Ch1 5 Sustainability

8/4/2019 Ch1 5 Sustainability

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MANAGEMENT

SKILLSFOUNDATIONS OF

MANAGEMENT

Chapter 5:Managing for Sustainability

MANAGEMENT

SKILLSFOUNDATIONS O F MANAGEMENT

IN

HOSPITALITY INDUSTRY


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Sustainability

Sustainability

The ability of a company or organization to meet

the needs of the present without exhausting

natural resources or damaging the environment.

Sustainable Business

Any organization that participates in

environmentally-friendly activities whilemaintaining a profit.


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Green Businesses

Green Business Practices

Generic term for environmentally-friendly

business practices, such as conservation of water

and energy.

Play a large role in sustainability initiatives.

Companies that employ them are often said to be

going green, being green, or greening theirbusiness


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Renewable Resources

Renewable Resources

Natural resources that are replaced by natural

processes at a rate comparable to or faster than

their rate of consumption.

Wood, paper, and leather may all be renewable if

harvesting is performed in a sustainable manner.

Perpetual Resources Inexhaustible resources such as solar radiation,

tides, winds and hydroelectricity.


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Business and the Environment:

Conflicting Views

The Win-Win Mentality

Being green" is a catalyst for innovation, new marketopportunities, and wealth creation.

Actions can be taken that benefit both business andthe environment.

The Dissenting View

Spending money on environmental problems does not

provide full payback to the firm. The belief that everyone will come out a winner is

nave.


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Complying with

Environmental Regulations The financial costs of complying with environmental

regulations are steep. GM spent $1.3 billion to comply with California emissions

requirements.

At Bayer, 20% of manufacturing costs were for theenvironment about the same amount as for labor.

The Clean Air Act was expected to cost U.S. petroleumrefiners $37 billion, more than the book value of the entireindustry.

California's laws have caused manufacturers to move toArkansas or Nevada.

Environmental regulations were once considered a threatto the survival of the chemicals and petroleum industries.


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A More Balanced View

Businesses must weigh the environmental benefits ofan action against value destruction. Don't obstruct progress, but pick environmental initiatives

carefully.

Shareholder value, rather than compliance, emissions, orcosts should be the focus of objective cost-benefitanalyses.

Such an approach is environmentally sound andsustainable over the long term.

Businesses have the resources and the competence tobring about constructive change. This creates opportunityif well managedfor both

business and the environment.


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Why Manage with the

Environment in Mind?

Legal Compliance

U.S. environmental laws govern water, air,

hazardous materials, and public disclosure.

Government regulations and liability for damages

provide strong economic incentives to comply

with environmental guidelines.


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Why Manage with the


ISO 14000 Standards

A family of voluntary standards developed by the

International Organization for Standardization

(ISO).

Provide a framework for a strategic approach to

an organizations environmental policies, plans

and actions.


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Why Manage with the


Cost Effectiveness

Short-run: Companies are realizing cost savings

from repackaging, recycling, and other

approaches.

Long-run: Companies may avoid paying damages

or upgrading technologies and practices when

laws change down the road.


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Cost Effectiveness

Other Cost Savings

Fines, cleanups and Litigation

lower raw materials costs reduced energy use

less expensive waste handling and disposal

lower insurance rates


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Why Manage with the


Competitive Advantage

Corporations can channel their environmental

concerns into new opportunities and producing

higher-quality products that meet consumer

demand.

Companies that fail to innovate in this area will be

missing a competitive disadvantage. Environmental protection is a major export

industry.


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Why Manage with the


Public Opinion

The majority of the U.S. population believes

businesses must clean up, but few people think

businesses are doing it well.

More than 80 percent of U.S. consumers consider

environmentalism in making purchases.

Companies recover public opinion very slowly

following an environmental disaster.

Adverse public opinion may affect sales and the firm's

ability to attract and retain talented employees.


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Why Manage with the


Long-Term Thinking

Economic arguments

It is the responsibility of management to maximize

returns for shareholders, implying the preeminence of

the short-term profit goal.

Attention to environmental issues enhances the

organization's long-term viability because the goal is

the long-term creation of wealth for serious investors inthe company.


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Why Manage with the


Long-Term Thinking

The Tragedy of the Commons Environmental destruction that results as individuals

and businesses consume finite resources (thecommons) to serve their short-term interests withoutregard for the long-term consequences.

Carrying capacity The limited ability of a finite resource to sustain a

population without being destroyed.

Examples of finite resources include clean water, air,and land.


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Why Manage with the


Long-Term Thinking

The Tragedy of the Commons

The solution is to make choices according to long-

versus short-term consequences.

In many ways, we are witnessing this tragedy of

the commons.

Carrying capacities are shrinking as precious resources

become scarcer.

Inevitably, conflict arisesand solutions are urgently

needed.


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Why Manage with the


International Perspectives Environmental problems are seen differently in

various countries and regions of the world. Holland, Germany and Denmark are among the most

environmentally conscious industrialized nations. Poland, Hungary, the Czech Republic, and former EastGermany are the most polluted industrialized nations.

Companies selling products in certain parts of theworld must take growing consumer consciousness

about environmental protection into account. There is a large growth market in Western Europe for

environmentally "friendly" products.


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What Managers Can Do

Systems thinking

Environmental considerations relate to the

organization's inputs, processes, and outputs.

Inputs

Include raw materials and energy.

Environmental pressures are causing prices of some

raw materials to rise, increasing production costs.

Higher energy costs are causing firms to switch to more

fuel-efficient sources.


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Systems thinking

Processes

Firms are considering new processes or methods of

production that will reduce air and water pollution,

noise and waste.

Firms are incorporating technologies that control these

by-products of business processes.

Many companies keep minimal stocks of hazardousmaterials, making serious accidents less likely.


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Systems thinking

Outputs

Include the products themselves and the waste or by-

products of processes.

Both have environmental impact.

Strategies for reducing environmental impact.

R

ecycling or reusing waste from manufacturingprocesses.

Refurbishing and reselling products.


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Strategic Integration

Environmental issues should be addressed in a

comprehensive, integrative fashion.

First step: create the proper mindset.

The firm must come to see environmental concerns as a

potential source of competitive advantage and an

important part of a strategy for long-term survival and

effectiveness.

This sets the stage for Strategic Actions


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Strategic Actions1. Develop a mission statement and strong values

supporting environmental advocacy.

2. Gain support of top management.

3. Involve employees at all levels.

4. Establish a framework for managing environmentalinitiatives.

5. Engage in "green" process and product design.

6. Establish environmentally focused stakeholderrelationships.

7. Provide internal and external education.


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Implementation

Preparations

Begin with a commitment by top management

Commission an environmental audit

Communicate the policy and make it highly visible throughout theorganization.

Have environmental professionals within the company reportdirectly to the president or CEO.

Allocate sufficient resources to support the environmental effort.

Build bridges between the organization and other companies,governments, environmentalists, and local communities.

Make employees accountable for any of their actions that haveenvironmental impact.


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Implementation

Implementation Strategies

1. Cut back on environmentally unsafe businesses

2. Carry out R&D on environmentally safe activities.

3. Develop and expand environmental cleanup services.

4. Compensate for environmentally risky projects.

5. Make your company accountable to others.

6. Make every new product environmentally betterthan the last.

7. Invest in green businesses.


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Implementation

Public Affairs

1. Attempt to gain environmental legitimacy and

credibility.

2. Try to avoid losses caused by insensitivity to

environmental issues.

3. Collaborate with environmentalists.


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Implementation

Legal Issues

1. Try to avoid confrontation with state or federal

pollution control agencies.

2. Comply early.

3. Take advantage of innovative compliance

programs.

4. Don't deal with fly-by-night subcontractors forwaste disposal.


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Implementation

Operations

1. Promote new manufacturing technologies.

2. Practice reverse logistics.

3. Encourage technological advances that reduce pollutionfrom products and manufacturing processes.

4. Develop new product formulations.

5. Eliminate manufacturing wastes.

6. Find alternative uses for wastes.

7. Insist that your suppliers have strong environmentalperformance.

8. Assemble products with the environment in mind.


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Implementation

Marketing

1. Cast products in an environment-friendly light.

2. Avoid attacks by environmentalists for

unsubstantiated or inappropriate claims.

3. Differentiate your product via environmental

services.

4. Take advantage of the Net.


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Implementation

Accounting

1. Collect useful data.

2. Make polluters pay.

3. Demonstrate that antipollution programs pay

off!

4. Use an advanced waste accounting system.

5. Adopt full-cost accounting.

6. Show the overall impact of the pollution

reduction program.


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Implementation

Finance:

1. Gain the respect of the socially responsible

investment community.

2. Recognize true liability.

3. Fund and then assist green companies.

4. Recognize financial opportunities.


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Opportunities for Making Your

Business Sustainable

Air Quality

Indoor and outdoor air quality is affected by the

type of energy we use to power our businesses

and the equipment and products we rely on in the

workplace.

Building Construction and Renovations

Building renovations are an opportunity toimprove environmental performance while

potentially realizing cost savings.


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Energy

Energy use is one of the largest contributors to theenvironmental impacts of any facility.

Reducing energy consumption will reduce yourcompanys environmental impacts and energy costs.

Paper

By reducing paper use and purchasing paper products

made with recycled fiber you will help to reduce theuse and pollution of freshwater, reduce greenhousegas emissions, and improve your companys bottomline.


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Purchasing

The purchasing decisions your company makes

have an impact on the environment.

Consider the effects of the products you purchase

and give preference to ecologically preferable

options.

Encourage the widespread adoption ofenvironmentally responsible purchasing practices.


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Transportation + Accommodation

Transportation is a source of pollution, smog,

carbon monoxide, and harmful particles that can

cause health problems.

By reducing the need for automobile

transportation and promoting environmentally

preferable forms of transportation and

accommodation your organization can reduce its

contributions to these harmful effects.


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Waste Management

By recycling, your company can keep products out

of landfills and reduce the harmful environmental

impacts associated with the extraction of naturalresources.

Choosing products manufactured from recycled

content also helps reduce pollution from virgin

resource extraction and processing.


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Water Quality and Use

Your company can reduce detrimental impacts on

water quality by limiting the use of toxic

chemicals, pesticides and fertilizers, and by usingmore grass and gravel on your property to absorb

and filter pollution.

Water conservation strategies can help ensure

that future generations have access to the water

they need, while saving your company money.

Documents

Ch1 5 Sustainability