Why are environmental issues becoming more important for international business - Essay Example

?Why Are Environmental Issues Becoming More Important For International Business? The relationship between international business and environmental issues has undoubtedly attracted a load of attention over the past few years which has only served to strengthen the reality of this interesting association. It is a fact that environmental issues have managed to strike “increased discussion on the international business horizon” (Cherunilam 2010: 670). It is generally suggested that environmental trends and standards play a significantly valuable role in determining relative success of different products in the international market so the importance of efforts directed at protecting the global environment should not be undermined on the basis of a few negative effects. This belief has resulted in fueling the development and implementation of many environmental management systems around the globe. Different ways by which environment influences business are heavily acknowledged now (Lozada & Polonsky 1993: 20). Recently, the popularity regarding the existence of the link between business and environment has exploded. A wide variety of reasons could be found explaining why businesses now lay a greater emphasis on their environmental policies and services instead of solely focusing on profit maximization which would be contemplated in this essay with the help of research literature. Research evidence identifies that modern environmental concerns challenging the business world “have their roots in the 1960s” (Johnson & Turner 2010: 382), but it has only been some years that these issues have really exploded onto the surface. General consensus today is that with growing awareness the business world has undergone gigantic transformation for the better and as a result of which international business has remarkably affected the environment as well. It is proposed that environmental issues are becoming increasingly important for businesses because low environmental protection standards lead to depressing losses every year. Even those countries which have embraced high environmental standards and where business organizations take great pains to establish strictest policies have to suffer from significant losses which are estimated to be 1-2% of GNP. The condition is even worse in the developing world where businesses have not yet adopted high standards due to gross economical contractions and where losses resulting from poor environmental protection have been reported to reach 3-5% of GNP (Wysokinska & Witkowska 2005: 270). This is why more stress is laid on environmental protection in the modern business world now because flawed policies and insufficient investments made in this field adversely affect business organizations. Also there are more governmental environmental regulations and requirements set by the government, customers, and suppliers now due to which business organizations come under pressure to address these issues (Lozada & Polonsky 1993: 20). Research literature makes it obvious that this obsession of international business with different environmental issues encompass a wide variety of subjects from promoting protection of natural resources and discouraging the imports of products deemed destructive to the environment to banning any products which may pollute the atmosphere or contain toxic metal compounds. For example, the Environmental Protection Agency in the US establishes certain restrictions on “the importation of lead and lead articles that constitute toxic substances” (Hinkelman et al. 2005: 829). As a consequence of banning the import of all goods which hold the potential to negatively interfere with natural environment, both positive and negative effects influence the economy of a country. Research indicates that while limiting the import helps in raising the environmental standards by reducing the rate of goods which could destroy or pollute the environment like noisy vehicles, this practice also exerts a bad influence on the regular “flow of imports and exports taking place between a country and its foreign trade partners” (Wysokinska & Witkowska 2005: 270) which also disturbs the probability of a healthy relationship between importers and exporters. It is also argued by critics that some firms suffering from losses due to cheap imports unnecessarily blow up the environmental issues “to serve their vested interests” (Cherunilam 2010: 670). However, in an order to keep up with the need to promote healthier production by strategic allocation of production resources, employment of healthy technologies which do not threat natural resources, and engineering smart policies which ensure prevention of problematic environmental issues, business organizations now attach a great deal of importance to the subject of raising their environmental standards. So many informative programs and efforts have made news in the recent years to encourage the business companies to invest a great deal in restructuring their environmental standards and raise them to gain a competitive edge over rival companies. If a business fails or refuses to acknowledge changes in environment and its duty to control the environmental pollution, not only its brand name will be adversely affected but the shareholders’ and customers’ interests will also be shaken (Cherunilam 2010: 661). Though debates on how business connects with the natural environment have been creating waves for past some years, it is claimed that only recently business organizations have started to address environmental issues in a really logical and meaningful manner (Lozada & Polonsky 1993: 20). However, some European countries like Germany and Netherlands where business organizations displayed a strong commitment with environmental protection were able to execute a strong influence on environmental policies during the 1980s (Johnson & Turner 2010: 382). Such attitudes later led many international business names to reconsider their attitudes towards environmental issues. Much time is now invested by the leaders of great companies in laying down immaculate plans about reducing the energy consumption and operating in a more energy-efficient manner. But this trend is more commonly seen in the developed world than in the developing world. It is claimed that “developed countries are more likely than developing countries to champion environment-friendly rule development” (Steinberg 2002: 289). Presently many organizations with huge profiles like Apple Inc. and Starbucks can be seen at the heights of success because of not only their exceptional commitment to work and satisfying customers but also because they have exhibited phenomenal interest in the environment issues. But as mentioned earlier, it is argued that it is only the organizations from the rich countries which enthusiastically talk about environmental issues as “poor countries are more concerned about growth than about environmental protection” (Aswathappa 2006: 102). Likewise, Apple is a big name from the US but stands distinguished because of its commitment to cleaner technological production so as to protect the natural environment. Founded in 1976 by Steve Jobs and Steve Wozniak, this company originally only specialized in personal computers (Harrigan 2003: 258) but the leaders never hesitated to fully address a broad range of social, ethical, and global responsibilities. As the issue of environmental protection gathered momentum and became a fixture in the business world, Apple hastened to engineer smart environmental policies and soon became a symbol of sophistication and one of the most influential names on the face of Earth. By making huge investments in resolving and controlling the issues of waste disposal and atmospheric pollution, this international business organization proves itself to be ethically and globally responsible and receptive to ever increasing demands of protecting the natural environment. Increased interest of international business towards producing ecofriendly products and protecting natural environment is mirrored in Apple’s Green Corporate Strategy. In 2007, Steve Jobs told the public how Apple is committed to sound environmental policies and is trying to eliminate all toxic materials and chemicals from its products (Ottman 2011: 136). In the past when the Green strategy was not so prevalent, many manufacturers used to externalize production costs to the society by polluting the environment (Werther & Chandler 2010: 94). This is absolutely thoughtless and explicitly a violation of social responsibility and international code of ethics. However, high-profile firms like Apple and IBM have shown an enhanced understanding and interest in the environmental issues like air and water pollution by lowering the level of externalities. It is claimed that “Apple Inc. has taken radical measures to assure consumers and other stakeholders of the success of its Green Strategy” (Respicio et al. 2010: 53). This suggests that reputable international business organizations like Apple Inc. leaders have quite a strategic, thoughtful, and practical vision of environmental issues which can be witnessed in their ecofriendly business activities like the decision to plummet down the amount of toxic materials used in factories during the manufacturing process which could prove to be dangerous for natural environment and raising awareness about recycling programs. Apple Inc. leaders believe in achieving sustained development by striving to maintain reputation of being one of the most celebrated and eco-friendly technology companies of all times (Mitchell 2006). Research suggests that such interest of international business organizations in protecting the human environment has made consumers “more likely to choose eco-electronics over traditional ones” (Mulvaney 2011: 145). Both Apple and IBM have amassed global trust by engineering products using such standards in their factories that consumers would not feel the need to dispose of the product for a long time. By incorporating such social and environmental concerns in their agendas, many international business organizations have proven themselves to be environmentally responsible and to achieve this target, they strive to operate in energy-efficient way. As mentioned earlier, increased interest of international business in the environmental issues can be witnessed in planning more energy-efficient operations which include excluding the use of materials in the products which are not ecofriendly. It is interesting to mention Apple here again because this organization is now recognized as the frontrunner of the green strategy. It stands superior to many other organizations due to achieving the milestone of becoming the first ever major computer manufacturer to offer its customers PVC-free and ecofriendly PC power cords in October 2009 (Coombs & Holladay 2011: 114). After already proofing all of the computer components of PVC, the power cords formed the last component to still contain PVC. PVC or Polyvinyl Chloride is a plastic considered toxic by Greenpeace which risked the natural environment. Research has it that plastics made from chemicals like PVC are an eco-hazard manmade material which continuously gives off carcinogenic gases. PVC is the most abundantly consumed plastic around the globe but research claims that this toxic plastic hold the potential to pollute natural environment throughout its lifecycle at every level during production, customer use, and disposal (Daven 2008: 101). It is this continuing and ceaseless commitment to human environment which encourages Apple to take eco-friendly steps by manufacturing computers free of PVC which not only boosts the company’s financial performance but also advances social progress of the communities. After the introduction of PVC-free computers in order to restrict the rate of environmental pollution, Greenpeace issued a praising statement in which was said that other popular PC manufacturers like Dell, HP, and Acer should take the lead of Apple by rigorously engaging in such ecofriendly activities (Greenpeace cited in Coombs & Holladay 2011: 114). This statement suggests support for increased interest shown by international business in preserving natural environment and also works to stimulate other corporations in the technology market to reduce PVC usage when manufacturing PCs. On one hand such actions work to control environmental pollution and on the other hand, they also boost comapnies' sales. It is a fact that this step also boosted Apple PC sales because consumers concerned about PVC and its negative relation with environment felt safe to go for Apple only when purchasing computers. This proves that environmental issues are becoming more important for international business because green policies and practices turn out to be beneficial for a company’s profit margins also. So, companies must be intent on making their products comply with strict environmental policies (Spedding 2009: 95). Businesses strive to incorporate green policies in their agendas now because not only they help in controlling energy consumption and eliminating the use of harmful materials but also drive profit margins. Research report based on IBM reveals that “$1 in energy savings can often drive an additional $6 to $8 in operational savings” (Lechner 2009). It is important to discuss how on different levels international business has exhibited keen interest in the environmental issues. Business leaders are seen now more concerned regarding if different decision-making processes and operations including product development and recycling etc. are energy-efficient and ecofriendly or not (Petty, Palich, & Hoy 2011: 59). If any decision is being made or any material is being used during the manufacturing process which is not in the best interest of the environment and is potential of putting the natural resources at risk, it is brought to a stop and investigations are made into the issue to make every step go in harmony with the ecosystem. Energy consumption and environmental protection which were in the past not heard of as often as they are now in the business world form regular features of organizational framework and efforts are made by conscientious leaders towards taking benefit from both these features to boost organizational efficiency and surpass rival companies in the international market (Madu 2001: 23). It is the result of the increased interest in the environmental issues that business leaders now seem more keen to invest a great deal of time and energy in engineering smart energy and environmental strategies as a way of attracting more customers to the brand name (Jackson, Ones, & Dilchert 2012). Each of these issues is not as simple as it seems because it could get quite complicated and especially intimidating as they are all somehow interrelated, but the way interest of the international business in managing these issues and finding answers to them is strengthening signifies only this that the payoffs resulting from this practice consequently are too attractive to let go of. Research also claims that when companies thoroughly address green issues, there is significant improvement both financially and environmentally (Lechner 2009). It is important however to deftly incorporate the environmental strategy into overall business strategy and evaluate how the products manufactured impact the natural environment. It is stressed that efforts should be targeted at manufacturing goods which have a really low impact on environment. Research exploring the relation between modern business and environmental issues also identifies that all corporations keen on maintaining their reputation as ecofriendly “need to transform business processes to reduce environmental impact for operations end-to-end” (Lechner 2009). It is also stressed by the green corporate strategy that environmental impact should be reduced by reducing the operations cost and greenhouse gas emissions through improved management and maintenance. Actually this implies that environmental issues are becoming more important for international business because by way of smart reductions in environmental impact, remarkable success in terms of efficiency and financial gains can be achieved. Concluding, this much becomes clear from the above discussion that a growing body of literature review on why environmental issues are gaining importance in international business indicates that the way international business engages in a multitude of efforts to preserve the sanctity of the natural environment has a wide range of positive ramifications. This has served to promote the idea of employing eco-friendly technologies in the business world which have the least probability of negatively interfering with the natural environment. Advocates of this engagement between business activities and natural environment are frantically busy in providing evidence for different merits ensured by this link. Business leaders across the world are now more conscious about handling the environmental pressures and try to properly address the issue of how they are consuming energy and what impact that consumption produces on the environment. Bibliography Aswathappa, A 2006, International Business, 2nd ed, Tata McGraw-Hill Education, New Delhi. Cherunilam, F 2010, International Business: Text and Cases, 5th ed, PHI Learning Pvt. Ltd., New Delhi. Coombs, WT & Holladay, SJ 2011, Managing Corporate Social Responsibility: A Communication Approach, John Wiley & Sons, UK. Daven, JI 2008, Progress in Waste Management Research, Nova Publishers, New York. Harrigan, KR 2003, Vertical Integration, Outsourcing, and Corporate Strategy, Beard Books, USA. Hinkelman, EG et al. 2005, Importers Manual USA: The Single Source Reference Encyclopedia for Importing to the United States, World Trade Press, USA. 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