CSR Activities Over Kraft Acquisition of Cadbury

Question: Discuss anout the CSR Activities Over Kraft Acquisition of Cadbury. Answer: Introduction: In the era of twenty-first centuries, Corporate Social Responsibility, widely known as CSR, has become an important aspect to the businesses of the world. CSR refers to the business practices that assist to implement greener business operations where organizations contribute some portions of their profit to make their business environment and society friendly (Navi 2012). The focus of the essay is to evaluate the different aspects of the CSR activities over the acquisition of Krafts of Cadbury. It is discussed in the easy that whether the CSR policies of Cadbury need to remain the same or not. There is a deep connection between the CSR practices and the long-term growth of the organizations (Pedersen 2015). The 2011 report of the European Commission states that a long-term strategic approach towards CSR is needed in order to maximize the value of the organization as well as the stakeholders of the organization (Humphery-Jenner 2012). The commission published a new European strategy regarding corporate social responsibility on 25 October 2011 in order to avoid the financial crisis. The aim of the strategy was to change the policies and components of CSR in relation to the business organizations (Gth et al. 2014). The aim of the takeover directive of European Commission is to provide the shareholders of the company enough information about the acquisition bid. This information assists the shareholders of the organization in taking effective decisions about exercising the rights to exit the company by selling the shares they possessed. There are some acts under European Commission that state the duties of the offeree board of directors towards the offered board of directors. These acts are Recital 17, Article 3(1)(b), Article 3(1)(c) and Article 9(5). All these articles say that the board of directors of the offeree company has some responsibilities towards the members of the offered company like the board of directors, employees and others (Johnston and Morrow 2015). In order to make the global presence more effective, Kraft acquired Cadbury on 2 February 2010. This deal raises many questions about the CSR activities of Kraft as they did not carry on the effective CSR practices of Cadbury. As per the media report at that time, Cadbury PLC is a company with highly ethical practices. In the year of 2005, Cadbury took over a chocolate manufacturing company, named Green Black in order to produce organic and fair trade labeled products. It was promised by Kraft that the company would maintain the highly ethical CSR practices of Cadbury; but the situation become worse when one of the brands of Cadbury, Green Black was not able to retain CSR activities. All these incidents called for a reform in the United Kingdom takeover rules for acquisitions and takeovers. The panel code committee for takeover considered that the board of directors of the target board needs to take into account all their demands and recommendations at the time of the bid for acqui sition. This has become one of the rules of acquisition (Fournier 2014). There is a relation between the takeovers and the CSR activities. Companies tend to follow the CSR activities of the acquired organization if the share pieces of the acquired company are influenced by those CSR activities. After the financial crisis of 2008, European Commission took the matter of corporate social responsibilities on a serious note as it has the power to increase the financial capacity of the organization by creating goodwill of the organization. The main aim of European Commission takeover directive was to implement the stakeholder friendly strategies. Another most important aim of the commission was to promote the various aspects of corporate social responsibility in takeovers and acquisitions (Servaes and Tamayo 2013). It has been seen that there are some problems in various sections of the provision. One of them is section 3 that states the need to safeguard the companys corporate social responsibilities; but the section does not describe the actions required to safeguard them. Many market failures raise question to the policymakers about the credibility of the current policies that whether they are able to fetch ling-term growth or not. The price of the shares is considered as the managerial efficiency and this may be the reason for dysfunctional market. It is suggested in the new policy that the corporate social responsibility can be used as the solution for the dysfunction in the market. The European Commission ordered a study on the takeover directive to Marcuus Partner, a French Law firm. The issues that were addresses were obligations imposed by the legislation, disclosure of the various facts of bids, corporate social responsibilities and others. At the beginning of the study, Marcuus Partners points out the community control gap that increase the risk of negative externalities. The solution of the problem was given. As per Marcuus Partners, the free market needs to be restricted as to increase the community protection. On the other hand, the management of the organizations needs to act for the interest of the organization as a whole. This provision needs to be included in the new Takeover Directive to protect the practices of corporate social responsibility. The takeover of Cadbury by Kraft helped to revise the policies of UK takeover directive. The tenth edition of the code was published following the acquisition. It was included in the revised takeover directi ve that the directors cannot provide any kind of advice to the directors of the target company (Grahl 2015). From the above discussion, it can be said that there is a real need to revise the policies of European Commission Takeover Directive. The above study says that there are some problems in the current policies as they are not made to encourage the corporate social responsibilities of the acquired organizations. It is pointed out in the new takeover directive that the legislators of organizations need to define some key concepts at the time of acquisition like the opinion of the shareholders at the time of bid, the corporate social responsibilities of the acquired company, disclosure of more information at the time of acquisition and others. References Fournier, J.M., 2014. Reinvigorating the EU Single Market. 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