Sustainable business strategy

Task 1

a: Global sustainability issues and their impacts on business organisations

Sustainability means satisfying the needs of today’s generation without compromising the ability of future generations to fulfil their own needs. The word sustainability is very common nowadays; it is about our environment, job, business, health, culture, money, country and every other thing which is important for our survival and we want them in the long run. We cannot neglect the importance of sustainability (Berns & et. al. 2009).

Sustainability means everything that is essential for our survival and well-being depends on natural environment. Sustainability creates the ways to maintain the harmony of ecosystem and helps people to fulfil their responsibility for the natural environment in which they live. Sustainability helps us to make sure that we will have natural resources like water, minerals, and plants in the future (Lubin & Esty 2010).

In today’s dynamic world businesses are facing many economic, environmental, and social challenges which are increasing with the passage of time. There is heavy pressure from government and consumers to the businesses to carry on business in ways that protect environment and their future. Due to the heavy pressure it is very important for business organisations to pay attention to sustainability (Petrini & Pozzebon 2009). Heavy industries like manufacturing, transportation, utilities, and resources consumes heavy amount of natural resources for their business processes and now it becomes their ethical and social responsibility to pay proper attention towards sustainability.

Industrial operations is a major reason for environment pollution, discharge of hazardous wastes into environment makes its polluted which is very harmful for the health of all living organisms. PWC of UK faces pressure of developing sustainable business strategies. The company is engaging in developing new business model by keeping sustainability issues in their mind. PepsiCo faces many sustainability problems like climate change, resource depletion, and shortage of fresh water. Due to depletion of resources PepsiCo is focusing more to save environment by investing in many environment friendly acts. Tesco, a retail food chain of UK is facing pressure to reduce food wastage (Jones, Comfort, & Hillier 2011). British Petroleum is facing problem due to shortage of fuel, climate change, and carbon emission risk. Sustainability problems facing by AKZO Nobles are climate change and fair trade. By focusing on sustainability issues Akzo Nobel invested money in raising awareness of timer. To create the awareness of timer in the mind of the people is very important because the use of timer is better than the use of PVC-u. Timber products are more sustainable than any other products and awareness of timer products ensured the sustainability of Akzo Noble.

Benefits of sustainability issues:

Leading companies understands the benefits of sustainability starting to invest in sustainability issues and form partnerships and alliances with interest groups like government, non government organisations, interest groups, and other companies so they can jointly learn and develop better solutions.

Companies found that creating sustainable business solutions is not an expense in fact it is an investment and they can earn both money and goodwill. Focusing on sustainability is a source of value creation which helps organisations to create value in the minds of their customers and increases their profits in the long run.

Sustainability gives competitive advantage to the organisations and helps them to stand forefront and compete with full power in the market (Kiron & et. al. 2013). Companies that are able to manage their sustainability issues are less exposed to the impact of global inflation.

Drawbacks of sustainability issues:

Formulating and implementing sustainability strategies is not an easy task it requires corporate focus, commitment of board of directors, time, resources, and huge capital investment. Organisations having problems with any of these can’t invest in sustainability issues and lose market share.

Organisations are facing problems in developing a sustainable corporate culture which is necessary to solve the issues arising by sustainability. The problems arise in developing new sustainable business model due to the excessive attention and investment. Organisations are facing consumer’s pressure because they demand eco-friendly products.

There is a huge pressure on organisations from government to develop sustainable solutions because governments are looking for ways to protect environment from the hazardous wastage of industries. Carbon taxing policy is a major problem for businesses and carbon emission is now an economic issue for them. Businesses are eagerly looking for ways to reduce sustainability pressure and to develop sustainable business processes.

b: Key drivers of sustainability:

Following are the key drivers that affect the business environment:

Competition for resources:

Organisations are competing for getting better resources at better price. Living standards of people are raising and create pressure on businesses to satisfy customer’s demands by getting more resources (Nidumolu, Prahalad, & Rangaswami 2009). Human demands are growing rapidly than the ability of natural processes to replenish them and reduction of natural resources creates problems for organisations to fulfill customer’s needs.

Government regulations:

Governmental policies, like carbon taxation is another driver for businesses that affects their growth because heavy taxation on carbon emission increases the cost of production which ultimately increases product price but by planning effectively business organisations can increase their profits and market share.

Climate change:

Sudden changes in climate cause more problems for business organisation to manage their processes effectively. Floods, drought, raising sea level and increase in temperature, these climatic problems should be met with new policies and procedures so that organisations can absorb these changes without being heavily affected. Companies that recognize the potential solutions for climatic problems can gain competitive advantage and increase profit.

Economic globalization:

Globalization brings opportunities for businesses but also creates potential risk because it increases the completion. Consumers have more options to buy products according to their taste and preferences, in global economy only those organisations can survive that knows how to meet international expectations.

Consumer preferences:

Consumer’s preferences are changing rapidly, for the survival of organisations is it very important to understand consumer’s demands and satisfy their demands. Now consumers want eco-friendly products which pressurize organisations to invest in eco-friendly procedure.

Employee recruitment and retention:

Company’s corporate sustainability efforts help to attract right employees who can increase the business worth because many employees view company’s sustainability efforts when choosing an employer. Employees’ retention is more on those organisations who focus on sustainability issues.

Technology and innovation:

Technology and innovation are biggest drivers for the growth of business organisations. Technological advances help organisations to implement cost effective procedures and to compete well in the market.

Task 2

a: Extended boundaries of Akzo Noble:

Expended boundaries of Akzo Noble include architectures, local authorities, housing associations, and contractors. Akzo Noble actively involves in creating different communication channels for its different stakeholders. To meet the needs of its consumers, Akzo Noble established complete range of wood care products and services, and communicate the benefits of wooden products over PVCs products, this strategy helped Akzo to increase the awareness of timber products to the customers. By communicating value added products and their benefits Akzo Noble has created strong brand image and increased its business.

Akzo Noble’s success strategy heavily depends on effective communication. Akzo noble convinced its contractors that it has the right product for the sustainable growth and that’s why utilizing all available communication channels to promote its products. Akzo Noble focused to promote timber as a renewable building and design material, and it is environment friendly, communication clearly demonstrated that timber products are cost effective products.

Akzo Noble has discovered key manufacturers of its products and wishes to develop long-term partnership with them. The reason for developing partnership with key manufacturers is to increase the customer, for pursuing this strategy Akzo Noble developed new product development program in Europe and continuously trying to improve its products and procedures.

Akzo Noble convinced local authorities that wooden products are better solution for sustainability issues and seek their help to promote its products. It explained that well-designer timber windows are better than PVCs windows and require only one coat maintenance every five year.

The boundaries of any organisation help to define the value creation process of the organisation. With the advent of modern technology the organisational boundaries are becoming more fluid and provide ways to organisations to work effectively and efficiently. Architectures, customers, interest groups, contractors, local authorities, and housing associations are extended boundaries of any organisation because these boundaries help organisation to expand their businesses.

Impact of sustainability efforts into business structure:

Desire to become a sustainable business organisation heavily impact organisational structure because taking a single step cannot leads toward sustainability, in order to improve business processes and become sustainable organisations have to modify their whole business structure, and include sustainability procedures into their whole system. In order to take steps towards sustainability business organisations can conduct SWOT analysis; SWOT analysis can provides information about strength and weaknesses of the business and ways to capture new opportunities and to avoid potential risks.

The corporate structure faces multiple challenges in incorporating sustainability. It requires modifying the core business process and standards.  Commitment of stockholders is necessary for taking initiatives towards sustainability because it requires huge investment and time, without stockholder’s commitment it is impossible to become sustainable business. Moving towards sustainability involves employees training so that they can understands its important and work towards the betterment of the organisation. Changing in organisational structure can be done by increasing or decreasing hierarchies in the organisation, it is important to understand which business structure is better for implementing sustainability.

Company’s leadership or management requires great attention towards sustainable efforts; sometimes new management is more effective to implement new ways towards sustainability because it does not bound with strong organisational culture and can think out of the box. Improving organisational structure from top to bottom is essential because people follow strong organisational culture and reluctant to change, by providing new ways to them and by increasing their awareness about sustainability business can become a sustainable business and compete well in the market (Ageron, Gunasekaran, & Spalanzani 2012).

Sustainability of the business can be increases by changing organisational communication channels, new and improved communication channels help organisation to communicate effectively with its customers and to create goodwill.

 

b. Impact of sustainability efforts into strategic objectives:

Sustainability efforts affect organisational strategic objectives like:

Competitiveness:

By investing in sustainability procedures business can gain competitive advantage and creates superior customer value. Competitive advantage cannot achieve within a day it requires to alter organisational activities and processes. Competitive advantage is directly link to organisational mission; altering competitive strategy means modifying mission and improves organisational performance.

Personnel Development:

There is a need to alter personnel strategies so that organisation can move towards sustainability. Personnel are organisation’s most important assets; by getting right employees and training existing employees help businesses to implement sustainability into its processes. Personnel pay attention towards corporate sustainability programs because they believe sustainable businesses are good and their future is secure with the organisation.

Effective Marketing:

Marketing strategies involves understanding of consumer needs and providing them products according to their needs. Sustainability alters marketing strategy of a business because now consumers are very conscious about environmental sustainability and wants environment friendly products. By keeping the demands of consumers in mind businesses organisations have to alter their marketing strategies so that they can clearly understands consumer’s demands and provide them products according to their requirements.

Product Development:

The final output of any business organisation is its products; by developing sustainable products organisations can achieve competitive advantage. Akzo Noble focused on its products sustainability and convinced its stakeholders about the sustainability efforts of the business. Like Akzo Noble any business organisation can produce sustainable products can increase customer superior value.

Contingency Strategy:

Business organisations should develop contingency strategies so that they can survive in turbulent times. Contingency strategies help organisation to be sustainable and implement sustainability procedures in to the organisation.

Cost leadership:

An effective cost strategy is about keeping business cost low and generates more profit so a business can beat its competitors. In order to make this strategy effective organisation should create sustainable business processes. Cost strategy creates ways to increase profits by reducing cost in all aspects of the business.

Customer Satisfaction:

Customer satisfaction is necessary for the survival of any business. Customers are highly satisfied with those businesses that engage in sustainability acts. In order to increase customer satisfaction business organisations have to alter their existing strategies and create new and improved strategies.

Market Share Growth:

Increasing market share is one of the important strategic agenda of business organisation. Number of marketing tactics can be used to gain market share from established competitors, the most effective way to increase market share is to increase sustainability efforts.

Effective distribution:

Effective distribution refers to any means of transportation which has minimum impact on social and ecological environment; it includes whole process of distribution from receiving the order to the final deliver of product to the consumer (López, E., & Monzón, A. 2010). Procedures to adopt sustainable distribution help businesses to protect their future and ecosystem.

Task 3

a: Triple bottom line:

Sustainability has become the new goal of the businesses, government and other organisations, but measuring the degree of sustainability of any organisation is not an easy task. In the mid-1990s John Elkington the famous author and co-founder of Sustainability identified new ways to measure the sustainability in the corporate world. This framework called the triple bottom line (TBL). Triple bottom line provides news ways to the organisation to measure their sustainability beyond traditional dimensions of profit, shareholder value, and return on investment. TBL measures performance with respect of three Ps (people, profit and the planet). Triple bottom line reporting is an important tool to implement sustainability goals into the organisations.

Triple bottom line is a structured management approach that depends on measuring, managing and publicly reporting of business and government sector’s performance. TBL acts as a medium to discuss issues regarding the people, organisation and environment. TBL provides new ways to the organisations to become sustainable and measure their efforts of the sustainability. Sustainable organisations are those organisations who know responsibility of the organisation towards natural environment and people.

Implication of Triple Bottom Line into Business Organisations:

Increasing tension between existing forms of value creation and social values force business organisations to pay attention towards sustainability issues and include TBL reporting. The pressure to become more environmentally and socially responsible is difficult to handle because there is no common unit to measure 3Ps. Organisations can measure profit in dollars but social and environmental measurement creates problem for them (Fauzi, Svensson, & Rahman 2010). Finding a common unit is very challenging for them.

To achieve the goal of becoming sustainable business, organisations have to develop integrated strategies and objectives throughout the enterprise. The COSO ERM initiated measures to apply triple bottom line into the organisation and divide its strategies into four categories: operations, reporting, strategic and compliance. By applying sustainability procedures into these four distinct categories COSO ERM is moving towards sustainability (Brockett & Rezaee 2012). New strategies provide an organising dimension that helps organisation to create strong context of risk consideration.

Businesses can apply triple bottom line into their processes by aligning goals with company’s vision. One of the most effective methods of implementing triple bottom line is gaining support of all stakeholders and takes small initiative in the start. Once organisation started to move business can take major steps that demands greater commitment and money to become sustainable business.

Relevant units to measure sustainability are required for implementing triple bottom line in businesses like Akzo Noble. Economic measures include; personal income, job growth, percentage of firms in sector, and establishment sizes. Social measures are; unemployment rate, relative poverty, violent crimes per capita, female labor force participation etc. environmental measures include; hazardous waste management, excessive emission of carbon monoxide, fossil fuel consumption, electricity shortage, and solid waste management. All these measuring units are very helpful for applying sustainability measures into the organisation (Dietz, Rosa & York 2009).

b: Sustainable strategic business planning:

Sustainable business practices are very effective practices for achieving success. World’s leading companies have set out their objective to reduce resource use and greenhouse gas emission and increased profitability and goodwill as a result. But, taking initiatives towards sustainability requires thoughtful strategy, new and innovative procedures, and effective performance metrics (Moore & Manring 2009). Without careful planning, proper implementation, and correct measurement it is impossible to become sustainable business.

Following are the important steps for developing sustainable strategic business plan:

Perform a stakeholder analysis:

Stakeholder analysis is required to identify whether they are interested to take initiatives towards sustainability or not. It sets outs all the relevant issues, information and concerns of stakeholders with respect to the organisational activities.

Develop sustainable policies and measures:

The next step is to develop policies and procedures with keeping sustainability issues in your mind. Senior management is responsible for planning long term sustainable polices and then set objectives according to these policies. Sustainable polices involve concerns of environment, people and organisational profits.

Design and implement the plan:

It is important to draw a plan which contains all possible steps necessary to implement in the organisation for achieving sustainable development objectives. The plan contains all information like changing the corporate culture; establish new hierarchical goals, responsibilities, and reporting practices and systems.

Develop performance standards:

Performance benchmarks are necessary to monitor organisational performance and to take corrective actions if business is not achieving its goals. Top managers are responsible to set performance benchmarks and to the implementation of corrective actions.

Prepare Reports:

The next step is to develop correct reports for management and stakeholders and use triple bottom line procedures of reporting. Internal management use reports to measure performance with the established benchmarks and effective reporting shows how capable the organisation is to achieve its objectives.

Enhance internal organisational processes and resolve conflicts between sustainability and corporate needs:

It is important to develop mechanism of continuous improvement because needs of the society never remains same. With the changing needs of society there are chances of conflict between sustainability and corporate needs, top management should modify organisational policies and procedures with the changing preferences of society.

References:

Ageron, B., Gunasekaran, A., & Spalanzani, A. (2012). Sustainable supply management: An empirical study.International Journal of Production Economics,140(1), 168-182.

Berns, M., Townend, A., Khayat, Z., Balagopal, B., Reeves, M., Hopkins, M. S., & Kruschwitz, N. (2009). The business of sustainability: what it means to managers now.MIT Sloan Management Review,51(1), 20-26.

Brockett, A., & Rezaee, Z. (2012). Sustainability Reporting’s Role in Managing Climate Change Risks and Opportunities.Stoner, JAF, and Wankel, C., Managing Climate change Business Risks and Consequences: Leadership for Global Sustainability, 143-158.

Dietz, T., Rosa, E. A., & York, R. (2009). Environmentally efficient well-being: Rethinking sustainability as the relationship between human well-being and environmental impacts.Human Ecology Review,16(1), 114-123.

Fauzi, H., Svensson, G., & Rahman, A. A. (2010). “Triple Bottom Line” as “Sustainable Corporate Performance”: A Proposition for the Future.Sustainability,2(5), 1345-1360.

Jones, P., Comfort, D., & Hillier, D. (2011). Sustainability in the global shop window.International Journal of Retail & Distribution Management,39(4), 256-271.

Kiron, D., Kruschwitz, N., Reeves, M., & Goh, E. (2013). The benefits of sustainability-driven innovation.MIT Sloan Management Review,54(2), 69-73.

López, E., & Monzón, A. (2010). Integration of Sustainability Issues in Strategic Transportation Planning: A Multicriteria Model for the Assessment of Transport Infrastructure Plans.ComputerAided Civil and Infrastructure Engineering, 25(6), 440-451.

Lubin, D. A., & Esty, D. C. (2010). The sustainability imperative.Harvard business review,88(5), 42-50.

Moore, S. B., & Manring, S. L. (2009). Strategy development in small and medium sized enterprises for sustainability and increased value creation. Journal of cleaner production,17(2), 276-282.

Nidumolu, R., Prahalad, C. K., & Rangaswami, M. R. (2009). Why sustainability is now the key driver of innovation.Harvard business review,87(9), 56-64.

Petrini, M., & Pozzebon, M. (2009). Managing sustainability with the support of business intelligence: Integrating socio-environmental indicators and organisational context.The Journal of Strategic Information Sy