Finance - Essay Example

Question 9: As compared to companies that focus on short term profit making, there decisions are solely based on bottom line i.e. profit making. On the other hand those businesses who focus on long term sustainability focus on long term decision making, they forge long term relationship with their employees, suppliers, partners, and all direct and indirect stake holders, which is key to their long term sustainability.
However there are a number of pressure on companies that need to be responded for their long term sustainability, that include,
Regulatory compliance
Environmental risk management
Long term business strategies (Studies, 2015)
Regulatory compliance,
For example introduction of new environmental regulation both national and international, forces business to improve their environmental performance, which often threaten businesses profitability due to unexpected cost, and if some businesses fail to comply with these regulations they faces penalties, and other stick regulatory problems and in short there is threat to their long term sustainability, so organization need to be serious while dealing with such regulatory issues, which are not often taken serious by most companies and at last faces huge financial liabilities
Environmental Risk management,
Companies operating in Europe has entered into a new era of environmental risk management with regard to prevention and remedy of environmental damage as per a recent survey by Harvard Business Review Analytic services 60% of the companies are now concerned about the environmental risk and are serious about it, therefor lglo Group should conduct a complete study that this new investment should not bring such threats for which company may bear regulatory obligations that effect its profitability and bring long term sustainability of company into question, (sustainable, 2015)
Long Term Business Strategies,
As for as long term business strategies are concerned lglo group need to be proactive regarding its strategic plans of either new installation or introduction of new ways power resources, that either all these activities have any environmental effect and if they have then are there any breach of regulation with regard to environmental regulation, because if such new changes affect these environmental regulations then it may harm companies long term sustainability.
As for as this new investment is considered for alternate energy source the projected cash inflows are quite good that show a steady growth from scratch to million
Years
Y.0
Y.1
Y.2
Y.3
Y.4
Y.5
Net returns
-10
2.9
2.5
2.7
3
3.20
The above projected returns show the economic viability of this project, but stakeholders attached to this project need to evaluate, as with this development they would be affected.
First of all in future it will reduce cost of production of lglo and other products also due low cost of power resource, hence it will affect production department costing, marginal cost of production reduces due to this low cost of production, so selling price would also be affected means marketing department would be affected, further external stake holders would also be affected like environmental agencies etc.
References
studies, B. c., 2015. social and industrail development. [Online]
Available at: http://businesscasestudies.co.uk/anglo-american/social-and-environmental-responsibility/anglo-american-and-sustainable-development.html#axzz3W2C03tg
[Accessed 01 April 2015].
sustainable, I. B. d. a., 2015. BSD Globle. [Online]
Available at: https://www.iisd.org/business/sd_journey.aspx
[Accessed 01 April 2015]. Read More