often lead a company to merge to obtain new products. The large number of mergers that took place during the last decade seemed to be prompted by the desire to diversify and so balance company risks, utilize capacity and capabilities, complement available products, and smooth seasonal and cyclical fluctuations. Policy markers should consider the following actions: mechanisms to restrict circulation of all private vehicles one day a week during the winter; establishment of a corresponding system of incentives and penalties through higher prices for fuel and parking; removal from circulation of all vehicles found polluting excessively; prohibition of parking lots in specific zones as a disincentive and means of alleviating traffic congestion and increasing average speed; incentives for shared use of vehicles; restrictions to traffic in specific areas and at specific times; regulation and encouragement of institutional transportation; reconfiguration and freeing of roadways and lanes for the exclusive use of buses; establishment of continuous working hours in public sector offices to reduce the volume of trips per person; and an increase in traffic police for adequate enforcement of these actions Shell Corporation Home Page 2009). Although various elements must be distinguished, he counseled that the whole picture cannot be ignored. Rich stressed that the role of the multilateral agencies in influencing policy must be considered, which means analyzing how economic resources are targeted in various countries and what happens to the environment. The basic premise behind debt-for-nature swaps is that the urgent need for debt relief also presents a unique opportunity to leverage additional domestic investments in those countries for desperately needed environmental and social investments. If one accepts that basic principle then the conclusion is almost inexorable that the environmental plan and the accompanying World Bank adjustment conditions should, across the board and systematically, have provisions, incentives, and inducements to insure that a significant part of the debt relief granted to developing countries through the careful planning and strategic initiatives go toward these desperately needed, long-term environmental and social investments. Policy makers anticipate strengthening this requirement and shortening the period for inspections to every six months. Industries are now subject to constant inspections and will be required to install scrubbers and particle control systems. Policy markers should start mandatory inspection and control of diesel vehicles. Policy markers have begun the renovation of urban bus fleets, the installation of new engines, and an adequate diesel motor maintenance program to reduce pollution and expand public transportation services. The Shell Corporation will begin a program for retrofitting three-way catalytic converters in public service vehicles.

References

Bearden, W. O., Ingram, Th. N., LaForge, L.W. 2004. Marketing, Prentice Hall.

Boone, L.E., Kurtz, D.L. 2002. Management, McGraw-Hill, New York.

Crawford C. Merle. 2006. New Products Management. Irwin-McGraw Hill. 7th edition.

Boddy, D. 2005. Management: An Introduction. Financial Times/ Prentice Hall, 3d edition.

Hollensen, S. 2997. Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition.

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Kotler, Ph., Armstrong, G. 2006. Principles of Marketing. Prentice Hall; 11th edition.

Shell Corporation Home Page 2009.

Stavins, R., Haty, B. 2005. Environmental Protection and the Social Responsibility of Firms Perspectives from Law, Economics, and Business. Resources for the Future.

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