Strategies for Sustainability

Strategies for Sustainability

Globalization is considered as the single-most important event to have been responsible for creating unprecedented changes in most aspects of organizational and social life in the last two-and-a-half decades. Foremost, it has brought about the collapse of the regulatory practices of permit–quota–licence raj that provided protection to domestic industry at unequal terms. It has provided an impetus to the human effort, initiative and creativity and competition. It has brought in a reward and recognition system for motivation to reach achievement. Formulation of competitive strategy that takes into account the market needs and core competencies has become a vital starting point to aim at success. Globalization also surfaced the desire to indulge; it has brought along the rise of the long-suppressed consumerism replacing frugality and austerity. Globalization has provided that missing opportunity of choice to the consumer. It has opened up the demand and has created an urge to possess or imbibe what the consumers enjoyed elsewhere. Globalization, in brief, has come to be defined as unbridled access to both markets and the resources.

In a way, globalization can also be considered as a global strategy which has opened gates of business to new markets, resulting in transformation from stagnancy to growth, with opportunities to seek wealth in new pastures. The later observation has to be appreciated in the context of saturation of demand in the developed economies of Europe and far east Japan because of zero growth of population.

There were serious challenges to be confronted. The revolution in technology and the resultant innovations, rising prosperity, especially in the developed economies, paving way for higher standards of living and now with globalization creating a new massive demand in the ‘forbidden’ countries for all those commodities as possessed by the developed economies of the West was giving birth to a new consumerism of wastage and uncontrolled consumption of natural resources. The ‘cheap’ human capital of South Asia, Africa and the underdeveloped economies came to be exploited in the excuse of creation of employment opportunities. In another dimension, the voices of concern came up from researchers and other thought leaders at world forums who rang up the warning bells on global warming, carbon footprints, loss of biodiversity and depleting resources such as fossil fuels, water, jungles, plantations and minerals. The loudest bells were sounded by mother nature herself and these came in the form of tsunami, Katrina, devastation in Uttarakhand (Himalayas, India), etc. Could these be checked?

Operating in the newly emerged environment of globalized business has its own challenges to gain competitive advantage. The first wave towards non-local enterprises seeking new markets in South Asia was witnessed in the early 1990s. Business process outsourcing (BPO) services and fast-food giants from the West made a beeline for India, with its high potential and large market. The burger and the pizza makers, and the chicken delicacies, went out of the way to accommodate the sensitivities of the consumers by excluding beef and pork and offering very innovative vegetarian items to the veggies. Thus was born McDonald’s aloo-tikki burger to become the largest selling burger of the country. Nestle’s Maggie, by popular count today, is ‘the national food’ for all school and college-going students in urban India. The strategies were designed for specific market needs. Business risks were shared through franchising, joint investments and alliances. At the same time, China made an impressive global entry in the developing economies to market light engineering goods like fans, lights and toys, and consumer items such as decorative products, shoes, artificial jewellery, ready-made garments and more. Cost became the overriding consideration for a price-conscious South Asian market. Economy of scale helped China to emerge as the ‘manufacturing hub of the world’. The second, large wave surfaced in the new millennium with automobile makers setting up plants in India. There are big names in retail, insurance, transportation, air traffic and more knocking to enter, irrespective of the existing players. It is the ability to compete and an adoption of appropriate strategy to ensure sustainability that will bring success. Industry boundaries are to be defined afresh. Business requires new strategies and road maps for a success which is composite of economic, environmental and social sustainability.

Strategies for sustainability dominate this issue.

Mustaghis-ur-Rahman, in the first case, chronicles the corporate social responsibility (CSR) activities at Fauji Fertlizer Company Limited (FFC), a part of United Nations Global Compact (UNGC). The discussion highlights CSR activities in five groups that are spread out at both the macro level and micro level. At the macro level, the company is addressing stakeholders’ concerns for underdevelopment in the country. At the micro level, FFC is having interventions by spreading education, providing health care, protecting environment, alleviating poverty and responding to the challenges of disasters. The case is interspersed with success stories as narrated by the beneficiaries. The case tries to educate the readers on the developmental issues in Pakistan and the emerging challenges of sustainability of the CSR programme of a large company. The case highlights the successes of FFC in terms of channelizing energy and resources at large scale for paying back to society.

H.M. Jha ‘Bidyarthi’, Ashish K. Srivastava, P.V. Bokad, L.B. Deshmukh and S.M. Mishra explore Maruti Suzuki India Ltd (MSIL) and examine the challenges it faces in growth and sustainability as the largest carmaker of India. Using data and figures as provided by the Society of Indian Automobile Manufacturers reports, publications and coverage in the media, the authors investigate the causes behind the declining share market share of the leader of Indian car market. The article endeavours to bring out the strategic perspectives of MSIL that helped it reach the top and does the environmental scanning to identify factors that made it dip down. The analysis focuses on ‘disruptive innovation strategy’ in the passenger car industry of India occupying the centre of the wheel. With increasing loss in its market prominence and market share, how does MSIL propose to meet the challenges of survival and sustainability on product price, customization and customer service is the issue of this case.

Herwina Rosnan and Rosmimah Mohd Roslin narrate the saga of super success of SimplySiti, a new brand in the beauty industry in Malaysia launched in 2010. For a new player, sustainable competitive advantage is a crucial indicator of success in this world of hyper-competition. SimplySiti has done fairly well amidst the presence of more established global competitors like L’Oreal, Avon and Estee Lauder in the Malaysian market. The authors trace much of success for this brand to fans of Dato’ Siti Nurhaliza, the most popular Malaysian singer with vast following not only in Malaysia but across countries such as Indonesia, Singapore, Brunei and the Middle East. Dato’ Siti Nurhaliza is the founder and the driver of this brand and she is involved in marketing and promoting this brand directly. This case study highlights how a newly established local business competes with the more established global players.

Ifedapo Adeleye, Abayomi Sule and Shola Tobun present a case study on transformation and sustainability of a large teaching hospital. UTHI was set up in 1970 as a hospital of eminence in the West African sub-region, offering world-class training, research and services and the first choice hospital. It kept its promise to emerge as the main teaching hospital of the country. The 1990s witnessed the decline. The Government of Nigeria appointed Vesta Healthcare Partners to advise on transformation and sustainability. The authors examine some of the suggestions. These involve restructuring and the reporting system; offer of opportunities to those who showed performance; remuneration system and ineffective linkage with clinical performance outcome and employee productivity; and more. The case study describes the challenges before Professor Temi, the Chief Medical Director of UTHI, who has to handle the implementation of the recommendations.

The benefits of the economic growth have not reached the bottom of the pyramid. The case from Taruna Gautam and Kapil Garg focuses concern on inclusive growth. Financial exclusion in India can be seen in the form of high population per bank branch or a high percentage of the population unable to access basic financial services. Financial inclusion encompasses the hitherto excluded population under the ambit of formal financial system. The authors stress that information technology (IT) can play an important role not only in reducing the operating cost but also in covering most of the regions which are unbanked. IT provides various solutions for financial services to the people devoid of banking facilities in the form of mobile banking and micro ATM. This case highlights the various IT measures and schemes launched by Union Bank of India towards financial inclusion as per the guidelines of Reserve Bank of India (RBI).

Internet penetration rates are often considered signs of technological, economic and social growth of nations. The global average is approximately 30 Internet users for every 100, and the number of users in the developed parts of the world has increased ten times in the last decade. In Bangladesh, in 2012, this still hovered around 6.3 Internet users per 100 people. The birth of BRACnet is to be seen as a blessing. Jashim Uddin Ahmed, Saad Md Maroof Hossain and Mirza M. Ferdous, in an article, present a case study that deals with the organization, business model, challenges and successes of the largest Internet Service Provider (ISP) in Bangladesh. To satisfy the connectivity needs of both corporate and individual customers, BRACnet offers a wide variety of service packages to accommodate the needs of its diverse client base. This case study explores the significant corporate and stakeholder aspects of BRACnet and how it is working towards its primary objective of bringing ‘IT sustainability in Bangladesh’.

A common perception relates sustainability to multinationals or, at best, to large organizations. The small and medium enterprises (SMEs) are outside the orbit on the logic that the indulgence in the environmental and social components is beyond their economic means and will be at the cost of economic growth objectives. M. Rakesh Krishnan and C. Ganesh illustrate implementation of sustainable development model by an SME. Extra Weave Pvt. Ltd, an SME in Allapuzha district of the state of Kerala, India, stands out from the crowd in its remarkable achievements in sustainability, overcoming initial challenges and issues in implementation of a sound sustainability development model. The study focuses on how communication plays a role in the implementation of sustainable development practices in Extra Weave. The study also discusses how soft system methodology (SSM) was used to identify the issues in implementation and facilitate for appropriate solutions.

Wine drinking is comparatively new to Thailand and is largely because of cultural impacts of globalization. Alcohol production and distribution, once monopolies by the grace of the crown, have been gradually replaced by large, diverse multinational enterprises. The Village Farm Resort and Winery is an integrated winemaking vineyard with wine tasting house, restaurant, spa and guest house located in the north-east of Thailand. Wilaiporn Lao-Hakosol and John Walsh present the travails of the winery as to how it has achieved success both through the quality of its Chateau des Brumes brand of wines and through the conviviality available at the country retreat. The sector is rapidly developing based on an expanding market and the passion and enthusiasm of investor-entrepreneurs. However, there are certain to be new challenges to be faced as the market matures and more players enter. Additionally, is it possible for a family-owned firm to continue to innovate and sustain itself?

Sven Seidenstricker, Christian Linder and Michael Schmitz, in their article, present a case study of a 100 year old company (name disguised) which is a leader today in the technology of plant engineering and construction for the beverage industries. The competition has increased heavily in this area over the last decade, while advances in knowledge have correspondingly declined, particularly in producing technology systems, and there is now a discernible knowledge gap. The authors discuss that the company has recognized that the business must find other markets and its technology core competencies should be a part of the evolving business. The case highlights the need to identify current core competencies and assess relevant fields of potential diversification from an outside-in perspective as a realization of the first steps in establishing a completely new business portfolio in the long run. Entry into emergent markets could make things easier for a diversifying company but analysis, valuation and selection should be comprehensive and systematic.

Human capital and its quality determine excellence in an organization. The importance of right human capital could not be better emphasized than at an emerging organization facing the established institutions of long-standing. Alok Kumar Goel and Geeta Rana discuss innovative practices to enhance retention of employees at YES Bank in India. The bank is comparatively new but has created a mark because of its human resource (HR) policies that are based around five key brand pillars which reflect the core values of the bank: growth, trust, human capital, technology and transparency, and responsible banking. The authors point out that YES Bank has adopted a knowledge-driven, entrepreneurial management approach and offers financial solutions beyond the traditional realm of banking. The bank has established the most stringent corporate governance norms, and is committed to responsible banking by focusing on sustainability and social responsibility. The case provides useful insights as to how YES Bank has successfully transformed its working environment.

Eduardo Schiehll, Gokhan Turgut and Elise Demers discuss governance issues on board composition and the governance roles of the board of directors in publicly traded companies. The governance issues relate to firm ownership structures, family-owned or controlled companies, ethical conduct of the board of directors and conflicts between majority and minority shareholders. The case concerns Magna International Inc., a Canadian automotive supplier of automotive systems, assemblies, modules and components. Its stocks are traded on the Toronto Stock Exchange. The case study is structured as a chronological description of the controversy generated by a proposed related party transaction (a buyout transaction) designed to dismantle a dual-share capital structure that allowed the Stronach family to control Magna International Inc. with just a fraction of its equity. Under the deal, the company would buy all of Stronach’s multiple-voting shares for cancellation. The deal proposal received a criticism from several large institutional shareholders.

Narumon Saardchom, in the last presentation of this issue, addresses the importance of design patents. Narumon points out that high-technology companies that bring innovation to the market also use their innovation to claim their intellectual property rights around the world. The smartphone and tablet industry is driven by the collection of intellectual property rights that has led to unavoidable lawsuits related to patent, design patent or trademark that span courts and several continents. The case refers to the most significant incident of this decade on patent war between Apple Inc. (Apple) and Samsung Electronics Company (Samsung) that took place in 2011, and ever since, expanded to more than 50 lawsuits in numerous courts around the world. Narumon goes on to chronicle the events and reveals many insights to the battle. The case leaves lessons for avoiding the pitfalls: any company must seriously incorporate design patent issue into its intellectual property portfolio.

We hope that the coverage provides an interesting read. We invite you to share your experiences in form of case studies.

We look forward to receive your critical comments and valuable suggestions for improvement of the journal, as always.