Leading an Ethical Business: a Case Study on Dilmah Tea

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Table of Contents

  • Introduction
  • Vision And Mission Of Dilmah
  • Dilmah’s Journey
  • Strategy Of Dilmah
  • Reasons Of Change
  • Key Issues
    Social Responsibilty And Ethics At Dilmah Tea
    Ethical Practices For Customers
    Challenges For Dilmah
    There are few reasons for that


The Tea Industry of Ceylon, now called Sri Lanka, is the lifeblood of the country today, providing direct employment to over 500,000 people, and producing for the world a beverage that is healthy, refreshing and delicious. It is an imperative for the future of this industry that we shall not forget the past, and those that made history in creating our tea industry. Dilmah is one of the famous brands of tea out of eight global brands in the Medinge group. Merrill Fernando is the leader who have originated the concept of single origin tea and the worlds first ethical tea. Meril J. Fernando, as a young fellow of twenty, was chosen to join the primary bunch of Ceylonese in the 1950’s to be prepared in tea tasting of Dilmah.

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Fernando was prepared in London’s well-known Mincing Lane, in the 1950s. It was here that tea was purchased and sold in a nation that developed abroad, foreign made and expended the greater part of the world’s tea Dilmah. On his arrival to Ceylon from his preparation in London, Fernando joined the A. F. Jones and Co. , a British-claimed and oversaw tea business of Dilmah. Inside a couple of years, he turned into its Managing Director of Dilmah. Hardly any years subsequent to joining the organization, Fernando purchased out the organization from the British proprietors and turned into the CEO of Dilmah. In 1988, Fernando propelled his image, Dilmah in Australia. Presently, Dilmah was acquainted with New Zealand. The company belongs to Sri Lanka and is the number one manufacturer and exporter of tea bags. The company was formally established in 1988, to serve Australian customers with tea bags. Dilmah accounts for more than twenty one percent of the export of country tea bags. Dilmah also accounts for being the first producer of owned tea brand. Dilmah has differentiated its product in the global market. Dilmah success is the result of strong leadership, corporate social responsibility and niche marketing.

This case study depicts ethical side of the Dilmah. Tea industry in Sri Lanka is integral part of economy, it provides employment to so many workers and employees. Tea export accounts for good amount of foreign exchange. Unilever Australia Ltd drove offers of tea in 2013 with a 30% off-exchange esteem share. Unilever Australia claims a broad brand portfolio including Lipton and Bushells covering dark, green, natural/other foods grown from the ground tea. Its Lipton image was positioned second in tea in 2013 holding a 12% off-exchange esteem share. In 2013, Unilever Australia Ltd procured the claim to fame tea mark T2 as a feature of a system to grow its quality in the top-notch tea advertise.

Vision And Mission Of Dilmah

Merrill J. Fernando had an altogether different vision for tea and the tea consumer of Dilmah. He needed to bring quality, genuineness and morals back to tea Dilmah. Crisp tea is more extravagant in cell reinforcements thus he needed to offer his purchasers tea that was cultivate new, picked and stuffed at starting point. He trusted that buyers had a privilege to know precisely what they were drinking thus he spearheaded the idea of Single Origin, unblended, tea. Fernando saw that Ceylon tea, was profiting agents in Europe while income for Ceylon, now Sri Lanka, were an allowance. That was the point at which he concluded that one day, he would set up his very own image, picked and stuffed at root, profiting Ceylon, its tea industry and the million or so specialists who made Ceylon Tea conceivable. Since Fernando in Sri Lanka has established Dilmah, it has made an effective quality Ceylon tea around the globe. From the representative’s diligent work at Dilmah, Ceylon tea wound up feasible for the Australian Market. Ceylon Tea was profiting the go between in Europe while it was created in Sri Lanka before touching base in Australia. This was Fernando’s Mission from the minute he assumed control over the AB Foods Company, to Spread the Dilmah name far and wide.

Dilmah’s Journey

In the neighborhood Sri Lankan advertise today we locate a lot of tea makers with nearly a similar quality, in any case laying the egg would not be sufficient except if the item was given great showcasing and advancement with esteem development. Dilmah has been one stage over the rivals as far as brand picture and supporting the Sri Lankan cricket group has been among a large number of their fruitful advancement procedures. In the global market particularly in Europe the organization has utilized savvy advancement of tea through workmanship. They have propelled their fruitful craftsmanship photography display under the name “Tea in the main sense” which advances and highlights wonderful scenes from Sri Lankan tea domains which in the end grabbed the attention of numerous European markets. Additionally, they have been brilliant on going under the name Ceylon rather than Sri Lanka which is both simple to articulate and understood for item quality from the season of the British intrusion. In an ongoing meeting done by Sunday times daily paper, Tomasz Witomski (Distributor of Dilmah tea in Poland) said “The EU showcase is typically kept running by worldwide brands and being a Sri Lankan organization, it was an extreme errand to fly into the market retires in Poland however with the considerable advancement of brand picture we have overseen” He additionally featured that the most essential procedure was to make a one of a kind picture unique in relation to other monster marks in the business. This has in the end enabled Dilmah to swim in the blue sea without an excess of danger from its rivals who are stuck contending in the red sea.

Strategy Of Dilmah

Dilmah utilizes exceptionally straightforward, yet appealing bundling that is exceedingly conspicuous. Over all product offerings, the well-known Dilmah logo (exceedingly promoted through Sri Lankan cricket) is constantly present. For their item bundling, they utilize a cardboard box that seals the tea and keep them crisp making them simple to perceive among different brands and furthermore for more elevated amount of items, for example, natural tea they utilize a top notch aluminum bundle with a client manual and wellbeing tips. Dilmah is drawing in clients and building its picture by partner its image with various components, for example, sports, occasions or demonstrating how great its items are. Many refreshment organizations utilize the push and draw procedure, our item Dilmah appears to pursue a touch of both of these strategies.

Dilmah frequently discharges their coupons on couponfollow. com regularly as a pushing technique to inspire clients to visit their stores. They likewise offer their tea in high amounts at lower costs, for instance if a client purchases a bigger box of tea packs, they will pay less per tea sack than if they just purchased a smaller box. Web has been the new pattern of showcasing in the advanced world, Dilmah’s internet-based life locales have been exceptionally alluring and dynamic advancing both Cricket and their new advancements. As of now the Dilmah Facebook page has over a million preferences which is an incredible accomplishment and furthermore they have separate online life joins for global nations, for example, Australia, Poland and so on. Additionally, their official twitter page is refreshed routinely with current occasions and voucher offers. Their online site has been all around kept up with item classification and depiction of various levels of preparations including client contact and criticism choices accessible. Additionally, they offer the internet shopping choice which is extremely valuable for worldwide customers, they offer tea by range, tea by arrangement and tea by sort in their online shop which is exceptionally appealing and easy to understand. Conversely connection FedEx, Visa and PayPal makes it exceptionally helpful for clients.

Reasons Of Change

Sri Lankan tea makers were looked with the decision to offer their natural tea into the worldwide tea sack showcase, or to esteem include nation and break into the worldwide tea bags advertise. Dilmah Tea is a case of the last that used in-nation esteem including, which helped the Sri Lankan economy with moral business practices to guarantee that nearby networks profited from the stream on impacts of the effective and now-worldwide business. In spite of the fact that tea is a sumptuous thing, more prevalent in the Chinese culture, it is a modest beverage to create right now and the market that gets it are center and privileged individuals making tea deals in Australia impervious to the subsidence tops in the Australian Economy.

The carbon charge which was executed in 2012 and finished in 2014 brought about purchasers retaining some cost increments in the cost of their products; subsequently their discretionary cashflow will be diminished. The work government had kept up solid associations with different nations with the end goal to showcase the reasonable exchange consent to keep on bringing in tea and espresso into the nation. The carbon assesses affected the assembling part brutally. Australian organizations lost their upper hand to abroad organizations who were exempted from import-trade charges. The development of swelling had ascended by 3% out of 2013 subsequent to rising 35% out of 2012. The control of swelling is essential to keep up a steady, developing economy, or, in other words a moderate expanding pace. The relentless development in expansion is a noteworthy hazard for tea industry and Dilmah.

The national broadband system conspires which was propelled in 2012 and finished in 2014 gave better web get to specially to remote territories of Australia. It was not something which profited the urban territories much. This plan gave a strain on the nation’s financial plan, henceforth the choice was made to grab the plan after the 2013 budgetary year. This plan negatively affected the economy, which affected on assessments and purchaser salary, which brought about the low level of efficiency in Australia’s innovative work. The decline in innovative work spending is a hazard to the nations advance. This may prompt lower levels of advancement, which will put Australia behind different nations in its capacity to safeguard against cybercrime and in addition create items and thoughts. For the tea showcase, this implies the decreased changes in innovation. Changes in innovation are prompting more proficiency in making tea, which make tea creation more beneficial, and prompts benefit for the tea business.

Key Issues

One of the country’s present challenges is the climbing contamination levels. The country’s sweeping dependence on coal and power is inciting an enormous releases of carbon dioxide, and what’s more the destruction of nearby vegetation, which will result in various issues for future periods. The capacity to create tea is dependent on the atmosphere, and furthermore the conditions it’s secured in, in this manner tea gets the opportunity to be manufactured in controlled conditions and set away in perfect temperatures. The main issues in front of Dilmah are

  1. Product differentiation in a focused worldwide market
  2. Foundational moral way to deal with advancement of the business; perfect with progress
  3. Commitment to socially capable business and the mix into the matter of generous practices
  4. Intergenerational social training.

Social Responsibilty And Ethics At Dilmah Tea

Dilmah tea is not just a giant exporter of tea or famous for a successful business strategy but it is the pillar of tea industry of Sri Lanka and its economy. Dilmah tea is adding value to the export of its county. Dilmah is also committed to its ethical and social practices by providing value to its stakeholders and workers. From the beginning of the business Dilmah didn’t have the sole objective of earning profit but it had struggled through competition, facing challenges in export market, building the new market and providing the best experience of tea to customers.

The customers of Dilmah belongs to different culture, specially the markets in British commonwealth and USSR. Dilmah has always focused on socially responsible business culture. In Dilmah the ethical leadership of the founder can be seen in its strategy and policies. Dilmah is committed for its ethical production by giving values to its stakeholders and customers. Dilmah is a company known for its ethical culture which goes beyond commerce and sole objective of profit for the human service. Dilmah social responsivity and ethics involves integrating environment into its objectives.

Dilmah is connected with ‘International Union for the conservation of nature’ and the Ceylon chamber of commerce to encourage the other businesses and to understand the obligations of a business regarding environment. Dilmah strives for the excellence in environment and social sustainability. Dilmah has accounted for key roles in business initiatives in sustainability of environment. This company has involved its stakeholders too into ethical practice like banking sector cause the overall success depends on sharing experience through encouragement. Dilmah has its values depends on “six pillars” model that is Integrity, quality, customers, ethics and sustainability.

Ethical Practices For Customers

Dilmah is providing the best quality tea to its customers by promising and delivering the best quality products. Dilmah follows a strict procedure to monitor and maintain the quality. Few of the foreign companies misusing the brand name of Dilmah tea by supplying the inferior quality. For Dilmah quality is just not attached with the product but with production methods and equipment’s too. For the customers quality of a product is as necessary as communication for the personal response to customers. Valuable feedback with honesty and integrity is the integral part of communication strategy of Dilmah for maintaining customer loyalty. Dilmah has a Charitable foundation established for the reduction of poverty and supported by ten percent revenue of Dilmah. The foundation MJF shows a economic model more than performing charity because it presents social justice and ethical way of doing business. MJF foundation doesn’t depends on any beneficiary. Dilmah has effectively combined the business model with philanthropic mission.

Challenges For Dilmah

Dilmah social responsibility and ethics are interlinked with its business model. The case of Dilmah is connected to the perception of a society in which the company is operating. Dilmah main challenge is to grow the business the highly competitive environment with also giving proper focus to ethical practices. Dilmah is upgrading the standard of living for the people of Sri Lanka by creating wealth. Dilmah provides fair wages to the workers along with providing fair price to the farmers. Dilmah maintain the workplace culture, outstanding performance has rewarded. Stakeholders and ethical practices are above anything for Dilmah. Fernado always choose the right way to do things, whether it’s the quality, shipping of stock or serving its employees. Competitive business of Dilmah is showing great compatibility with its ethical principles. Main challenge for Dilmah is to meet commercial and social desires at the same time focusing on stakeholders. Sri Lanka is a developing country but Dilmah has shown that developing country need not to avoid social responsibility and can focus on ethics too with business. Question – Does your team consider that this firm’s focus on ethics and corporate social responsibility is not feasible or appropriate for businesses operating in other industries such as financial services, manufacturing, transport, media? Why or why not? Answer – The CSR and model for ethics used by Dilmah has been very successful for the company but its not necessary if the other firms or industries like financial services, manufacturing, transport or media, if follows the same model it’s not necessary that they will get successful in the same way.

There are few reasons for that

  1. Every company has their own organizational structure depends on hierarchy of employees, culture, diversification, leadership and communication strategy. One successful model of one company doesn’t guarantee success for other company
  2. Dilmah is the company which is basically a trading company which buy raw tea leaves from manufactures, process it and export it. Model of a trading company can not be replicated by other type of concerns
  3. Financial services, transport or media are always country specific. These companies work on the specification and need of the consumer but Dilmah is the big exporter.

Though these companies can focus on ethics and corporate social responsibility but replication of model can not be done. Media can be ethical in showing the fair and true picture of the incidents. Transport company’s corporate social responsibility depends on the profit earned by the company. Providing free transport services for the people below poverty line can be CSR activity for the company. Ethics not just lies in the leadership but we can see the ethics in the culture, quality of the product, service provided, values, systems, employees and stakeholders. Its not impossible for any company to focus on ethics and corporate social responsibility, need is of a leader to follow the value and matters the value for economy and society.

Question – Can your team recommend ways that other businesses could adopt some of the principles and practices of the case study firm?

Answer – After studying the case study our team can recommend few ways for other businesses some of the principles and practices that other firms can adopt

  1. Principles of ethical leadership
  2. Clear corporate values
  3. Corporate social responsibility activities
  4. Integration of the business with philanthropy
  5. Commitment to socially responsible business
  6. Intergenerational social education
  7. Strong focused leadership


Taking everything into account, Dilmah has huge space for development on the off chance that they improve changes to rival rest of the world goliaths. They have awesome open doors with their solid image devotion to enter assist into the tea advertise. Some of Dilmah best promoting chances lie in their utilization of web-based life, and additionally proceeding to give quality items so their faithful clients spread the brand name through verbal. They should keep on utilizing their valuing methodology that positions them nearly to their fundamental rivalry in the market. Dilmah is an effective organization that has incredible open doors for development in the event that they extend promote into the tea market and take a more prominent piece of the pie of this developing industry.

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