Mbad6197 Multinational Enterprise | Analyzing Assessment Answers
Research Topic: Prepare a research Individual report of the following topic:
'Attention to Sustainability at the International Level has grown leaps and bounds in the last decade, primarily owing to the awareness of governments, societies and individuals of the need to be sustainable. Using three case studies of multinational firms, examine and describe the current trends in sustainability and demonstrate how these firms have developed their business strategy around it. Conclude by providing insights into the future of businesses with or without attention to sustainability issues.’
You will be assessed on your ability to recognise, analyse and discuss the key issues in the topic; and on your ability to appropriately use reference material to support your arguments. The quality of the sources of information you use, as well as your referencing skills, will be assessed. Written assignments must use the Chicago Referencing System (16th edn) and papers that are unsatisfactorily referenced will be returned unmarked. You are expected to use at least twelve (20) different academic sources to support your arguments and discussion. The use of WIKIPEDIA online encyclopaedia is not allowed. This is not an essay. It is your responsibility to understand the format of a report. There are numerous business communication books that will show you the format/layout if you are unsure of what is required.
Answer:
Introduction
The concept of sustainability at international level has received growth recognition, but at the same time have given rise to leaps and bounds in past few decades. This may be due to increase in awareness among government, individuals and society where they demand sustainable business operations ( Baharin, Daud and Sentosa 2012). However, this concept still remains new to many business executives as most of its concept remains theoretical and abstract. Protecting firm’s capital base is deemed as well-expected business fundamental, yet, many firm’s fails to recognize the likelihood of extending this concept to society, government and individuals. To achieve sustainable development, it must be implemented in measurement systems and planning of business enterprises and to ensure that it is maintained properly, the concept must be well versed and familiar to firm’s leaders (Joshi and Li 2016). Environmental, economic and political issues are substantial where any common response strives business regulations that often inhibits growth. Thereby, constraining growth opportunity of business enterprises. However, there are few development forms that are sustainable especially for the firms working in international levels that do not lead to trade-off, but leads to an improved business environment. This is called sustainable development where a revolutionary change is adopted to approach business related issues (Walker, et al. 2014). Firms that have developed sustainable development in their business activities generally gains competitive advantage over the others along with earning local community’s goodwill. Due to growing concern towards sustainability at international level, many multinational firms’ have adopted current trends to develop their business strategy around sustainability (Ishak, et al. 2017). This report will analyze case of Apple Inc., PepsiCo and IKEA to find out how these multinational companies have evolved themselves to gain sustainability for their future growth.
What are current trends in sustainability?
Business and its stakeholders like individuals, government and society can find approaches that can facilitate towards sustainable goals like environment protection, economic development and social well-being. Power and position multinational enterprises embraces is evident in literature where they hold a strong position while contributing economies to the country they operate in (Kareiva, et al. 2015). Therefore, this report will focus on multinational enterprises due to their potentiality to impact environment and their visibility to face stakeholder’s scrutiny. Although the sustainability trend is based on encouraging environmental disclosure, the depth and content of corporate sustainability reports varies from each other. Companies are generally accused of parodying their environmental and social performance or “greenwashing” (Somers and Steger 2008). Due to growing awareness among stakeholders, they often accuse corporate companies for showing inconsistency if the chaos of current disclosure remains stagnant. Therefore, sustainability has become one of the major topics for discussion among researchers and authors where they describe sustainability as core component of business success (Walker, et al. 2014). At the similar time, firm’s leaders are also embracing sustainability operations and reporting where notable environmentalists argues that future conservation and sustainable development depends further on values and nature adopted by standard business practice (Kareiva, et al. 2015). Even governments worldwide are recognizing the challenge to sustainability and this term is therefore being addressed while discussing public policies. However, Bahrain, Daud and Sentosa (2012) further argues that government needs to anticipate rising needs for sustainable services and products where they can play key role for giving assistance in transitions to increase efficiency and damaging less economies.
Another major trend for sustainability is seen in sustainable business coalitions where it convenes firms to test environment and societal assessment tools, develop industry benchmarks and share best practices. For example, Sustainability Consortium convenes organizations various sectors with non-government organizations and universities to develop scientific developments and avoid impacts of product specified environment (The Sustainability Consortium 2018). The propagation of professional service related organizations is also becoming more dedicated to quantify and remain rank holding company in terms of economy as well as sustainability performance to reflect their growing relevance towards sustainability to business. To practice sustainability in management, organizations chooses sustainability measurement targets that are consistent and provides material to core business strategy and mission along with giving relevance to external stakeholders. However, Joshi and Li (2016) argues that managing sustainability at international level, related costs are critical and thus firms needs to design sustainability management in such a manner that it can control and remain synergistic with traditional management. Environmental costs information’s also proves critical for making business decisions like product mix, product costing, regulatory negotiations, product design, labeling, tax and risk management. All the above-mentioned practices along with sustainability creates opportunity for multinational firms while launching their products in foreign market and creating value chain management (Walker, et al. 2014). Therefore, sustainability management has become an important and integral part of business strategies.
Case study 1
Booming period at 21st century in consumer electronics industry made many technological improvements while advancing business efficiency for keeping people connected and making environment friendly business practices. Nevertheless, for longer period, industries did not consider giving importance to sustainability issues (Lock and Yao 2015). Therefore, many environmentalists and scholars pinpoint negative impacts on environment, society and individuals during manufacturing, disposal and usage of consumer electronics as large amount of energy and toxic along with hazardous materials used during electronic manufacturing made many multinational companies fall under sustainability suspicion. Under such circumstances, it became significant for Apple Inc. for implementing sustainability and environmental responsibility to create better world and best products. For such, Apple expanded and redefined its innovative practices from services and its products giving more concern to environment and sustainability. Company led by Lisa Jackson, the office of Apple related to Environmental initiatives worked closely along with other team members of the company. In past few years, sustainability issues have been considered greatly by Apple and thus it has made priority to include sustainable operations in its core business strategies. This can be seen in Apple’s initiative towards climate change reduction, conservation of limited resources, implementation of renewable energy and usage of safer and greener materials for manufacturing purposes (Apple Inc. 2017).
Manufacturing, design and transportation of products from production sites to consumers spread globally consumes huge amount of energy, thereby creating a large amount of carbon footprint resulting climatic change. Apple was also not an exception to this and thus the company created a demanding measurement standard that not only reduced carbon footprints from its products, but also from its facilities like retail stores and offices. Slowly, these measurements were adopted in its supply chain like transportation and product recycling areas also. Apple’s manufacturing alone contributed 72% of total carbon footprint and was the biggest reason why Apple was accused for brining climatic change (Moloney 2017). Apple itself do not own manufacturing and supply facilities, but still counts footprints in those areas and works closely with its global partners to reduce environmental impacts. Apple products that are designed for hardware and software products adopts methods with technological alliance to create greater energy efficient products. It develops products to reduce energy consumption and increased efficiency including efficient power supply and smart power management (Payne 2010). Apple also uses renewable resources like sunlight, wind and forest to provide both energy as well as materials for sustainable time period. Earlier, Apple strived to utilize 100% renewable and clean energy like generating energy from sunlight, water and wind in its facilities. To achieve the same, Apple have started using packaging that have zero impact on sustainable virgin fiber where Apple utilized papers in more efficient manner by designing smaller packages through sustainable fiber specified packing materials (Apple Inc. 2017).
Collaboration with Conservation fund also proved positive for Apple where the company protects 36,000 acres of forest in US regions. In those areas, Apple has developed renewable and clean energy standards. The company designed products that utilized minimum materials and promoted recycling and reusing. It also minimized the raw material impacts on environment and people using its products by adopting those resources in manufacturing that were recycled as much as water. For example, batteries used in Apple notebooks are built in and could last for more than 5 years. Thus, consumers can continue using old products of Apple’s during installation of new applications and software’s (Moloney 2017).
“Reuse and recycling Program” of Apple allowed its customers to get their old Apple products exchanged for credit while purchasing new models at Apple’s retail stores present all over the globe. In fact, the new headquarters of Apple has more than 95% of materials brought from its old headquarter building (Lock and Yao 2015). Recycling water also contributes in showing sustainability approach towards environment and society where Apple improved its water usage techniques through recycling methodology (Montgomarie and Roscoe 2013). The company also initiated “The Clean Water Program” that aims in water usage enhancements in its manufacturing and suppliers’ units (Apple Inc. 2017).
Government act as one of the major stakeholders in multinational companies. They incorporate regulations and guidelines that needs to be followed by companies while developing sustainability strategies (Walker, et al. 2014). For Apple, as an industrial leader among electronics, following such regulations became very critical as most of its products contained toxins and other substances that could harm its consumers. However, with time, Apple eliminated most of the harmful constituents from products and asked all its suppliers to adhere to “Regulated Substances Specification” that goes beyond minimum governmental requirements. Apple also provides safe work environment by implementing individual rights at workplace along with looking upon its suppliers also to implement the same (Sustainalytics 2017).
Case study 2
Food and beverage companies also faces many incentives to get engaged in sustainability initiation that includes growing pressure to respond to stakeholders like government and individuals along with desire in exploiting link between competitive advantage and CSR (Somers and Steger 2008). Approval or disapproval of activities, depending on the country they operate in further makes significant for the companies to determine the brand value and reputation ( Ross, Pandey and Rossc 2015). For multinational companies, brand value is highly vulnerable and thus managing stakeholders and responding sustainability demands becomes highest priority. PepsiCo, publicly acknowledges best business practices that is inseparably linked with sustainable operations through the initiation of “Performance with Purpose” mission (Torkornoo and Dzigbede 2017). This mission helped company improve its sustainability approach in several areas throughout the globe including environment. Since 2006, PepsiCo have achieved remarkable progress in sustainability approach by reducing water usage and increasing efficiency in energy by monitoring its operations from baseline. These initiatives have even made company more profitable by saving around $375 million through environment sustainability projects from 2010 (Furlong 2015). However, research suggests that PepsiCo must make further investments to new solutions for cutting water usage and reducing emissions. For the same, PepsiCo has made an announcement for 2025 agenda where a considerable change will be noticed in its business operations ( PepsiCo, Inc. 2016).
Putting succinctly, PepsiCo leverages existing manufacturing and supply by slowly reducing internal dependence on greenhouse gases and water. PepsiCo cultivates sustainability starting from managing its employee culture (Setordzi and Gyimah 2017). The human resource department of the company act as a tool that integrates perception of sustainability in firm’s culture, thereby protecting individual requirements (Sehrawat 2017). This establishment of sustainability inspires the company from procedures like hiring, training and providing its employees with welfare packages and plans. PepsiCo ensures hiring qualified staff who are then provided further training related to sustainable business practices. This not only creates sense of belonging among them, but also cements presence of individual welfare. Addition to sustainable individual approach, PepsiCo engages in ecological production practices like (and are not limited to) diverting left-over from landfills, organic packaging and reducing greenhouse emissions during manufacturing and supply chain operations (Kanani 2012). PepsiCo does not fail in executing efficaciously driven sustainable culture through reduction of water wastage per unit during beverage production, sustainable farming, climate protection, empowering women and following governmental regulations. Therefore, PepsiCo can be referred as a sustainable company as it engages its organizational practices that are categorized as an ecological conscious company.
Case study 3
The concept of eco-efficiency contributes to the progress of sustainability ideas significantly. It not only encourages organizations to develop their production process efficiently, but also decreases environmental influence. Companies can implement eco-efficiency theory by re-designing, re-valorizing, re-engineering and re-thinking markets (Menoni and Morgavi 2014). IKEA is a good example that reveals how eco-efficiency can help firms develop sustainable development. Since IKEA deals mainly in furniture making, solid wood constitutes its main raw material that makes IKEA subject to forest requirements. But, environmental regulations prevent using woods from forests due to conservation values and thus IKEA have to follow Forest Stewardship Council (FSC), Chain of Custody (COC) and Forest Management (FM) standards. According to IKEA’s sustainability reports, IKEA conducts regular audits of their wood suppliers and states that in 2010 it has raised around 97% being 100% target for future years ( Sklyarova and Kobets 2011). Nevertheless, IKEA always remain under suspicion against utilizing forest woods. The forestry experts of the company make sure that woods for the company comes from sustainable and legal forests. This initiative of the company gained new perspective where they want to plant more trees not only because they care about environment, but also to ensure that they get enough wood supply for upcoming years also (Inter IKEA Systems 2018).
Other sustainability approach adopted by IKEA includes reduction in energy consumption within company facilities and manufacturing units. IKEA owns more than 350 buildings spread all over the globe and thus reducing energy consumption also leads in cost-saving measurements for the company (People & Planet 2014). Using renewable energy is primary goal of IKEA’s sustainability concept where the company has launched “IKEA goes Renewable” project to enhance energy efficiency in IKEA’s facilities. The company also uses solar, wind, biofuels, water and geothermal energy by installing relevant energy conversion pumps in its units.
The company prides in itself for delivering recyclable and effective products to its customers along with helping them for home furnishing solutions. “Waste Management Manual” of IKEA requires all its stores having built in recycling categories that helps in minimizing waste from the company stores. IKEA also shows an interesting sustainability and waste management approach where all the damaged or scratched products are preserved and sold under special category in its stores (Inter IKEA Systems 2018). Increase in Service intensity approach among individuals implies selling of services rather than products only which fulfills customer demands ( Baharin, Daud and Sentosa 2012). For IKEA, being a multinational company with chain of retail stores, this concept remains very challenging, however, various initiatives have been implemented by the company to meet individual requirements efficiently (Wiese, Zielke and Toporowski 2015). IKEA also endeavors in offering healthy and safe work environment for its employees and co-workers. Employees safety has remained top priority for the company and thus IKEA ensures that appropriate training is instituted among co-workers so that they use safety gears and right tools. IKEA’s active involvement with communities is a remarkable approach where the company remains active in global, local and national projects designed specially to meet community welfares. By cooperating with trade unions, NGOs, organizations and IGOs, IKEA have accomplished much more than they could have of their own (IKEA 2011).
Conclusion
After evaluating current trends in sustainability, it can be said that multinational enterprises have significant impacts on sustainable development at international level, owing to the awareness seen among individual, government and society. Here, it can be acknowledged that multinational firms have key role in creating challenges that are faced in sustainable transitions which are unlikely taking place in smooth manner. Nevertheless, industries alone cannot accomplish sustainability concept and thus require governmental support along with policy frameworks. In past few years many multinational companies have taken initiatives by involving sustainability in their business strategies. However, increase in individual demands, standards and law, international and industry trade have influenced business activities that encourages multinational companies adopt more sustainable development approach. Therefore, several forms of discourse and partnerships are essential along with critical assessment of possibility among all multinational firms to get their voices heard. Despite every challenges and complexities involved, this report has made an exciting journey in research, investigation of business practice and policy making to make further contribution in giving critical insight into the future of businesses with regards to sustainability concept.
References
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