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Business report (it is a common perception among CEOs that sustainable practices are all about costs and less about benefits”

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    Management
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7BUSINESS REPORT

Business Report

Wal-Mart on Sustainability Policies

There exists a common perception among Chief Executive Officers (CEOs) that sustainable practices are all about costs and less about benefits. This assumption when addressed in relation to the progress and success of Wal-Mart Company leads to an argument that contrary to existing perceptions, any sustainable initiatives developed by an organization equals the costs and benefits. Since its founding in 1962 and incorporation in 1969, Wal-Mart Stores has been active in offering groceries and general merchandise as a multinational company (Cristina et al, 2012). The US based largest retailer is currently operating more than 10,000 retail units on the international platform. The company employs more than 2 million associated retailers globally with generated net sales worth $443 billion as at 2012 (Cristina et al, 2012).

At Wal-Mart, our mandate is to save the financial resources of our customers with the objective of ensuring that they live better lives. This is not only in the provision of products but also in the sustainability measures that the company has been able to develop since its foundation. These measures not only focus on streamlining the company’s supply chain but also improve on its corporate social responsbility initiatives, which aim at enhancing environmental protection, improving customer perception and improving company profits. The three goals through which Wal-Mart seeks to realize its vision include to be supplied with 100% renewable energy, creation of zero waste and the sale of products that sustain the existing resources and the environment (Henderson & Weber, 2017). Additional sustainability measures include the reduction of greenhouse gas emissions by 20 precent and double the company’s transport fleet efficiency by 10 precent (Henderson & Weber, 2017). These methods of improving sustainability of the company would be important approaches in pursuing regulatory and policy changes. These are crucial in the creation of incentives for improved investments in the energy sector and initiating programs in different countries that would show preference to suppliers who set their own goals with regard to aggressive reduction of their own emissions (Henderson & Weber, 2017).

The operations of Wal-Mart Company are based on the understanding that any sustainable initiatives are based on the existing natural systems, which are increasingly becoming vulnerable to human activity considering the existence of limited adaptive capacity and the irreversible changes that some of these systems may undergo (Wu & Pagell, 2011). Prevailing climatic conditions occasioned by climate change and global warming have also affected these systems. CEOs have often associated sustainability measures such as those targeting environmental protection and streamlined supply chain as additional cost imposed by the government (Ambec & Lanoie, 2008). These costs erode the profit levels and competitiveness of companies. However, at Wal-Mart, we believe that cost equal the benefits considering that investing in environmental protection not only protects the environment but also ensures that the current and future generations are protected from the possibility of resource depletion due to wasteful use. In addition, through such measures Wal-Mart believes that it will be able to sell products, which sustain the resources and the environment (Henderson & Weber, 2017).

Inasmuch as the company recognizes the essence of sustainability measures in organizational development, Wal-Mart also operates on the understanding that there are cost implications related to successful development of these measures (Ambec & Lanoie, 2008). For example, Wal-Mart was faced with high initial cost especially in trucking. Furthermore, the company considers such an approach as long-term investment considering that there are no quick returns (Henderson & Weber, 2017). The company has also faced challenges with regard to its 100% supply of renewable energy (Henderson & Weber, 2017). This explains why we have been criticized for doing less compared to the impact generated. The understanding that the supply and use of renewable energy accounted for 2% of the total consumption while the majority of greenhouse gas emissions were from the company’s suppliers generated this criticism (Henderson & Weber, 2017).

Despite the high initial cost and the long-term nature of these investments, the company has been able to experience gradual benefits, which include reduction of fuel costs, reduced nose, and air pollution, which are crucial for environmental and supply chain sustainability (Henderson & Weber, 2017). In addition, through these investment initiatives the company has been able to save additional financial resources hance limiting the cost implications these initiatives. An essential objective of any sustainability measure is an improvement in customer perception (Henderson & Weber, 2017). This is considered crucial for the eventual profitability of a company because customers will prefer dealing with organizations that focus on environmental protection. An improvement in customer perception is a guarantee of profitability in future company operations (Beard & Hornik, 2011).

When assessed from the perspective of five-stage model of sustainability, it is possible to assert that Wal-Mart is in the process of realizing sustainability. This is because other than possessing sufficient knowledge on compliance laws and recognizing them as opportunities of improvement, the company has been able to implement some of the legal requirements by improving on value and supply chain performance (Henderson & Weber, 2017). The company has also been able to witness advances in its operations and returns. Sustainable value chain has been instrumental in the manufacture of sustainable products, which has been critical in improving the quality of products with regard to existing environmental law. For Wal-Mart, this has been realized by working with suppliers to implement packaging solutions essential in the reduction of packaging wastes. The company has also been engaged in the improvement of trucking and implementation of energy lighting (Cristina et al, 2012). However, Wal-Mart still faces the challenge of developing effective human resource policies especially when dealing with suppliers in foreign countries such as Bangladesh (Cristina et al, 2012). Currently the company’s policy on human resource related problems such as the use of child labour is limited to discontinuing its business operations with the suspected supplier (Cristina et al, 2012).

For the company to actualize its objective of developing a new business model as required in the stage new business model, it will be important to mend its human resource policies and develop its sustainable value network. This will be perceived as a future remedy to ensure that it operates in accordance o the dynamic demands of the business world and in developing sustainable environmental policies. Through Sustainable Value Network (SVN), it will also be possible for Wal-Mart to actualize its plan of implementing a series of projects aimed at reducing water usage by recycling and reduction of food wastes. The company is yet to establish its foundations for stage five, which requires an assessment of the status quo with regard to possible changes that could enhance business operations essential in improving on customer perception (Henderson & Weber, 2017).

In conclusion, the management at Wal-Mart recognizes that the unfolding of new economic order has led to the realization that profits and profitability are just parts of its long-term success (Kleindorfer e al, 2005). There are other important factors such as the future of its stakeholders and the future of the environment hence the need to establish sustainable policies focusing on these elements (Kleindorfer et al, 2005). For the company to meet its goals of developing practical sustainable policies, it must maintain it crucial franchises, which include establishing trustworthy relationships with its employees, customers and the local communities. Furthermore, it must also maintain effective economic franchises, which will ensure that it pays from the cash flow generated for capital and other inputs used in production of outputs.

References

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Beard, A & Hornik, R. (2011). It’s Hard to Be Good. Harvard Business Review

Cristina,A., Torres,C., Garcia- French, M., Hordijk, R Nguyen, K & Olup, L. (2012). Four Case

Studies on Corporate Social Responsibility: Do Conflicts Affect a Company’s Corporate Social Responsibility Policy? Utrecht Law Review, Volume 8, Issue 3

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Henderson, R & Weber, J (2017). Greening Wal-Mart: Progress and Controversy. Harvard

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