Strategic Management and Sustainability PDF

Strategic Management and Sustainability Integration Topics: The Role of Strategy in Sustainability, Sustainability as a Competitive Advantage, and Sustainable Business Models (e.g., Circular Economy) Group Members:​ Alcaraz, Anghelo Francis ​ ​ ​ Awid, Mac Gabriel ​ ​...

Strategic Management and Sustainability Integration Topics: The Role of Strategy in Sustainability, Sustainability as a Competitive Advantage, and Sustainable Business Models (e.g., Circular Economy) Group Members:​ Alcaraz, Anghelo Francis ​ ​ ​ Awid, Mac Gabriel ​ ​ ​ Lojo, Christian James 1.​ The Role of Strategy in Sustainability ​ Framework For Operational Planning. -​ Strategies provide the framework for plans by channeling operating decisions and often predeciding them. If strategies are developed carefully and understood properly by managers, they provide a more consistent framework for operational planning. If this consistency exists and applied, there would be deployment of organizational resources in those areas where they find better use. Strategies define the business area both in terms of customers and geographical areas served. Better the definition of these areas, better will be the deployment of resources. For example, if an organization has set that it will introduce new products in the market, it will allocate more resources to research and development activities, which is reflected in budget preparation. ​ Clarity in Direction of Activities. -​ Strategies focus on direction of activities by specifying what activities are to be undertaken for achieving organizational objectives. They make the organizational objectives more clear and specific. For example, a business organization may define its objective as profit earning or a non-business organization may define its objective as social objective. But these definitions are too broad and even vague for putting them into operation. They are better spelled by strategies, which focus on operational objectives and make them more practical. For example, strategies will provide how profit objective can be sharply defined in terms of how much profits is to be earned and what resources Of how much profit is to be earned and what resources will be required for that. When  objectives are spelled out in these terms, they provide clear direction to persons in the organization responsible for implementing various courses of action. Most people perform better if they know clearly what they are expected to do and where their organization is going. ​ Increase Organizational Effectiveness. -​ Strategies ensure organizational effectiveness in several ways. The concept of effectiveness is that the organization is able to achieve its objectives within the given resources. Thus, for effectiveness, it is not only necessary that resources are put to the best of their efficiency but also that they are put in a way which ensures their maximum contribution to organizational objectives. In fact, taking strategic management, which states the objective of the organization in the context of given resources, can do this. Therefore, each resource of the organization has a specific use at a particular time. Thus, strategies ensure that resources are put in action in a way in which these have been specified. If this is done, organization will achieve effectiveness. ​ Personnel Satisfaction. -​ Strategies contribute towards organization effectiveness by providing satisfaction to the personnel of the organization. In an organization where a formal strategic management process is followed, people are more satisfied by the definite prescription of their roles thereby reducing role conflict and role ambiguity. If the decisions are systematized in the organization, everyone knows how to proceed, how to contribute towards organizational objectives, where the information may be available, who can make decisions, and so on. Such clarity will bring effectiveness at the individual level and consequently at organizational level. Strategies provide all these things in the organization through which everything is made crystal clear. Looking into the role of strategy, Ross and Kami have suggested “without a strategy the organization is like a ship without a rudder, going around in circles. It is like a tramp; it has no place to go.” They ascribe most business failures to lack of strategy, or the wrong strategy, or lack of implementation of a reasonably good strategy. They conclude from their study  that without appropriate strategy effectively implemented, failure is a matter of time. 2.​ Sustainability as a Competitive Advantage -​ Sustainability has become a crucial part for organizations. The concept of sustainability encompasses the idea of meeting present needs without compromising the ability of the future generations to meet their own needs. In the business context, sustainability refers to integrating environmental, social, and economic considerations into organizational practices and decision-making processes. The result of integrating sustainability in the core of the business would make them unique from their competitors and create value in the eyes of their customers and stakeholders. Advantage: ​ Proactively address environmental and social challenges while driving innovation and cost savings. ​ Attracts environmentally conscious customers, investors, and increases employee retention ​ Enhance brand image and reputation ​ Open up new market opportunities ​ Compliance and regulation Companies that use Sustainability as their competitive advantage ​ Tesla -​ Electric cars reduce their carbon footprint and help fight climate change. ​ Patagonia -​ They use recycled materials in their products like clothes to avoid carbon footprint ​ IKEA -​ Recently they commit to being fully circular in the following years.  3.​ Sustainable Business Models (e.g., Circular Economy) -​ An organization's structure for creating, delivering, and capturing value based on sustainable development principles is known as a sustainable business model, or business model for sustainability. -​ A business model for sustainability, as opposed to a standard business model that is just concerned with profit, can assist organizations in addressing sustainability issues while still making money. -​ Businesses can change their goals, goods, and procedures while making a beneficial impact on the environment by tackling a variety of ecological and social challenges within the framework. What makes a sustainable business model work? ​ Four Key Elements of a Sustainable Business Model. 1. A sustainable business model is commercially profitable. -​ You may be socially conscious and still turn a profit. Without consumers, no business can grow or flourish. What is the value that you offer? Who are your intended audiences? What niche do you fill, and why is your business valuable? Example: Patagonia ​ How It Fits: Patagonia has built a highly profitable business by offering durable, high-quality outdoor clothing while maintaining a strong commitment to environmental and social responsibility. Their "Worn Wear" initiative encourages  customers to repair, reuse, and trade old gear, aligning with their values while retaining loyal customers. ​ Key Takeaway: Profitability and purpose can coexist when a business addresses a specific market need with a compelling value proposition. 2. A sustainable business model can succeed far into the future. A trendy business or one that relies on limited resources may be profitable for a few months, but how will it fair in a year or two? Resource availability and cost are never assured or fixed; you don’t want to build your castle on a sinking rock. Example: Tesla ​ How It Fits: Tesla’s focus on electric vehicles (EVs) and renewable energy products positions the company for long-term success as the world transitions away from fossil fuels. By investing in battery technology and expanding EV infrastructure, Tesla ensures its relevance in the sustainable energy future. ​ Key Takeaway: Long-term planning and innovation allow businesses to stay ahead of shifting market trends and resource constraints. 3. A sustainable business model uses resources it can depend on for the long term. -​ Without sustainable resources, a sustainable business model is impossible. Exceptionally high pricing or restricted resources restrict a lot of commercial operations. In the meanwhile, some materials could be easily accessible but detrimental to the ecosystem. Example: IKEA  ​ How It Fits: IKEA has committed to becoming a fully circular business by 2030, using sustainable or recycled materials in its products. For instance, the company sources wood responsibly and uses renewable materials like bamboo in its furniture lines. ​ Key Takeaway: By focusing on renewable and sustainable resources, businesses can reduce their environmental footprint while building a reliable supply chain. 4. A sustainable business model gives back. -​ According to one notion, a business model that provides as much as it takes is one that is genuinely sustainable. This idea is known as the "borrow-use-return" approach, which is cyclical. -​ The "linear take-make-waste model" that so many contemporary enterprises are based on is "culpable for contributing to [this world's] unsustainability," according to Bob Willard, an expert and author on quantified sustainability measures. -​ A sustainable business "borrows" resources with the goal of replenishing them rather than depleting them. Businesses and consumers alike may encourage and implement this idea of responsible consumption. Example: Unilever (Sustainable Living Plan) ​ How It Fits: Unilever aims to "give back" through initiatives like reducing waste, water use, and greenhouse gas emissions across its supply chain. The company also invests in programs to improve the livelihoods of smallholder farmers and workers. Its brands, such as Dove and Ben & Jerry's, promote sustainability and social impact. ​ Key Takeaway: Businesses that replenish resources, invest in communities, and embrace ethical practices create a cycle of positive impact for society and the environment. Examples of sustainable business models 1. The eight-step sustainable business model by Szekely and Dossa -​ By examining phases spanning from organizational purpose to PR transparency, the eight-step model developed by Francisco Szekely and Zahir Dossa takes sustainability beyond the triple-bottom line. They suggest that companies should prioritize meeting societal needs right away and see profitability as a means of promoting sustainability rather than as a goal in and of itself. Their eight steps to success are as follows: 1.​ Sustainability mission: What is the purpose of your organisation? 2.​ Long-term vision: What will your organisation look like in twenty-five years? 3.​ Sustainability strategy: Identify your stakeholders and develop a plan to impact them in a positive way. 4.​ Implementing sustainability strategy: How can you engage your stakeholders for maximum impact? 5.​ Measuring sustainability performance: How do you measure non-financial performance? 6.​ Transparency and accountability: Can you pass the newspaper test? 7.​ Scaling: Can sustainability scale? 8.​ Sustainability innovation: What makes sustainability innovations unique? 2. The eight sustainable business model archetypes by Bocken, Short and Evans When developing a business model for sustainability, organizations can benefit from the solutions and possibilities outlined in the eight sustainable business model archetypes developed by Nancy Bocken, Sam Short, and Steve Evans. To speed up the study and use of sustainable business models, the following eight strategies were created: 1.​ Maximise material and energy efficiency. 2.​ Create value from ‘waste’. 3.​ Substitute with renewables and natural processes. 4.​ Deliver functionality rather than ownership.  5.​ Adopt a stewardship role. 6.​ Encourage sufficiency. 7.​ Re-purpose the business for society/environment. 8.​ Develop scale-up solutions. 3. The triple layered business model canvas (TLBMC) by Joyce and Paquin -​ The triple layered business model canvas (TLBMC) was created by Raymond Paquin and Alexandre Joyce to investigate sustainable innovation strategies in the corporate world. -​ Using a lifecycle approach and stakeholder perspective, the TLBMC is a method for incorporating social and environmental aspects into an organization's business model. The business model canvas's economic layer can produce a variety of value when the environmental and social layers are added. 1.​ Economic: Considering partners, activities, resources, value proposition, customer relationships, channels and customer segments. 2.​ Environmental: Considering supplies and outsourcing, production, materials, functional value, end-of-life use, distribution and user phase.  3.​ Social: Considering local communities, governance, employees, social value,​ societal culture, scale of outreach and the end user. References: Bhasin, H. (2024, December 17). Role of strategy. Marketing91. https://www.marketing91.com/role-of-strategy/#google_vignette Daye, D. (2023, July 3). 7 Competitive advantages for sustainable brands. Branding Strategy Insider. https://brandingstrategyinsider.com/7-competitive-advantages-for-sustainable-bra nds/ Hendricks, D. (2024, November 7). How to create a sustainable business model. business.com. https://www.business.com/articles/how-to-create-a-sustainable-business-model/ Jenks. (2024, February 22). How businesses can turn sustainability into a competitive advantage. Green.org. https://green.org/2024/01/30/how-businesses-can-turn-sustainability-into-a-comp etitive-advantage/?fbclid=IwZXh0bgNhZW0CMTEAAR2V9gfuC7i154MBY-W_vlC l5fcaT9yHjEneEXrl85zH3ihlmLzaFjBdl8Y_aem_-xKbzz6cvinZ18yxKCVx-w University of Leeds. (2024, February 2). Sustainable Business Models | University of Leeds. Online Postgraduate Courses - University of Leeds. https://pg-online.leeds.ac.uk/blogs/sustainable-business-models/