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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
Environment in Mind?
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
Environment in Mind?
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
Environment in Mind?
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
Environment in Mind?
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
Environment in Mind?
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
Environment in Mind?
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
Environment in Mind?
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
Environment in Mind?
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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What Managers Can Do
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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What Managers Can Do
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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What Managers Can Do
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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What Managers Can Do
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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What Managers Can Do
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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Opportunities for Making Your
Business Sustainable
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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Opportunities for Making Your
Business Sustainable
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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Opportunities for Making Your
Business Sustainable
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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Opportunities for Making Your
Business Sustainable
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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Opportunities for Making Your
Business Sustainable
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.