5Ap - 1
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5Ap - 2
Chapter
5
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Appendix: C
Managing In Our
Natural Environment
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Business And The Environment:
Conflicting Views

Win-win mentality
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being “green” is potentially a catalyst for innovation, new
market opportunities, and wealth creation
Dissenting view

not a single empirical analysis supports the “free lunch
view” that spending money on environmental issues
provides full payback to the firm
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5Ap - 3
business people upset by the financial cost of compliance with
environmental regulations
Balance
business must weigh the environmental benefits of an action
against value destruction
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
Why Manage With The Environment
In Mind?

Legal compliance
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government regulations and liability for damages provide
strong incentives to comply with environmental guidelines
Cost effectiveness
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5Ap - 4
in the short run, companies have realized cost savings from
repackaging, recycling, and other approaches
environmentally conscious strategies offer long-run cost
advantages as well
Competitive advantages

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environmental concerns can be transformed into
entrepreneurial opportunities
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Why Manage With The Environment
In Mind? (cont.)

Pubic opinion
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5Ap - 5
majority of U.S. population concerned about the negative
effect of business on the environment
consumers expect companies to develop environmentally
friendly alternatives to current products and practices
companies receive pressure from local communities and
their own employees
Long-term thinking


helps business leaders understand the nature of their
environmental responsibilities
economic arguments - attention to environmental issues
enhances the firm’s long-term viability
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Why Manage With The Environment
In Mind? (cont.)

5Ap - 6
Long-term thinking (cont.)

sustainable growth - economic growth and development that
meets the organization’s present needs without harming the
ability of future generations to meet their needs

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fully compatible with the natural ecosystems that generate and
preserve life
tragedy of the commons

commons - shared property with a limited carrying capacity
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a finite resource’s ability to sustain a population
carrying capacities are shrinking as precious resources become
scarcer
inevitably, conflict will arise over the remaining resources
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Why Manage With The Environment
In Mind? (cont.)

5Ap - 7
Environmental movement


1900s the “earth decade”
combines many diverse viewpoints

conservation - concerned with the efficient use of resources


environmental movement - showed that the unintended
negative effects of human economic activities on the
environment often are greater than the benefits


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compatible with business management
posed a dilemma for business
the symptoms of environmental problems are in the biological
world
 source of these problems lies in economic and political
organizations
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Why Manage With The Environment
In Mind? (cont.)

Economics and the environment

environmentalists criticize economics for its notions of
efficiency and its emphasis on economic growth


suggest that economists should supplement estimates of
economic costs and benefits with other factors
Qualitative judgments in cost-benefit analysis
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5Ap - 8
many environmental issues do not lend themselves to
quantitative analysis
fairness cannot be ignored when doing cost-benefit analysis
International perspective

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environmental issues perceived differently around the world
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What Managers Can Do

Systems thinking

environmental considerations relate to an organization’s:

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5Ap - 9
inputs - include source of raw materials and energy
processes - procedures that reduce water and air pollution, noise
and vibration, and waste
outputs - products themselves or the waste or by-products of
processes have an environmental impact
Strategic integration

environmental issues should be addressed in a comprehensive,
integrative fashion
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5Ap - 10
Comprehensive Approach To Environmental
Issues
Mission statement and
strong values supporting
environmental advocacy
Provide internal
and external
education
Establish
environmentally
focused stakeholder
relationships
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Strategic
integration
Establish framework
for managing
environmental
initiatives
Engage in “green”
process and product
design
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What Managers Can Do

Life cycle analysis
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5Ap - 11
process of analyzing all inputs and outputs to determine the
total environmental impact of the production and use of a
product
green design of initial packaging can minimize the need for
repackaging, cut waste, and realize many benefits
Implementation


fundamental requirement for effective environmentalism is a
commitment by top management
essential to make employees accountable for actions that have
environmental impact
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What Managers Can Do (cont.)

5Ap - 12
Strategy

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cut back on environmentally unsafe businesses
carry out R&D on environmentally safe activities
develop and expand environmental cleanup services
compensate for environmentally risky projects
make your company accountable to others
make every new product environmentally better than the last
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What Managers Can Do (cont.)

Public affairs
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5Ap - 13
attempt to gain environmental legitimacy and credibility
avoid losses caused by insensitivity to environmental issues
collaborate with environmentalists
The legal area

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try to avoid confrontation with state or federal pollution
control agencies
comply early
take advantage of innovative compliance programs
don’t deal with fly-by-night subcontractors for waste
disposal
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What Managers Can Do (cont.)

5Ap - 14
Operations

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promote new manufacturing technologies
aim for zero waste or zero discharge
encourage technological advances that reduce pollution from
products and manufacturing processes
develop new product formulations
eliminate manufacturing wastes
find alternative uses for wastes
insist that your suppliers have strong environmental
performance
assemble products with the environment in mind
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What Managers Can Do (cont.)

Marketing

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5Ap - 15
cast products in an environmentally-friendly light
avoid attacks by environmentalists for unsubstantiated or
inappropriate claims
differentiate your product via environmental services
Accounting

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collect useful data
make polluters pay
demonstrate that anti-pollution programs pay off
use an advanced waste accounting system
adopt full cost accounting
show the overall impact of the pollution reduction program
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What Managers Can Do (cont.)

5Ap - 16
Finance

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gain the respect of the socially responsible investment
community
recognize true liability
fund and then assist green companies
recognize financial opportunities
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