Chapter 05

Natural Resources and Environmental

Sustainability

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives• LO1 Describe how geographical features of a

country or region create contextual differences that contribute to economic, cultural, political, and social conditions important to international

business.• LO2 Apply Porters diamond model to a

discussion of geographical features.• LO3 Summarize the importance to business of

inland waterways and outlets to the sea.• LO4 Outline the nonrenewable and renewable

energy options available and their broad business implications.

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Learning Objectives

• LO5 Describe the issues related to nonfuel minerals that concern international business.

• LO6 Describe the concept of environmental sustainability and its potential influence on business.

• LO7 Explain the major characteristics of sustainable business.

• LO8 Discuss the utility of the stakeholder model for sustainable business

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Geography

Elements of geography managers consider•Location•Topography•Climate

Physical elements of location are uncontrollable

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Competitive Advantage:Porter’s Diamond

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Location: BuildsPolitical andTrade Relationships

Location: BuildsPolitical andTrade Relationships

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Topography:Creates differences ineconomies,cultures,politics,social structures

Topography:Creates differences ineconomies,cultures,politics,social structures

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Separate LanguagesSeparate

Languages

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3 mountain ranges create 4 separate markets, each with its own culture and dialect

3 mountain ranges create 4 separate markets, each with its own culture and dialect

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Bodies of Water attractpeople and facilitate transportation

Bodies of Water attractpeople and facilitate transportation

Inland waterways give access to interior regions

Rhine Waterway –

World’s Most Important

Inland Waterway

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Climate

Climatic conditions explain differences in human

and economic development

Meteorological conditions• Temperature• Precipitation• Wind

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Natural Resources Anything supplied by nature on which people

depend Anything supplied by nature on which people

depend Nonrenewable Energy Petroleum Nuclear Power Coal Natural Gas Renewable Energy Hydroelectric Solar Wind Geothermal Waves Tides Biomass

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EnergyUse byFuel Type

EnergyUse byFuel Type

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PetroleumReserve estimates change

• New discoveries in proven fields with improved prospecting equipment

• Governments open their countries to exploration and production

• Improved techniques in steam and hot water injection enable greater output from operating wells and new areas

• Automated equipment lowers offshore drilling costs and makes. smaller-sized discoveries workable

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Petroleum

Crude Oil cheap source of energy and raw material for plastics& fertilizers

Heavy Oil does not flow easily and cannot be drawn from wells

Shale sedimentary fossil rock, yields 25+ liters per ton @ 500º C

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Coal49% increase projected to 2030

ProblemsPollutionGlobal warming

Coal49% increase projected to 2030

ProblemsPollutionGlobal warming

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RenewableEnergy Sources1) Wind2) Biomass3) Solar photovoltaic4) Concen solar therm 5) Geothermal6) Ocean energy7) Hydropower

RenewableEnergy Sources1) Wind2) Biomass3) Solar photovoltaic4) Concen solar therm 5) Geothermal6) Ocean energy7) Hydropower

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Context for Sustainability

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Characteristics of Environmentally Sustainable Business

LimitsEnvironmental resources are exhaustible

InterdependenceActions in one ecological, social, and

economicsystem affects the others

Equity in DistributionFor interdependence to work, there cannot bevast differences in gains

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Stakeholder TheoryDecision-making takes into account all interestholders

Addresses Underlying Values and PrinciplesType of relations business has with stakeholdersBalancing of tension among stakeholdersProfits a result (not a driver) of value creation

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Companies with a Societal Context Consistent with Stakeholder Theory

• Johnson & Johnson• eBay• Google• Lincoln Electric• Freeport-McMoran• Interface, Inc.• Patagonia

• Johnson & Johnson• eBay• Google• Lincoln Electric• Freeport-McMoran• Interface, Inc.• Patagonia

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