Good Corporate Citizenry, No Longer a Choice But a Necessity

By Victoria Galeano & Jerry Haar

When queried at a 1909 business meeting about the choice of colors available for his automobiles, Henry Ford replied that customers could have any color they wanted as long as it is black. Fast forward to the late 20th and early 21st centuries and consumers today are now in the driver’s seat (no pun intended). Publications such as Consumer Reports, CNET, and a myriad of other independent professional and consumer reviews of goods and services empower buyers, dictating to producers the style, features, and price ranges that consumers seek.

Continue reading

GLOBAL CONSUMERISM AND SUSTAINABILITY

Between 1980 and 2010, the middle class worldwide nearly doubled in size, growing to almost 2 billion people. By the year 2030, it is likely to reach nearly 5 billion people. The middle class is the largest group, demographically, in terms of consumers of various products and services. However, growth of the middle class poses pressures on the natural environment and demand for resources, such as energy, food, and raw materials. Rising world population and increased production and consumption raise concerns about sustainability, which refers to meeting humanity’s needs without harming future generations.  On the one hand, rising consumerism is a sign that living standards are improving worldwide; billions of people are emerging from the poverty that besets humanity.  On the other hand, growing population and consumerism pose important challenges to planetary well-being.

The World Economic Forum has proposed various ideas for addressing sustainability, while ensuring people can obtain the products and services they need:
1. Emphasizing durable over disposable. Firms and consumers alike benefit from products that are relatively durable, as opposed to disposable goods that use more resources and fill up landfills.

2. Using renewable versus disappearing resources. Renewable resources are usually more cost-effective and encourage sustainability. For example, energy generated from solar and wind sources can be maintained indefinitely, while fossil fuels are dwindling over time.
3. Sharing resources. Firms and consumers must think increasingly about developing and using goods that they share with others. For example, homeowners tend to use lawnmowers, snowblowers, and other home-care equipment only intermittently. Economies result when such resources are shared among several households.

4. Favoring virtual products and delivery methods.  Online product vendors use resources more efficiently than physical, “brick-and-mortar” retailers. Some products can be offered electronically, which saves paper. For example, many consumers opt for digital books they can read on Kindles, Ipads, and similar devices. Such approaches help reduce the destruction of forests and other resources.

5. Consuming locally grown goods. Many agricultural products must be transported long distances, which contributes to air pollution and needless resource usage. An emphasis on consuming locally-grown farm products can help increase resource sustainability and decrease pollution.

To thrive while preserving natural resources, companies will need to include sustainability in their strategy-making. Managers need to improve their understanding of how resources create new risks, but also produce new opportunities.  Firms must devise sophisticated approaches for conserving resources and offering sustainable products and services.

For example, Otis makes the Gen2 elevator, which uses up to 75 percent less energy than conventional elevators.  Recently, Otis established a green manufacturing facility to produce Gen2’s in Tianjin, China, which reduced site energy use by more than 25 percent. Builders are adopting Gen2 elevators and escalators, to save energy and help the environment. The Dutch consumer products company Unilever is cutting water usage and greenhouse gas emissions in its factories. The firm aims to increase recycling and recovery efforts in manufacturing, and reduce by one-third the use of materials in its product packaging by 2020. The Swiss food company Nestlé works with farmers around the world to help them increase crop yields, while minimizing their water usage and pollution. Nestlé has allied with nongovernmental organizations such as the Rainforest Alliance to focus on how farmers can improve access to clean water and sanitation.

Sources: Business & the Environment, “Food and Beverage Companies Serve Up Sustainability,” October 2011, pp. 1-3; Richard Dobbs, Jeremy Oppenheim, and Fraser Thompson, “Mobilizing for a Resource Revolution,” Mckinsey Quarterly, January 2012, accessed at www.mckinseyquarterly.com; World Economic Forum, Consumer Industry Emerging Trends and Issues (Geneva, Switzerland: World Economic Forum, 2011), accessed at www.weforum.org

Export Promotion Rationale Continued – Final Part

Here are my conclusions about the seven dimensions that should guide export
assistance efforts, in particular where new and growing businesses are
concerned. One needs to determine what export assistance is to achieve. Some of the current objectives are global fairness and the opening of world markets. Public funds and government attention are too scarce to invest solely to right wrongs or for the
sake of fairness. The key focus must be on the benefits to U.S. employment. The
time frame involved should be a long-term orientation, which concentrates efforts on introducing more and new firms to the global market. Export assistance needs to achieve either a specific reduction of risk or an increase in profits for firms. It should be concentrated primarily in those areas where profit and risk inconsistencies produce market gaps, and be linked directly to identifiable organizational or managerial characteristics that need improvement. Otherwise, assistance supports only exports that would have taken place anyway. The measurement of success should be based on the export involvement of the firm, focusing on the number of customers, transactions, and locations served. Coordination is crucial. Within government, one must avoid that well established industry sectors with relatively low employment effects consume resources in an over proportionate fashion while priority growth industries would be left to seek export success on their own with insufficient support. Externally, export assistance must ensure that the policy gains abroad are actually used by domestic firms. Rather than concentrate only on well entrenched industries, the focus
must be on sunrise industries. Export assistance should emphasize those areas where government can bring a particular strength to bear-such as contacts or prowess in opening doors abroad, or information collection capabilities. Externally, programs should aim at the large opportunities abroad. As far as firms are concerned, attention should not assist industries in trouble, but mainly help successful firms do better.

Export assistance programs should start out by analyzing the current level of international involvement of the firm and then deliver assistance appropriate to the firm’s needs. For example, help with after-sales service delivery is most appropriate for firms at the adaptation stage; firms at the awareness stage worry much more about information and mechanics. Assistance must also take foreign market conditions and foreign buyer preferences into account. It is easier to sell what is in demand rather than being guided by what’s in ample supply.

There should be a spark of boldness which goes beyond ensuring that things are done
right, but checks whether one can do more right things. One could, for example, think about domestic and international efforts to set standards for technology and quality, and include the grading of enzymes, meats, hormones, and other products developed by biotechnology firms. Or one could think about the development of a national forfeiting institution and the delivery of training to banks,  to be of major assistance in handling the financial and documentation aspects of exporting. In a world of shifting goal posts and rapidly changing realities, all firms should be prepared for the global marketplace. If they can grow and successfully meet international competition, they will strengthen themselves and the nation.

What Drives Globalization? Part 2/4

Globalization is driven by four factors:

  1. Cost
  2. Market
  3. Environment
  4. Competition

Market:

Consumers in advanced economies are becoming more similar in terms of education, income, lifestyles, aspirations, and their use of leisure time. Marketers of certain products find ready buyers in countries with high purchasing power and well-developed infrastructures. Still other products might fare best in markets that are less sophisticated.

Having a global strategy does not mean that a company should serve the entire globe. Critical choices include deciding where to spend resources and where to hang back. The usual approach is to start by picking regions and then countries within them. Regional groupings might follow the organizational structure of existing multinational management or export offices, such as splitting Europe into northern, central, and southern regions that have similar demographic and behavioral traits. Market data might be more readily available in situations where the firm is grouping markets according to existing structures and frameworks.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg.91.