Analyze and Consult strategic management case study

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Case 12 • World Wildlife fund for nature (WWf) 2015
499
World Wildlife Fund for Nature
(WWF) 2015
www.worldwildlife.org
Headquartered in Gland, Switzerland, the World Wildlife Fund by some measures is the world’s
largest independent, nonprofit conservation organization working in 100 countries, supported by
over 1 million members within the United States and 5 million members globally. The organization
has about 6,200 full-time staff members that manage an average of 1,300 projects at any one time.
Since being founded in 1961, it has invested close to $10 billion in more than 13,000 conservation
projects in over 150 countries. Within the United States, the WWF operates as a nonprofit organization and is headquartered in Washington, DC. The organization generated a total of $291.49 million
in operating revenue in 2014, resulting from a fundraising expense of $28.70 million. A total of
$224.46 million was expended by the organization in direct support of conservation programs. The
symbol of WWF is the Giant Panda (the endangered black and white bear from China).
WWF opened a new office in Myanmar in late 2014 after partnering with the national government to achieve shared goals. Myanmar, located in southeast Asia, has a very rich natural capital, including three of the world’s most pristine rivers, over 250 mammal species, and more than
1,000 bird species. The country’s important biodiversity includes endangered species such as
tigers, elephants, and Irrawaddy dolphins. Myanmar is determined to develop a green economy
that can serve as a global model of how to improve life for a country’s citizens, while protecting
its natural capital.
In July 2015, the U.S. Fish and Wildlife Service began investigating the circumstances surrounding the killing that month of Cecil, a lion who is thought to have been lured out of his
protected habitat in Zimbabwe and killed by Walter J. Palmer, an American dentist and hunter.
The killing of Cecil raised global awareness for wildlife welfare on many fronts. Well known
to anyone who ever visited Hwange National Park in western Zimbabwe, Cecil was killed and
beheaded—the head intended as a trophy for the hunter.
Copyright by Fred David Books LLC. www.strategyclub.com (Written by Edward Moore, Liberty
University)
history
The World Wildlife Fund was formed when the Morges Manifesto document was signed in 1961
by 16 of the world’s leading conservationists, stating that although the expertise to protect the
environment existed, the financial support for the goal did not. As a result, the document established the WWF as an international fundraising organization. It quickly established itself on the
world conservation stage and opened its first office in Morges, Switzerland, with H.R.H. Prince
Bernhard as its first president. In 1961, WWF funded the British National Appeal and the United
States Appeal, the first two national organizations funded under WWF. Also that inaugural year,
WWF approved five projects totaling $33,000 to begin conservation work with several endangered species, including the Bald Eagle.
By 1973, WWF hired its first staff scientist as a project administrator and had projects in
countries across the globe, ranging from a $38,000 grant to study tiger populations in Nepal to
purchasing 37,000 acres of land in Kenya to be set aside as a feeding ground and sanctuary for
nearly 30 bird species, including one million flamingoes. WWF promoted the Convention on
International Trade in Endangered Species of Wild Fauna & Flora (CITES), which to date has
been signed by over 170 nations, all committed to ensuring wild plants and animals from runaway trade and exploitation.
By the early 1980s, in partnership with the United Nations Environment Program and
the International Union for Conservation of Nature (IUCN), WWF established a program of
debt-for-nature swaps in which the WWF converts portions of national debt into funding for
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conservation efforts. In 1985, WWF launched Wildlands and Human Needs, a new initiative
intended to highlight how economic conditions of rural people who share land with wildlife can
improve without negative impact to the natural habitats the wildlife relies on. By 1989, the WWF
debt-for-nature swap initiative had grown and the organization was able to negotiate a $2.1 million swap for Madagascar.
In 2004, a wildlife census in Africa showed that WWF efforts to save rhinos were paying off
with the population of black rhinos reaching 3,600 and white rhinos reaching 11,000. Otherwise,
these animals would likely have gone extinct. WWF soon adopted a new and challenging 10-year
goal to “measurably conserve 15 to 20 of the world’s most important eco-regions and in so
doing, transform markets, policies, and institutions in order to reduce threats to these places and
the diversity of life on Earth.”
Internal Issues
Vision/Mission/Ethics
The World Wildlife Fund’s mission is to conserve nature and reduce the most pressing threats
to the diversity of life on Earth. The organization’s vision is “to build a future in which people
live in harmony with nature.” WWF’s mission is to conserve nature and reduce the most pressing threats to the diversity of life on Earth. In an effort to increase organizational effectiveness,
WWF has recently shifted its emphasis from a narrow focus on saving specific species and landscapes to a broad focus addressing the global forces and threats that are impacting specific species and landscapes. This shift has led the organization to focus its efforts on the six key areas of
forests, marine, freshwater, wildlife, food, and climate.
The code of ethics calls for the organization to remain global, independent, multicultural,
and nonparty political. Importantly, it also calls for objective examination of available information and a strong focus on concrete conservation solutions. The code also highlights the strategy
of partnerships and collaboration to accomplish the mission as well as a focus on cost-effective
operations.
Organizational Structure
The World Wildlife Fund is structured divisionally, as illustrated in Exhibit 1. There are five
divisions reporting to COO Marcia Marsh, including the newest division, simply titled Oceans.
Strategy
The World Wildlife Fund’s strategy relies on a combination of fundraising, collaboration, research, conservation projects, and government influence to accomplish the following:
•
•
•
•
•
Protect and restore species and their habitats.
Strengthen local communities’ ability to conserve the natural resources they depend on.
Transform markets and policies to reduce the impact of the production and consumption
of commodities.
Ensure that the value of nature is reflected in decisions made by individuals, communities,
governments, and businesses.
Mobilize hundreds of millions of people to support conservation.
The World Wildlife Fund’s strategy is to partner with organizations to positively impact
seven areas: forests, oceans, freshwater, wildlife, food, climate, and species. Its work on forests,
for example, focuses on the threats created by growing agriculture use as well as illegal and
unsustainable logging. The WWF website places the rate of loss of forests globally at a staggering 48 football fields per minute. To help mitigate this, the WWF has set a specific goal of
“conserving the world’s most important forests to sustain nature’s diversity, benefit our climate,
and support human well-being by 2020.”
The organization’s work on oceans focuses on promoting healthy marine ecosystems
capable of sustaining livelihoods and economies while supporting biodiversity. The WWF
website says 1 billion people rely on fish as an important part of their diet and that more than
520 million livelihoods are supported by fishing and its related activities.
The WWF’s 2014 Living Planet Report reported that wildlife populations of mammals,
birds, reptiles, amphibians, and fish have declined by 52 percent over the last 40 years. Success
stories in this area include the recovery of Africa’s black rhino and black bucks in the Himalayas.
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Brad Ack,
SVP for
Oceans
Acting
Senior
VP
Marine
Jason Clay,
Senior VP
Markets
and Food
Marcia
Marsh.
Chief
Operating
Officer
Tom Dillon,
Senior VP
Forests and
Freshwater
Margaret
Ackerley,
Senior Vice
President
and
General
Counsel
Ginette
Hemley’s,
Senior VP
Wildlife
Conservation
Suzanne
Apple,
Senior
VP Private
Sector
Engagement
Michael
Bauer,
Chief
Financial
Officer
Source: Based on information from the WWF 2014 Annual Report as of June 30, 2014.
David
McCauley,
Acting
Senior VP,
Government
and
Multilateral
Affairs
Steven
Chapman,
Chief
Conservation
Officer
Carter Roberts, President & CEO
Exhibit 1 WWF’s Organizational Structure
Elaine
Bowman,
VP Human
Resources

Jon
Hoekstra,
VP and
Chief
Scientist
Terry
Macko,
Senior VP
Communications
and Marketing
Julie
Miller,
Senior VP
Development
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Current projects include efforts to conserve snow leopards in Central Asia, and ostriches and
zebras in Namibia. The goal here is to “use our best science, policy influence, market based strategies, and communications to quantify and enhance the value of wildlife.”
Work in the area of food focuses on the conflict created by growing demand for food and
the loss of habitats and wildlife that results from that demand. WWF studies show that 7.2 billion
people are currently stressing the world’s ability to meet demand by consuming 1.5 times what
natural resources can supply. With the world’s population expected to grow to 9 billion by 2050,
the demand for food is expected to double. WWF’s plan is to freeze the amount of land currently
allocated to food and instead focus on improving efficiency and productivity in current systems
while reducing waste. WWF estimates that 1.3 billion tons of food is wasted each year—four
times what is needed to feed the estimated 800 million malnourished people in the world. The
overall goal is by 2050 to be able to produce enough food for everyone, using roughly the same
amount of land currently in use today.
The WWF’s strategy includes working with businesses to help discover new and creative
ways to reduce WWF’s impact on wildlife and habitats while meeting the growing global demand
for goods. WWF focuses on a broad range of priority commodities, including items such as dairy,
beef, timber, tuna, and many more. In a recent collaborative effort with business, the WWF established the Bioplastic Feedstock Alliance, where leading global companies have committed to the
development of plastics made from plant-based material rather than fossil fuels.
Influencing Policy
Public policy has a significant impact on global conservation efforts as it can guide and control
actions of individuals and organizations. The WWF actively seeks to influence governments
in the United States and globally to pursue conservation actions as well as actively supporting
government initiatives that align with organizational goals. In a recent policy initiative, WWF
actively supported U.S. government legislation titled the Wildlife Trafficking Enforcement Act,
which increased the penalties associated with wildlife trafficking. WWF went a step further and
committed to working with the U.S. government to help apply those new penalties to organized
crime and illegal wildlife trade to help protect a wide range of threatened species.
Partnerships
The WWF forms partnerships as a key element of its strategy. For example, Bank of America
has offered a WWF Visa card since 2009 in support of global conservation. Through this program, Bank of America contributes to WWF for each new qualifying account opened and
activated. Other key WWF partnerships include Avon, CARE, and Coca-Cola. Avon, with
$11 billion in annual revenue, is a large producer of brochures and consumer paper products
with distribution in over 120 countries. Recognizing its impact on the environment, Avon has
partnered with WWF in two key areas. First, Avon is a member of WWF’s Global Forest & Trade
Network that focuses on sustainable pulp and paper supply chain solutions. Second, Avon has an
internal customer-focused education campaign called Hello Green Tomorrow to help curb deforestation through consumer awareness.
The World Wildlife Fund’s partnership with Coca-Cola was established in 2007 and was recently
renewed through 2020. Through this partnership, both companies focus on efforts to improve and
sustain fresh water supplies globally and specifically address Coca-Cola’s value chain. The value
chain enhancements within Coca-Cola include climate protection through reduced carbon content,
improved social performance through renewable packaging, sustainable sourcing of agricultural
resources, and improved water efficiency throughout manufacturing operations. Externally, the companies work to conserve important water sources in Asia, Africa, and the Americas, and specifically
target key river basins and catchments throughout the world.
The WWF’s 2014 Annual Report shows that individuals contributed 32 percent of total revenue, whereas corporations contributed only 4 percent, so WWF wants businesses to rally to
WWF’s cause more in the future.
Finance
The World Wildlife Fund generated $291 million in revenue during 2014, up 12 percent from the
previous year. The Statement of Activities shown in Exhibit 2 is similar to the income statement
of a for-profit organization and reveals that $136 million of the WWF revenue was in the form of
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Case 12 • World Wildlife fund for nature (WWf) 2015
direct contributions, with another $51 million in government grants and contracts. The remaining
revenue came from other sources, including WWF network revenue and non-operating income.
Total operating expenses were $266 million, resulting in a surplus of nearly $26 million.
As a nonprofit, it is important for WWF to measure the efficiency with which the organization raises funds and converts those funds into programs that support its mission. Charity
Exhibit 2 WWF’s Statement of Activities (in millions of USD)
report date
2014
2013
$136.58
50.82
17.90
5.49
46.96
33.75
291.49
–
291.49
$122.18
48.22
16.21
6.81
64.30
21.73
279.44
–
279.44
Commercial Building Operations
Revenues
Expenses
Net Income on Commercial Building Operations
Total Revenue and Support
6.10
5.85
0.25
291.74
6.68
5.52
1.16
280.60
Operating Expenses
Program Services
Conservation Field and Policy Programs
Public Education
Total Program Services
159.75
64.71
224.46
144.38
81.74
226.12
Supporting Services
Finance and Administration
Fundraising
Total Supporting Activities
Total Operating Expenses
12.72
28.71
41.43
265.89
12.35
27.66
40.02
266.13
25.85
14.46
12.19
0.28
34.47
0.45
46.94
(33.75)
13.19
39.03
318.82
357.85
29.21
5.87
19.42
(0.12)
54.39
(21.73)
32.66
47.12
271.69
318.82
Operating Activities
Revenues
Contributions
Government Grants and Contracts
WWF Network Revenue
Other Revenue Including Royalties
In-kind Contributions
Non-operating Income Allocated to Operations
Total Revenues
Net Assets Released from Restrictions
Net Revenues
Revenues and Support Over Operating Expenses
Non-operating Activities
Bequests, Endowments, and Split Income Gifts
Income on Interest Rate Swaps
Income from Investments, Net
Gain/(Loss) on Foreign Currency Exchange
Total Non-operating Activities
Total Allocated to Operations
Change in Net Assets from Non-Operating Activities
Change in Net Assets
Net Assets at Beginning of Year
Net Assets at End of Year
Source: Based on WWF’s 2014 Annual Report.
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Navigator (www.charitynavigator.com), a nonprofit rating organization, provides guidance when
evaluating this type of performance in the form of industry norms. WWF spent $224 million on
programs in support of its mission in 2014, representing 77 percent of its total revenue. Data
from Charity Navigator shows that 7 out of 10 nonprofit companies spend at least 75 percent on
programs, placing WWF in the top tier for the conversion of revenue to programs. Total administrative and fundraising expenses for 2014 were nearly $13 million and $29 million, respectively.
These two categories represent 4.8 and 10.8 percent of total expenses. The best-performing nonprofit organizations, according to Charity Navigator, keep their administrative expenses below
15 percent and fundraising expenses below 10 percent. WWF is operationally efficient in both
categories when compared to industry norms.
Another metric to consider is the return on fundraising expenses. According to Charity
Navigator, top-performing nonprofit companies will spend less than $0.10 to raise $1.00 in
revenue. During 2014, the WWF raised a total of $291 million with a fundraising expense of
$29 million, placing them in the top tier with an expense of $0.0985 for each $1.00 raised. One
final metric used by Charity Navigator is the working capital ratio that measures how many years
the organization could sustain its present program spending using only net assets, with the best
performing organizations having a ratio of greater than 1:1. With a current program expense of
$224 million and total net assets of $358 million, the WWF has a ratio of 1.59:1, placing it again
in the top tier. Taken together, these financial performance metrics reveal WWF to be an efficient
and effective organization in the area of fundraising and allocation to program expense while
minimizing internal expenses.
The Statement of Financial Positions in Exhibit 3 is similar to the balance sheet of a forprofit organization in that it summarizes assets and liabilities, but differs in totaling net assets
rather than shareholders’ equity. Despite the differences, several leading financial health metrics
can be calculated. For example, the current ratio for 2014 for WWF is 2.35, up from 2.28 in
2013.
Exhibit 4 reveals 10 years (only even years data are shown) of operating revenue and program spending history. Note how the distance between the two lines becomes wider toward 2014,
indicating both greater profits and efficiency. Spending decreased $2 million, and net revenues
increased $12 million from 2013 to 2014.
Competitors
Donors make choices about where to make contributions based on the operational efficiency of
the nonprofit organizations as well as its specific causes. The Nature Conservancy, Conservation
International, and the Wildlife Conservation Society are leading wildlife and habitat conservancy
nonprofit organizations and as such are competitors to WWF.
The Nature Conservancy (www.nature.org)
Headquartered in Arlington, Virginia, The Nature Conservancy was founded in 1951 with the
broad goal of working around the world to protect ecologically important lands and waters for
both nature and people. The organization currently has more than 1 million members and since
its inception it has protected more than 119 million acres of land and thousands of miles of rivers
across the globe. It has a global impact with projects in all 50 states in the United States and more
than 35 countries. Its work is focused on threats to conservation, including climate change, fresh
water, oceans, and land. The mission statement of the organization is similar to the WWF in that
it focuses on achieving conservancy through collaborative partnerships.
The organization’s 2013 total revenue was $859 million with a total expense of $752 million
made up of $542 million in program expenses, …
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