sustainable strategic management
Post on 27-Nov-2015
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• Foundations of SSM
• Formulation of SSM– Environmental Analysis of SSM– Sustainable Strategic Management Analysis
SSM Strategies
Hierarchy of SSM
Functional Level SSM
• Establish and exploit core competencies• LCA vital, provides cradle-to-grave appraisal of the
ecological impacts of a firm’s product or service across the firm’s value chain (type II)
• Strategic Environment Management strategies like DFE, TQEM, Environmental audit and reporting
• SEM + social performance -> SSM (Type III closed loop value chain)– DFE -> DFS, TQEM -> TQSM, etc.– Sustainable Marketing, SMIS, SHRS, Full cost accounting
Competitive Level SSM strategies
• Focus on how to compete in an industry or product/market segment
• SEM strategies are classified according to the nature of competitive advantage provided:– Cost Leadership – Pollution Prevention strategies– Market Differentiation – Product Stewardship
Cost Leadership strategiesPollution Prevention Strategies
• Cost advantages through improved eco-efficiency• Core competencies in operations and logistics
basis for competitive advantages exploited • Pioneer: 3M– Pollution Prevention Pays (3P) program– 3500 projects => saving $ 550mn
• Big benefits for companies– Recruit and retain best talent– Impress stakeholders
Market Differentiation StrategiesProduct Stewardship
• Competitive advantage through superior products and services
• Expansion in focus from materials, energy and process efficiency to a focus on complete life-cycle impacts of products and processes
• Core competencies must in marketing and product/service development
• Effective environmental differentiation through competitive product positioning
• Continuous Innovation to create first-mover advantage and sustain it (avoid imitation)
• e.g. Electrolux – Green Range line of appliances
SEM -> SSM
• SEM = Economic + Environmental performance • SSM = SEM + Socio-efficiency• Strategic Managers• e.g. SC Johnson -> Sustainable Racine– Core value: “Every place should be a better place because
we are there”• Firm’s reputation good corporate citizen– Perceived differentiation in products and services– Social labeling
Corporate level SSM
• Corporate level SSM strategies• SSM Corporate Portfolio• Emerging markets – BOP– eg HUL, Grameen Bank
Strategic Decision-Making
• Strategic decision-making process:– Data gathering phase– Matching external opportunities and threats with
strengths and weaknesses: TOWS matrix– Strategic choice
Implementing and Evaluating SSM
Implementation
• Organizational Objectives– Action plans– Policies– Procedures
• Reward systems, performance tracking systems and controls
Sustainable R&D System
• Focus on traits like dematerialization, resource intensity, recycled content, non-toxic content, durability, social impacts.
• Nature as a model for R&D system – closed loopTools:Life Cycle Analysis (LCA)Design for Sustainability (DFS)Information Substitution for Energy and Materials
Sustainable Procurement Systems
• Socially and environmentally sensitive products need socially and environmentally sensitive inputs.
• SPS – Provide usable tangible and intangible sustainable inputs to the organization– Sustainable Purchasing
• Sustainability-based supplier relationships– Sustainable Consumption
• Educating employees about sustainability– Purchasing Services rather than things
• SPS supports both low cost and differentiation strategies
Sustainable Operations System
• Necessary core competence for Low-Cost SSM strategies
• Vital to improve eco-efficiency in organizations – Approaches:– Pollution Prevention– Energy Efficiency– Reverse Distribution– Industrial Ecology
• Supports both low-cost as well as differentiation SSM strategies
Sustainable Infrastructure Systems
• Avoid ‘Sick building syndrome’• Design buildings to mimic natural processes– Eg Ford Motor Company’s Rouge plant (renovated)– Benefits: Energy and water cost savings, lower waste
disposal costs, improved heating and cooling systems, and improved employee health and productivity
• Timely Replacement of Energy Inefficient Equipment• Optimal location of plant and office sites• Reduction of toxic, hazardous waste and adequate
waste management practices
Sustainable Marketing Systems
• Necessary core competency for SSM competitive strategies focusing on social and environmental differentiation
• Requirements to achieve this differentiation:– Top management commitment to sustainability– Designing ecologically and socially products and
packaging– Sustainable pricing strategies using full cost accounting– Promotional strategies– Marketing channels are sustainable
Evaluating SSM
• Begins with generative evaluation of fundamental assumptions
• Measure sustainability performance• Perform Gap Analysis with sustainable based goals• Occurs organisation wide, regardless of level• 3 Value chain support activities– Sustainable Accounting and Finance– Sustainable Management Information Systems– Sustainable Strategic Management Reporting
Sustainable Accounting and Finance
• Traditional financial systems fail when applied to SSM as lot of issues cannot be accounted for
• Full-cost accounting• Cost of externalities – LCA, ecobalances,
ecological footprints
Sustainable Management Information Systems
• MIS designed to identify, collect, process and transmit environmental and social information from throughout the organization
• Key for effective SMIS:– Prioritization of data gathering, processing and
analysis
SSM Reporting
• Sustainability reports – comprehensive, ensuring continuity and comparability of data over time, presenting overview of firm’s SSM policies
• GRI, SustanAbility• Sustainable sustainability reports• Seventh Generation Inc.
Towards SSM
•Bill Ford
Bill Ford and Ford Motor Company
• Participation in SUV market – Ethical implications• Five corporate level SSM priorities– Strong commitment to human rights– Focus on sustainable mobility– Develop a comprehensive climate change strategy– Establish business principles to provide an underlying
value system– Seek new solution through technology and
partnership
• Products– Vehicles that use alternative fuels like hydrogen
fuel cells, hybrid electric power, natural gas, ethanol
– Development of Model U concept car
• Manufacturing– Renovation of Rouge plant in Dearborn, Michigan
Thank You
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