Summary
Summary: Sustainable Organisation BMNG7311
- Institution
- Varsity College
Summary For Chapter 2, Business Management 3a, 3rd Year
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By: jabuharris • 2 year ago
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Chapter 2: Sustainable OrganisationWhy is it necessary for an organisation to consider social
and environmental impacts?
Being a sustainable organisation reduces the risks that a business faces. These risks
can affect profitability in a number of ways, like expensive workplace accidents or
reputation damage. An example is the Brent Spar affair. The Brent Spar was a
permanent oil storage rig in the North Sea owned by Shell. In 1995 Shell intended to
dispose of the structure by sinking it into the sea.
Why is it necessary for an organisation to consider social and
environmental impacts?
There are 2 aspects to answering this question.
1. Greenpeace mounted a massive operation which included occupying the
structure and raising public awareness. In protest, consumers boycotted Shell
petrol stations and applied pressure to their governments. Eventually, consumer
and government pressure forced Shell to back down.
2. A sustainable organisation can access important business opportunities and
reduce costs. For example, by changing the materials McDonald’s uses to wrap
its food, they were able to reduce waste by 30%.
Defining the term ‘sustainable organisation’
Sustainable organisation is an umbrella term which includes but goes beyond
concepts such as corporate social responsibility (CSR), corporate citizenship and
social entrepreneurship. It is an organisation that is proactively implementing
financially viable business models that also contribute to solving social and
environmental problems.
, A Sustainable Organisation is:
One that makes charitable donations.
Implements Broad-Based Black Economic Empowerment (B-BBEE) and
Complies with environmental legislation.
In sub-Saharan Africa, where extreme poverty is still evident and the natural
environment is under pressure, business has an important role to play. Instead of
compliance and philanthropic approaches, a strategic approach is needed.
A strategic approach to sustainable organisation
As strategy identifies the key opportunities and challenges for an organisation, it
needs to incorporate social and environmental aspects.
Traditionally, social and environmental issues are seen as challenges or threats
and manifest in poverty, crime, climate change, etc.
An organisation must accept there are opportunities for it to develop solutions to
these problems.
Porter and Kramer argue that there are two ways to approach the interface
between business and society.
The inside-out perspective is illustrated in Figure 2.1 on p.52 of your textbook.
In this perspective, a business needs to examine its value chain to determine the
social and environmental implications.
For example, Nike used suppliers who operated “sweat shops” and thus the
‘procurement’ activity was having a negative social impact.
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