Chapter 5 – Attempts at the Creation of the GCNA–ASPIN Nutmeg Cartel
5.2 Formation of the Joint Marketing Agreement
5.2.1 The Decision Making Process and its Implications for the Attempting to Form
Chapter 3 (Research Methodology) and Appendix 4 highlight the process by which the archival data were treated, using an integrative theoretical approach that includes Langley‘s (1999) sense-making method to treat and classify data chronologically in columns as a form of temporal bracketing. The narrative provides elaboration and interpretation. The talk and text evidence related to the formation of the cartel is presented in the rest of the chapter. Chapters 6 and 7 address the operation of the Marketing Agreement while it was in existence and its collapse respectively.
In order to better understand the talk and text and locate the various stakeholder groupings in the context of the formation of the cartel, it is useful to understand the stakeholders from the perspectives of: (a) who they were and their classification; (b) what were their stakes and who had a right to such stakes (Mitchelle, Agle and Wood, 1997), in the GCNA in particular, and the nutmeg industry in general, and (c) how well their
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expectations were met via the operations of the GCNA-ASPIN Marketing Agreement. A key question is concerned with the impact of these stakeholders on the decision-making of the GCNA. It is also useful to understand the following concerns: in whose interest was the cartel being formed? Who were the expected beneficiaries? And were there conflicts of interest based on the stakeholder groupings? In order to better understand the above issues, the stakeholder analysis was applied.
Table 5.5 summarises the interests of the various stakeholders with a focus on the primary stakeholders and how their objectives relate to the formation of the Marketing Agreement. It forms the basis for the later examination of the operation and end of the Marketing Agreement. Jensen (2001) argues that if stakeholder theory should seek to pay attention to all groups/constituents that would not attainable The validity in our use of table 5.5 lies in its power to identify the stakeholders, and with the appropriate tools, use it to unearth the objectives or perceived stakes/interest of the stakeholders. Moreover, it helps to establish which stakeholder groups are most important and carry most influence by virtue of their urgency, power and legitimacy in the formation of the Marketing Agreement.
Table 5.5, while seeking to present the theoretical stakeholder analysis framework for determining the stake of each group, also provides and brings to the fore the issue of who or what really counts, and therefore shows the conflicts of interest that exist when dealing with relevant stakeholders in the decision-making process, as it relates to the creation of the nutmeg cartel (Argle, Mitchell, and Sonnenfeld, 1999). The use of the above stakeholder framework helped the researcher to identify 12 key stakeholder groups within the GCNA construct, consisting of nine national and three external (foreign-based) stakeholder groups. On the basis of the above framework, the four most important stakeholders of the GCNA in order of priority are: the membership of the GCNA; the Board of Directors; the Government; and the trading agents. The 12 groups of GCNA stakeholders have been further categorised into primary and secondary groups, based on the classification by Mitchell, et al (1997).
The primary group of stakeholders comprises the following:
1. Board of directors
2. Membership of the GCNA 3. Government
4. Management
5. Financial intermediaries (banks) 6. Trade agents/brokers
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The secondary group of stakeholders comprises the following;
1. Competitors
2. National community 3. Media
4. Suppliers of non-product inputs. 5. Retailers
6. consumers
Among the members of the primary stakeholder group, the GCNA Board of Directors is of critical interest to this thesis. . It is useful to understand the profile of this group in order to describe their interest and influence, and relate their contributions to the debate on the formation of the nutmeg cartel. Table 5.6 presents the profile of the GCNA Board Members and Management, their stake in the GCNA and in their attempt at the formation of the cartel (1985-87).
123 Table 5.5 Determining Stakeholders‘ Stake in an Organization
Stakeholders (Primary)
Basis of Relationship Objectives of Stakeholder
Power Legitimacy Urgency
1. Board of Directors
Coercive – force or threats can be applied to other stakeholders Utilitarian – material / incentives can be provided to other
stakeholders, e.g., the level of advanced payment and bonus payments to be paid to farmers, renewal of agent contracts, salary
increases to staff. The bases for legitimacy was
established by powers vested in the Board from the Nutmeg Industry Act 1947.
Criticality – the time- bound nature of advanced payments and bonus, as well as the deadlines set for the execution of tasks by managers.
Increased export prices, stable prices, increased annual bonus, maintaining the power/legitimacy and influence of the Board, i.e. maintaining the status quo.
2. Membership (nutmeg farmers)
Coercive – threat of not electing or re-electing individual members to the Board of Directors, or to threaten to sell to would-be competitors.
Normative – to attend the annual general meeting of the GCNA, Utilitarian – to influence managers and staff salary.
The right to vote at AGMs to elect members to the Board of Directors, as established by the Nutmeg Industry Act, 1947, and exercise national political influence.
As individuals, they all have property rights to the assets of the cooperative. They are the sole suppliers of the cooperative products. Without them the
cooperative will cease to exist.
Time – demand for immediacy of payment for crop delivered, and payment of annual bonus.
High pay-out of advanced payments and annual bonuses.
Low or restrained payment to staff, agents and other service suppliers.
Financial support from government in times of need.
3. Government Coercive – high, can force changes to legislation or ―take- over‖ control of the Board of Directors
As established in the Nutmeg Industry Act, 1947
Timely payment to farmers as a means of maintaining economic and social stability. Since the GCNA pays no taxes,
Maintenance of the industry as a source of income to farmers and the maintenance of economic and social stability.
124 Stakeholders
(Primary)
Basis of Relationship Objectives of Stakeholder
Power Legitimacy Urgency
there is no income to the Government from the GCNA.
4.
Management
Normative – managers are symbolic leaders of the GCNA, since the real responsibility for the management is entrusted to the Board of Directors
Individual – based on qualification or competence, and as delegated by the Board of Directors. Criticality – maintenance of the relationship between the cooperative (Board of Directors) and all other
stakeholders
Job security
5. Local Financial Intermediaries
Coercive – threaten to withdraw financial services such as overdrafts or to facilitate loans. Utilitarian – offer attractive rates of interest on loan and other financial products and services.
Societal – a fundamental institution of society Time sensitivity – timely payment of GCNA‘s accounts To maximize earning opportunities for
conducting business with GCNA
6.
Staff/Employee s
Coercive – threat of strikes, or other forms of industrial actions. Utilitarian – necessary to facilitate the workings of the cooperative.
Individual – competence, qualification, etc. Organizational – employment of contract Time sensitivity – timely completion of all tasks relating to the purchasing and exporting of nutmeg
Higher salary, greater benefits, and
compensation.
7. National Community
Coercive – threaten to initiate action to change the legal shield of the GCNA – break the
monopolistic. control of the industry
Societal None Maintain GCNA as a
source of employment, foreign exchange earnings.
8. Suppliers (Non- farmers)
Coercive – non delivery of key inputs such as bags, insecticide, etc. Organizational - as suppliers of inputs. Time sensitivity - ensure timely delivery of supplies. To maximize revenue from GCNA, and maintain GCNA as a customer.
125 Stakeholders
(Primary)
Basis of Relationship Objectives of Stakeholder
Power Legitimacy Urgency
9. Media Normative – symbolic influence, exerts little or no influence on the GCNA or other stakeholders.
Societal – as a vital institution of society. Organizational – based on public reputation. Time Sensitivity – expectation that request for information would be forthcoming from the GCNA.
To obtain news worthy stories from or about the GCNA.
Secondary Stakeholders 1. Trade Agents
Utilitarian – they are critical in finding buyers, establishing export prices.
Normative – representative of the GCNA on the international
market.
Organization – as contracted by the Board of Directors for purposes of making sales for the GCNA.
Time sensitivity – they must ensure that nutmeg is delivered to the customer on time and that claims made by buyers are attended to in a timely manner. Criticality - timely settlement if claims and delivery of products are necessary for good relationships.
To secure markets, enter into sales contracts and earn higher
commissions/profits.
2. Competitors Coercive – threat to undercut world prices.
Utilitarian – offer of colluding on world prices. A source of competitive products. Virtually non-existent in dealing with GCNA.
To obtain higher prices than GCNA or to collaborate with the GCNA to eliminate competition. 3. Wholesalers Coercive – could use marketing
intelligence information to manipulate prices, unknown to the suppliers, with whom they
A key source of marketing information, may also supply grinders/processors of industrial and domestic oils
Non-existent with the GCNA
To obtain the lowest prices and thus allowing them to maximize prices from the retailers. Their
126 Stakeholders
(Primary)
Basis of Relationship Objectives of Stakeholder
Power Legitimacy Urgency
have no relationship
Utilitarian - Knowledge of the market including key buyers and thus the ability to influence prices
and other value added nutmeg based products
role as middlemen in this trade is to maximize income at the expense at those in the value chain who come before and after them.
4. Retailers Utilitarian – possess knowledge of final consumers, their changing tastes and behaviour. This
information is critical in informing production and supply issues
A key source of consumer information and provider of supplies to the final
household consumer. They also supply value-added nutmeg-based products to the final consumers
Has no direct relationship or claim to the GCNA but are critical holders of key marketing
intelligence and information. Their activities can impact on global prices
To ensure that they have a consistent supply of nutmeg-based products at a price and quality that their consumers are willing to pay
5. Consumers Final consumer of the products and bi-products of nutmegs. If they do not buy the products there is no market for nutmeg
Buyers of nutmeg and bi- products or value added products from nutmeg.
Criticality- the demand for the products are time bound and should attain certain quality standards.
To obtain the highest quality product at the lowest price.
Sources: Researcher using aspects of Mitchell, Agle and Wood, (1997, pp.869) and key constructs in the Theory of Stakeholder Identification and Salience.
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Table 5.6 Profile of the Composition of GCNA Board Members and Management, their Stake in the GCNA and Cartel, 1985-1987
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