Elsa Del Castillo
Universidad del Pacífico Perú
Cementos Lima S. A. is a leading player in Peru’s cement industry, with 44% domestic market share and growing presence in some international markets as well.
As the company grew, urban areas started to emerge around its plant, quickly becoming the city’s fastest growing districts. In time, neighboring communities literally encroached Cementos Lima’s plant, forging close, yet complex ties with the company. On the one hand, nearby dwellers were directly affected by the factory’s environmental impact. On the other, they benefited from the company’s social initiatives.
The case describes how this organization’s social engagement evolved from an inarticulate, predominantly philanthropic and assistentialist practice into a more formal and effective social responsibility approach that translated into a number of innovative community projects. This transformation started with initiatives focusing on environmental care that later shifted to zero in on the advancement of sustainable development in surrounding communities.
As the case draws to an end, the company faces a management turning point as a result of its exports growth plans, which imply greater plant output and, therefore, a larger impact for its neighboring community with more incoming and outgoing materials. To meet these additional transportation demands, the company has planned to embark on two projects: building a cable car to connect the cement manufacturing plant to one of the supplying limestone quarries and an underground conveyor belt linking the plant to the port area. Both projects require approval from the neighboring community, as per municipal regulations. Realizing the neighbors are unwilling to approve these projects, the company starts to analyze how community relations have been handled so far and how important these ties are for its strategic business goals.
Reading the case, students will judge the situations created by several actors with whom the company needs to interact and who, to a greater or lesser extent, affect its performance. To name just a few, these actors include the State, regulating cement prices; neighboring communities’ members, who are concerned about the company’s expansion plans, and governmental environmental organizations, with a constantly monitoring attitude to protect local natural resources.
For illustrative purposes, a second document –an appendix to the case- describes how the organization chooses to create, in 2003, a stand-alone outfit to execute its social projects. This new organization, supervised by Cementos Lima’s board and Senior Management, must rise to the challenge of improving its social initiatives’ planning, monitoring, impact evaluation systems, as well as strengthening the company’s ties to the community and finding new funding sources to expand its medium-term operations.
This case may be used in courses on social venture management, corporate social responsibility and organizational behavior to tackle the following topics: