Grupo Bimbo/GROUP 202

Con el cariño de siempre.

Monday 12 June 2017, by Alma Rojas

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A. The main facts about the activities of the company.

Grupo Bimbo was founded in 1945 in Mexico, and it has ever since established itself as one of the world’s leading bakery companies. From an initial lineup of nine products in 1948, its catalog includes now up to 10000 products across its more than 100 brands, offered to the public through 1700 sale points in 22 countries and 3 continents. It operates in the Mexican Stock Exchange under the BIMBO label, reported sales up to US$14,064 millions in 2014 and dominates the market with its 90% control of the sector. It is estimated that the average Mexican consumer spends around US$131.6 every year on Bimbo products.
Its ever-present polar bear corporate mascot is a well known imag. The brand itself is recognized as “famous” by the Mexican Institute of Industrial Property, one of 27 Mexican brands to achieve such status . The company has ranked #986 in the Forbes Global 2000 list from Forbes Magazine, and the Kantar World Panel gave the brand the seventh place in its Brand Footprint list.
Grupo Bimbo, as such, first appeared in 1986, when after 41 years Bimbo began its international expansion with exports to the US. The global growth strategy was enhanced in 1997, and the group acquired companies in the US and Brazil. Presence in Asia begun with the acquisition of the Panrico bakery in Beijing in 2007.
Under the leadership of the Servitje family, and particularly Roberto Servitje, Grupo Bimbo not only has achieved an important commercial success, but has also gained prestige and notoriety both in Mexico and internationally. Even more so regarding its corporate social responsibility standards and practices., as proven by its many awards and prominent positions in ethical rankings around the world.

B. The Ethical challenges this company is addressing.

Probably the greatest ethical challenge for the company comes from within. Bimbo has always followed a very strict, very honest set of ethical rules set by its CEO and founder, Roberto Servitje. He was well aware that the general environment in Mexico is notoriously low as far as ethical standards go, and that tax fraud, bribes and a general lack of respect for the law run rampant in the country. We know, thanks to the very detailed work he himself did on the ethical guidelines for the company, that his main goal was to set Bimbo apart and above those low standards. In his own words, overcome the “temptations” around the company and its workers and management.

Unfortunately, Servitje passed away last February. Bimbo is obviously solidly established and it has lived up to it own ethical standards (we might think so, given it position in the most respected ethical rankings in the world). Maintaining itself up to its own standards, keeping them as a mainstay for its activity, being able to update them according to a rapidly-evolving world and an international expansion and doing so without the fundamental contribution and leadership of Servitje. While the company is still under the management of a Servitje family member, that is probably the company’s biggest, most critical challenge.

C. What makes you believe this company is really ethical and why you trust it?

We believe that Grupo Bimbo is ethical, because first of all the company has appeared in a ranking of Forbes, and the study was done by a company called Ethisphere. In their study they independently verify those responses with outside sources like SEC filings and by asking companies for supporting documentation. And Ethisphere’s analysts research companies’ reputation, history of litigation and ethical track record. Through its ethics survey, Ethisphere evaluates firms on five criteria, which roll up into a single Ethics Quotient (EQ) score. (Forbes)
We relied on their studies, and on the raking, because we found their five criteria relevant to measure ethics, such as:

1 - Company ethics and compliance program:
Which accounts for 35% of the EQ. Firms must answer questions like whether they track gifts received by employees and what resources they offer employees for reporting misconduct. (Forbes)

Our group found this criteria crucial, mostly because it shows more transparency in their conduct with their employees. And something relevant here is that in the data of 2016 more companies more companies revealed information about misconduct to their own employees, telling them how many complaints were filed and what was done about it. And the years before, firms tended to keep such matters confidential.

2 - Are ethics incorporated into the company’s culture from top to bottom?
Accounting for 20% of the EQ. (Forbes)

3 - Corporate citizenship and responsibility:
Includes questions about what methods companies use to measure their environmental impact. (Forbes)

This criteria also shows transparency, and can create more awareness for the customers in terms of how the company is dealing with the environment, which is a huge issue to consider.

4 - Corporate governance:
Ethisphere’s survey asks whether a company’s CEO and board-chair roles are held by separate people. This year, Ethisphere also placed an increased focus on diversity in board and leadership positions. (Forbes)

The fourth aspect considered we found it relevant, mainly, because of the focus on diversity in board and leadership positions, since is really hard to find companies that really care about this important issue, and also because companies have the responsibility to include minorities in their workplace.

5 - Leadership, innovation and reputation:
Ethisphere asks if companies have been named to top business lists, such as Forbes’ own Most Trustworthy Companies, and whether its executives have spoken at high-profile conferences like the World Economic Forum in Davos, Switzerland. (Forbes)

Our group, however, knows that rankings might have bias and we can not just rely on these source to justify the ethics of the Grupo Bimbo. Then, doing more researches we found out that in 2006 the Ministry of Labour and Social Security (Secretaría del Trabajo y Previsión Social (STPS)) in Mexico has given to Grupo Bimbo a recognition of Inclusive Company, which is given to companies that work in this direction. And has stimulated them to continue working for this new labour culture, which includes personnel with disabilities and other vulnerable groups, considering their profiles, skills and experiences inside different production processes. As a consequence of the inclusion, it also raise the awareness of the current staff to adopt an attitude of tolerance and teamwork, which is an important value that the employees of an ethical and responsible company have to have.

Some others Social Responsible Company Award:

The Mexican Center for Philanthropy (CEMEFI) awarded Grupo Bimbo for thirteen consecutive years the Company Socially Responsible ESR 2013, recognizing the valuable social contribution of our company. (Grupo Bimbo)

To this award they considered mainly the Social Responsibility Model that Grupo Bimbo has which aims to return to the communities in which they act in, a little of how much they receive from them. Seeking to support them in the challenges they face. This model, called Sowing Together, focuses on four lines of action: Welfare, Planet, Community and Collaborators.

CEMEFI, in collaboration with the Alliance for Responsibility in Mexico (AliaRSE) and Forum Empresa, recognize through the ESR Badge companies that, like Grupo Bimbo, publicly and voluntarily assume a socially responsible management as part of their culture and business strategy . (Grupo Bimbo)

The sustainable seal of the BMV, a distinction granted annually by the Mexican Stock Exchange to those companies considered the best in Corporate Social Responsibility. For the second consecutive year we are among the issuing companies belonging to the Sustainable IPC Index. (Grupo Bimbo)

For the fifth consecutive time, we have been recognized by the Ministry of the Environment and Natural Resources (SEMARNAT) for declaring and publishing the inventory of greenhouse gases (GHG) of all our facilities and vehicles in Mexico.

Some others facts that proof Bimbo´s social responsibility:

Environmental Responsibility:
The Program Committed to the Environment, they focus their environmental efforts on 5 lines of action: energy saving, emission reduction, water saving, integrated solid waste management and social responsibility in environmental matters, through its Civil Association of Reforestation México.

In 1998, the year of great forest fires, the Ministry of the Environment and Natural Resources invited companies from Mexico to participate with resources to reforest affected areas. Grupo Bimbo participated with donations, which helped to the reforestation with million new trees. Grupo Bimbo decided to give continuity to these types of projects on a permanent basis. In May 2002, Reforestamos México AC was born.

Furthermore, Bimbo uses biodegradable plastic technology which allows the complete degradation of the packaging in a maximum period of three to five years, while the normal plastic takes 400 years.

Social Responsibility:
Their main objective is to support activities aimed at incorporating social commitment in favor of vulnerable communities, seeking to optimize efforts in programs that support the environment, health, nutrition, education and culture of society, especially children and indigenous people. Just as they are concerned with improving internal operations, they contribute to the general welfare of society. They work to restore forests and forests throughout the country, create microfinance opportunities for small business owners and children’s education.

So, bearing all of these facts in mind, our group think that we can trust on Bimbo’s Group as being an ethical and social responsible company.

D.The possible challenges facing the company in the future and how you think this company may improve.

The Bimbo’s Group is currently the world leader in bakery sales. It holds 3% of world sales, 11% in the United States and 14% in Mexico, but it also acts in Europe, Latin America and Asia. Due to its large participation in the American market, Bimbo must be equipped to face a very competitive food market and come up with innovative strategies to stand out. For a future consolidated strategy, Bimbo has to think about the opportunities of each country differently, considering also each country’s main issues, and social problems.

In regards to the United States, they are presented with another challenge which is an aggravating problem in the field of health and nutrition: obesity. For Bimbo to survive, the food and bakery company most innovate its product to maintain it nutritionally rich and healthy thus promoting wellbeing and fighting an underlying problem in the country.

There is another important issue that Bimbo has to consider to seek for a better future and to maintain itself as an ethical company. In regards to its production, Bimbo has to increase their production, while using the same limited resources: the existing farmland and the same amount of water. “One of the possible solutions is to migrate to smart subsidies: the low cost of water and electricity generates waste and overexploitation of the aquifers, as well as lack of incentives to invest in resource-sparing technologies. We should move over from aid subsidies to productive and sustainable subsidies, so as to promote that farmers provide added value to the lands they work” (Daniel Servitje Montull, President and CEO of Grupo Bimbo).

As we have discussed in lectures and in seminars, it is or it may seem difficult to maintain yourself leading a firm that is 100% ethical and responsible for its operations. We believe Bimbo has been performing for the best of society, taking into account its environmental, cultural and social impact in the different communities worldwide that the company has been working in. It is a challenge, nevertheless, to keep itself in this position, midst a market and global context where collusion and corruption is an available strategy to get by.

In order to stand out and keep its position at the world stage, Bimbo should hold its corporate values and standards that has proven to be ethical and responsible not only inside the firm but also outside. Bimbo should continue to invest in sustainable long-term strategies to keep the business alive and prospering; avoiding any shortcut or collusion to cheat on its competitors. The company should continue to invest in the quality of its employees, products and operations; dedicating time and energy to create innovative solutions for global challenges.

Sector: Accommodation and food service activities

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