Strategic and Sustainable Accounting: A Case Study of Nestle Australia

This case study examines Nestle Australia Limited's strategic and sustainable accounting practices, focusing on its environmental and social responsibilities. It identifies key stakeholders, including top executives, customers, government, and employees, and discusses the company's environmental and social concerns, such as resource management, waste reduction, and workplace conditions. The analysis proposes three environmental and social objectives for Nestle Australia, along with performance measures. Furthermore, the case study explores transfer pricing strategies within the company, highlighting strengths, weaknesses, and alternative pricing methods. The document concludes by emphasizing Nestle Australia's responsibilities toward society and the environment, expecting the management to take necessary steps to deal with related concerns. The full case study is available on Desklib, offering valuable insights for students.

Running head: STRATEGIC AND SUSTAINABLE ACCOUNTING
Strategic and Sustainable Accounting
Name of the Student:
Name of the University:
Authors Note:

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STRATEGIC AND SUSTAINABLE ACCOUNTING
Contents
Executive Summary:........................................................................................................................2
Introduction:....................................................................................................................................3
Answer 1:.........................................................................................................................................3
Answer 2:.........................................................................................................................................9
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13

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Executive Summary:
Sustainability is a very important concept in modern business environment. It is essential
for each and every organization to give priority to the sustainability efforts to ensure that the
operations can be continued in the long run with sustainable growth. Brief discussion on the
sustainability efforts of Nestle Australia Limited in the country is made here with the objective
of suggesting potential environmental and social objectives that the company should thrive to
achieve in the future. In addition the company should take new steps to improve its social and
environmental responsibilities in the future. The importance of corporate social responsibilities
over a period of time has increased significantly. Each and every organization now needs to
adhere to the requirements of CSR. Social and environmental objectives of Nestle Australia is
also part of its CSR responsibilities. A detail discussion in this document shall explain the key
social and environmental concerns of the company.

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Introduction:
Being the leading health and nutrition company across the globe Nestle has its presence
in almost all the countries across the globe. In Australia, the company operates as Nestle
Australia Limited. The company is well known for its social awareness and operating
efficiencies across the globe. Over the years the company has made it a point to ensure that its
operations are in line with the social and environmental requirements of the place of operations.
A detailed report on key social and environmental concerns of the company is presented here.
Answer 1:
Key stakeholders of the company:
Before proceeding with the report to identify key social and environmental concerns of Nestle
Australia it is imperative to know the key stakeholders of the company as without the knowledge
of the key stakeholders it would not be possible to identify the impact of company’s operations
on social and environmental factors affecting different stakeholders of the company (Corporate
social responsibility, 2017.).
Stakeholders of an entity are the persons who have direct or indirect or both types of interests
associated with the functioning of the entity. The operations of such entity affects the interests of
the stakeholders thus, the entity and its management must kept in mind the interests and stakes of
the stakeholders while taking important decisions relating to management and functioning of the
organization. In respect of social and environmental concerns the key stakeholders of Nestle
Australia are as following:
Top executives and Board officials:

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Top executives and Board officials are always the key stakeholders of any organization and it is
not an exception for Nestle Australia. The Chief Executive Officer, the Chief Financial Officer
and other board officials are key stakeholders of the company and thus, each and every single
decision in relation to the company affects these executives and Board officials (M. Yasodha et
al., 2019).
Customers:
Nestle is the largest health and nutrition company in the world. It has a huge customer base in all
across the globe. Similarly Nestle Australia Limited has huge number of customers in Australia
and New Zealand. The social and environmental issues affects these customers as they expect the
company to provide them with healthy and proper food and nutrition items.
Government:
Australian government has the responsibility to ensure that the social and environmental matters
are given due importance by the entities which are operating using natural resources of the
country and its environment. Social and environmental concerns of Nestle Australia certainly
affects the Australian government as it is responsible to look after the health of the environment
and society of the country.
Employees and workers:
The employees and workers of the company must be provided with suitable work condition
within and outside the workplace to ensure they are healthy and safe. The social and
environmental concerns of Nestle affect the workers and employees equally as these affect the
other key stakeholders mentioned earlier (Bakanauskienė, Staniulienė & Žirgutis, 2015).

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Environment and atmosphere:
The environment and atmosphere in which an organization work is affected mostly by the
functioning of the organization. The environment and atmosphere in the country under which
Nestle Australia operates are equally affected due to the operations and functions of the
company.
Key environmental and social concerns of the entity:
Nestle Australia is a leading health and nutrition company in the country providing health and
food supplements to the people of Australia. It is important to ensure that the health and nutrition
products produced by the company are healthy and safe for the people consuming it. Thus,
maintaining the standard and quality of health and nutrition products manufactured in the
country is one of the key social and environmental concern of the company. A company operates
in a country uses the natural resources it is important for the organization to ensure that the
natural resources are used effectively and efficiently. With the help of advanced technology it
has become possible to conserve scarce natural resources. Nestle Australia must use advanced
technology to conserve natural resources as it affects the environment and society positively.
Reducing the harmful impacts of manufacturing and production activities of an organization is a
key social and environment issue for the organization. Nestle Australia involves in
manufacturing and production of processed food and nutrition items. Necessary steps shall be
taken to ensure that the manufacturing and production activities are not harmful to the society
and overall environment of the place in which such activities are carried out (Porto & Revelli,
2011).
Controlling wastage of agricultural goods and products:

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Nestle Australia uses natural corps fruits and other agricultural products in manufacturing
processes to produce different food and health items. All these natural products must be used
effectively to ensure there is minimum wastage of agricultural goods and corps. Controlling
wastage of agricultural goods and products is an important social and environmental concern for
the company.
Water conservation:
Huge amount of water is used by the manufacturing units of Nestle Australia to manufacture
different food and health products. Reducing water usage to the minimum possible by making
optimum use of water is an important social and environmental concern for the company.
Conservation of energy:
Energy is one of the most important requirements for any factories and manufacturing units of an
organization to function. Ensuring energy conservation is truly essential for any organization to
not only reduce the cost of operations of business but also to reduce the negative impacts of
manufacturing activities on the environment as a whole.
Providing a suitable working condition at the manufacturing as well as non-manufacturing units
of the organization:
The factory and non-factory units must be in good condition to ensure the safety and security of
the workers working in these conditions. In Australia, the entities are under obligation to
maintain a particular health and safety standards for the workers and employees. It is compulsory
for each and every single organization to adhere to the health safety requirements in the
workplace. Nestle Australia’s social and environmental concerns include providing better

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working conditions to provide healthy and safe workplace to the workers and employees (van
den Heuvel, Soeters & Gössling, 2011).
Taking into consideration the above social and environmental concerns in relation to the
operations of Nestle Australia lets discuss the three potential social and environmental objectives
that the company should strive to achieve in the future. The table below contains the dimension,
objective and possible measures to achieve the social and environmental objectives by the
company in the future.
Dimension Objective Possible performance
measures
Environmental Ensure minimum wastage of
agricultural goods and natural
resources.
The natural resources and
agricultural goods shall be
used effectively by using
advanced technology to
minimize the wastage of
resources. In addition
recycling of resources further
helps in reducing wastages.
Conservation of energy Energy conservation is very
important for sustainable
growth. This could be
achieved by using
technologically advanced and

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latest equipment which uses
less energy as compared to
old machine and equipment.
Reducing harmful impacts of
manufacturing and
production operations on the
environment
Use of safety tools and
equipment to minimise the
pollution from manufacturing
units and factory units would
help in reducing the harmful
impacts of manufacturing and
production operations.
Social To provide healthy food and
nutrition supplements to the
customers.
The agricultural goods shall
be of highest quality to
produce healthy food and
nutrition supplements. In
addition it is to be ensured
that no preservatives colours
and other harmful ingredients
are added in the health and
food items.
To ensure 100% safe and
healthy products for kids and
elders.
Tasting the foods multiple
times before releasing the
same in the market for the
consumption of kids and

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elders. Ensuring no harmful
ingredients are there in the
food and nutrition
supplements (Pasternak,
2014).
Contribute to corporate social
responsibilities in the area of
operations as well in larger
part of the country.
Contributing by building
schools and colleges for the
under privileged and helping
the poor to overcome
difficulties by contributing to
the social development.
Answer 2:
Requirement 1:
Porridge Cereal Muesli Bars
Oats Department Department Department Department
Direct Materials $0.25 $1.50* $1.20* $0.75*
Direct Labour $0.03 $0.50 $0.50 $0.25
Variable $0.05 $0.25 $0.25 $0.13

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Overhead
Fixed Overhead $0.03 $0.13 $0.13 $0.05
$0.36 $2.380 $2.080 $1.180
Minimum price $0.360 $2.380 $2.080 $1.180
Maximum price $0.400 $5.500 $5.000 $4.500
Contribution under minimum price:
Porridge Cereal Muesli Bars
Contribution Oats
Departmen
t
Department Departmen
t
Department
Minimum $0.360 $2.380 $2.080 $1.180
variable
costs
$0.34 $2.26 $1.96 $1.13
Contribution $0.025 $0.125 $0.125 $0.050
Contribution under maximum price:

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Porridge Cereal Muesli
Bars
Contribution Oats Department Department Department Department
Maximum 0.4 5.5 5 4.5
variable costs 0.335 2.255 1.955 1.13
Contribution 0.065 3.245 3.045 3.37
No if negotiated pricing would be used then transfer pricing of oats would not be same for three
different departments as the cost and market price of these departments are not same.
Requirement 2:
Strengths:
I. Transfer pricing helps in ascertaining cost to departments.
II. Proper percentages can be imposed on cost to transfer to goods to different
departments.
Weaknesses:
I. Recognition of profit by a department though the goods may have not yet been sold
and is in the inventory of the transferee department.
II. Inflation of inventory.
Requirement 3:

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No, despite the fact that the external organization will supply Oats at lower price i.e. $0.35/ per
kg than that offered by the Oats department, i.e. $0.36/ per kg since the fixed overheads for Oats
department is $0.03 per kg. Thus, the variable cost of Oats transferred by Oats department at
$0.34 per kg is still lower than that offered by external department at $0.35 per kg.
Requirements 4:
Use of transfer pricing by imposing fixed percentages on cost or by determine the profit margin
and deducting the same from per-determined transferring prices. The contribution margin will be
positive under these transfer pricing methods.
Requirement 5:
General transfer situation rules will not consider the actual costs incurred by Oats department
rather a general transfer price shall be used to transfer the oats. In such situation it becomes
difficult to properly assess the performance of different departments.
Conclusion:
Taking into consideration the discussion above it is clear that Nestle Australia Limited has
number of responsibilities towards the society and environment. It is important for the company
to take necessary steps to deal with the social and environmental concerns. Nestle Australia
being an internationally leading nutrition company it is expected that the management will take
all necessary steps to deal with social and environmental concerns.

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References:
Bakanauskienė, I., Staniulienė, S., & Žirgutis, V. (2015). Strategies of Environmental
Management in Lithuanian Business Organizations: In Response to Environmental
Stakeholders Context. Management Of Organizations: Systematic Research, 74(2), 7-23.
doi: 10.7220/mosr.2335.8750.2015.74.1
Corporate social responsibility (3rd ed., pp. 4-176). Sydney.
M. Yasodha et al.,, M. (2019). A Comparative Statement Analysis on Nestle India Limited and
Britannia Industries Limited. International Journal Of Economics, Commerce And
Research, 9(1), 7-12. doi: 10.24247/ijecrjun20192
Pasternak, A. (2014). The Impact of Corporate Task Responsibilities: A Comparison of Two
Models. Midwest Studies In Philosophy, 38(1), 222-231. doi: 10.1111/misp.12025
Porto, E., & Revelli, F. (2011). TAX-LIMITED REACTION FUNCTIONS. Journal Of Applied
Econometrics, 28(5), 823-839. doi: 10.1002/jae.1275
van den Heuvel, G., Soeters, J., & Gössling, T. (2011). Global Business, Global
Responsibilities. Business & Society, 53(3), 378-413. doi: 10.1177/0007650311424724