Ron Santa Teresa’s Social Initiatives, Case Study Example

This case concerns the new direction taken by Ron Santa Teresa in supporting the community projects initiatives. Alberto C. Vollmer, the CEO of the company finds it hard to convince the board of directors of the latest trend of events in the company’s management. The directors of the board feel that this is destructing the company attention and also feel that such projects are not sustainable. From a reliable source, Alberto was able to realize that some directors were not happy with the social initiatives because they not only boosted the image of the company but also the profile of the Vollmer’s family which owns more than half of Ron Santa’s shares. From a close friend who happens to be one of the directors, Vollmer realized that the Venezuelan president, Hugo Chavez was also delighted by the whole project as he mentioned it as “one example of responsible business”.

Alberto on the other hand is quite impressed by the recent company turnaround. During his four year tenure as the Chief Executive Officer, the company had dramatically grown from the verge of total collapse to a 9 percent increase in the rum products produced. During the period, majority of the company debts had been paid. Despite this success, Vollmer was quite concerned about the overall social political and economic situation in Venezuela as a whole. This had greatly affected the international trade by contributed only 11 percent net sales revenue according to the 2002-03 financial year report.

Hacienda Santa boasts over 200 year history of existence which dates back from 1796 on the fertile grounds of Aragua. In 1885 the company started farming coffee, indigo and Sugarcane and in the following year after being registered as Ron Santa Teresa, it started producing rum.  In 1947, Alberto Vollmer senior and his brother Gustavo, joined the company and immediately installed a new sugar mill thus enabling the production of more brands from the new sugar product and packaging line. This was followed by the purchasing of a neighboring El Palmer mill which was to be run by Gustavo.

The period from the 70s and 90s is considered as the period of massive investments. Under the skillful leadership of Vollmer, the company acquired 47 percent stake of Distribuidora Benedetti; one of Venezuela’s leading liquor marketer. In 1983, the company was faced with financial challenges due to devaluation of Venezuela’s currency prompting the decision of downsizing its operations to overcome the impending crisis. Selecto rum brand incidentally was launched and immediately took the lead as the highest quality liquor brand.

Two of Alberto’s sons, Vollmer the current CEO, and Henrique, the export manager, joined the company in 1996 as the company was celebrating the 200^th anniversary. This is the time when the management crisis issues started to emerge. The Venezuelan national economy crisis greatly affected the local population making them turn to lower priced liquors. This in turn affected the company’s net sales. For instance, consumption in 2003 was one million against over six million per annum experienced in the late 90s.

Vollmer was deeply concerned about the social issues and situations of community around El Consejo County. He was determine to support and finance projects that benefit the community such as building schools, sports facilities and refurbishing the old and dilapidated Venezuelan railway Station.  Through the Alberto Vollmer foundation, the company was also able to offer medical attention and care to pregnant women and children.

However, in April 2000, it became apparent that this was not enough to impress the local population. The Ravenga municipality residents invaded the company property. They wanted the government leadership and the prominent business firms to address their plight. The local El Consejo population was quite impressed with the employment they have enjoyed from the Vollmer’s company but the local military growth labeled the company as “oligarchic enemy of the Bolivarian Revolution”. The company was automatically forced to secede part of the occupied land and the invaders were required to pay back under the housing policy law.

CARST had a vision of turning the Rarega municipality into a tourist attraction site. To achieve this, the company concentrated on developing artisans’ villages and sites in Camino Real for tourists to purchase the local merchandise. This posed a great challenge to the company as it hoped this will act as a model for people living in El Consejo. The invasion astonished the management making them to reconsider the company values and the effective interaction with the local community.

In 2003, juvenile delinquents ambushed and assaulting a security officer at Hacienda Santa Teresa ground. The arrested culprits however agreed to work for three months without a pay so as to repay the damages. This provided the company with an opportunity to address the plight of the youth through counseling on controlling drug abuse, legal issues and community work. With Henrique as the couch, the youth were engaged into playing rugby not only to preoccupy their mind but also enhance team work. CARST funded this project by covering medical food and other maintenance costs.

The Alcatraz project was received with massive criticism from within and outside the company. The local administration especially the police was not happy with the rehabilitation terming it as “contrary to the paradigm of justice”. However, Alberto believed that community focused investment should replace the convectional general charity and philanthropy and should be connected with the company’s business strategy and propelled through the management criteria.

If I were Alberto Vollmer:

I know that the main aim of the company’s existence is to generate profits by concentrating on the mission and vision concerning the production of liquor products. Thus we need to focus on strategic significance of sustained growth of the company and not just its survival. This company was for decades running smoothly as far as its relations with the local community is concerned, but lately we have been experiencing sudden collisions for example the land invasion and the assault on the security guards. This is a wake up call for the management and we cannot afford to ignore or take risk. We need to establish the underlying cause and focus on the probable remedy. We need to craft an ambitious roadmap that will enable us to foresee and improve the relations for future betterment of both the company and the community in general.

My parents as the pioneer of this company had the spirit of philanthropy to the society as evident from their charity foundation. However this is not all that is expected from us in this municipality and state of Aragua as a whole. The residents are yearning and expecting a rather sustainable impact rather than the convectional building of community infrastructure.

Many people are quite skeptical about the latest turn of events where the company is engaging itself more on the social initiatives but I feel that it is necessary to get dirty for things to work. It is necessary therefore for the entire management to fully engage itself in following up the company’s initiatives. According to the 2004 budget report, the company used only $58 000 to fund this projects which accounts for just 1 percent of the company’s net profit margin.

CARST needs to proud for pioneering this project through the transformation of the reactive measures to a broad-based objective for the local municipality to engage other cooperate actors. This year a conference dubbed “Ravenga Vision”and comprising of business, community representations and the local government administration will be organized in order to strike the way forward for the Alcatraz Project strategic growth plan. I believed with no doubt whatsoever that this project will dramatically transform the image and future of the local youths since solely we cannot fully absorb them into our company workforce.

References

Gonzalez, R. A. & Marquez, P. (2005). Ron Santa Teresa’s Social Initiatives. Instituto de Estudios Superiores de Administración (IESA).