Paraways Sustainable Strategic Balanced Score Card - Case Study Example

Running Header: Assignment 3 Assignment 3 Course Name Professor’s Name Institutional Affiliation City and State Where Institution is Located Date Executive summary With the increasing advocacy for sustainability, many companies are increasingly incorporating sustainability into the traditional business strategies. This is because companies have noted that by being sustainable, it is becoming easier to attain their strategies than ever before. One way of incorporating sustainability into the company’s overall strategy is through the strategic map as well as through the sustainable balanced score card. As such, this report presents Paraway Pastoral Company’s strategic map as well as the sustainable balanced scorecard. The report starts with a brief explanation of what a strategic map is as well as its use to the company before presenting the company’s strategic map that has six perspectives including financial, customers, internal processes, learning and growth, non-market as well as environmental perspectives. The strategy map has 21 objectives that cover the perspectives and these have been explained in the report. The report then presents the company’s sustainable balanced scorecard that has five pillars including the financial, customers, internal processes, and the sustainability perspective that incorporates environmental and social sustainability strategy for the company. The report also explains the indicators that will measure the achievement of the company’s sustainability objectives as well as the justification for the choice of the indicators. Finally, the report analyses the impact that the chosen indicators are expected to have on the company’s overall strategy. It is hoped that by putting into action the strategy map and the sustainable balanced scorecard, the company stands to achieve its overall objectives and hence become a more profitable company’ Table of Contents Running Header: Assignment 3 1 Executive summary 1 Introduction 4 Strategic map 4 Paraway’s Sustainable Strategic Balanced Score Card 6 Classification of the strategic objectives into the perspectives of the suggested SBSC 7 The environmental sustainability objectives 7 The social sustainability objectives 8 Customer perspective 8 Financial perspective 9 Internal process perspective 9 Learning and development perspective 9 The balanced score card 9 Indicators through which the objectives would be measured 9 Environmental sustainability objectives and the respective indicators 9 Social sustainability perspective objectives and respective indicators 11 Eventual impacts of the indicators chosen 12 Conclusion 13 Appendices: 17 Appendix 1: Strategic Map 17 Appendix 2: Sustainable Balanced Score Card 18 Paraway Pastoral Company Limited Introduction In the previous report, the essence for sustainability reporting for the company was laid down. Although companies have traditionally failed to give enough wait to sustainability, companies that act responsibly stand to achieve their traditional objectives more easily than those who do not consider sustainability to be an integral part of their operations. This is why sustainability should be part and parcel of any company’s strategy. In this regard, companies ought to spell out their sustainability agenda clearly in the various tools that are used in laying down organizational strategies including the strategy map and the balanced score card (Rae and Sands, 2013). This report looks at how Paraway ought to incorporate sustainability objectives in its strategic map as well as come up with a sustainable balanced score card. In this regard, the report first looks at the essence of a strategic map before laying down the company’s projected strategy map that includes sustainability as one of its core objectives. The report then lays down the company’s sustainable balanced score card that incorporates environmental and social sustainability as part of the company’s strategies. It is hoped that by incorporating sustainability in its strategies, the company will find the achievement of its traditional strategies easier than ever before. Strategic map A strategic map is a diagram that organizations use in documenting the primary strategic goals that are being pursued by the organization’s management team in a single page (Truant, 2017). The strategic map aids in quickly communicating the big-picture objectives to everyone in the organization. It helps everyone concerned to know the organization’s overall strategy and where they fit in and thus keeps everyone on the same page and helps everyone understand how their jobs affect the company’s strategic objectives. The strategic map helps in ensuring that the organization’s strategy is more successful as they help in capturing, communicating and managing the organization’s strategy better by capturing the management team’s thinking in a rich manner and also help in better performance management (Bocken et al, 2013). In addition, a strategic map captures the important elements of strategy while helping in the formulation of the balanced score card for the organization. Paraway’s strategic contains 21 objectives or strategies that the board aims at achieving in a bid to achieve success (Appendix 1). The strategies incorporate sustainability as part of the company’s strategy and incorporates six perspectives. The perspectives include the financial perspective where the company’s objective is that of increasing profitability while ensuring that it pays the right share of tax on time as part of its sustainability strategy (Bonn and Fisher, 2011). Regarding customers, the company’s strategy is that of sustainable production while ensuring that its practices do not harm people or the environment. In addition, customers are treated ethically by ensuring that their concerns are sought and sorted in the right manner. The company’s internal process perspective also incorporates its environmental sustainability perspective. In this regard, the company’s strategy includes sourcing its energy from renewable resources such as biogas and solar energy. Recycling the waste in the company through such initiatives as biogas production is aimed at ensuring that the greenhouse gas emissions from the company’s pastoral practices and hence carbon footprint is minimized. The learning and growth perspective on the other hand involves ensuring that employees at Paraway are treated in a sustainable manner by ensuring fair treatment, employee health and safety while availing training and development opportunities for them in a bid to ensure their satisfaction (Galpin, 2012). The non-market perspective on the other hand involves social sustainability in which Paraway aims at ensuring that its business is conducted in an ethical manner while ensuring that community concerns are ethically addressed in all its 21 operations. In addition, the company has a no child labor policy. Finally, the company’s environmental sustainability perspective involves the company’s efforts to ensure that its practices promote rather than harm the environment by ensuring that they do not harm people, animals or ecosystems. By applying all the 21 strategies laid down in the below strategic map, the company will be successfully running a sustainable business. Paraway’s Sustainable Strategic Balanced Score Card There are three approaches to the development of a Sustainable balanced score card (SBSC). The SBSC can build sustainability measures into existing perspectives which means that a range of environmental and social targets and indicators are incorporated in one or four of the BSC four perspectives (Perez et al 2017). Another approach would be adding an additional perspective that includes sustainability performance measures. The third approach would be developing a separate BSC build around the sustainability performance measures as part of the core strategy. Of the three approaches, the second approach is chosen for Paraway whereby additional perspective that includes sustainability performance measures will be added into the BSC. The reason for this is that Paraway being a pastoral company, environmental as well as social sustainability would be of great importance to the company and hence the need to look at the perspectives separately. The organization would thus succeed in giving a strong internal and external message around sustainability issues that would involve allocation of sustainable resources and hence be able to use the sustainability perspectives as a competitive advantage tool while enhancing the company’s reputation given that these are externalities that are not yet fully integrated in the market exchange process (Excitant.co.uk, 2017). Classification of the strategic objectives into the perspectives of the suggested SBSC The objectives of the company’s balanced score card are have been classified into six perspectives as shown in the balanced scorecard below. These perspectives include financial perspective, customer perspectives, the internal process perspectives, the learning and growth perspective, the environmental perspective and the non-market perspective (Bloomberg.com, 2017). The emphasis of this report is however on sustainability objectives which include environmental and social sustainability objectives. These are explained below; The environmental sustainability objectives The company’s environmental sustainability objectives are should be aimed at ensuring the sustainable use of the company’s soil, grasslands, water, air and land while ensuring sustainable management of waste while making efforts to continually reduce the direct and indirect greenhouse emissions with an aim of guarding against climate change (Zingales and Hockerts, 2003). Paraway company’s environmental sustainability objectives include; i) Ensuring that the natural resources including soil, water and air are managed responsibly ii) Ensuring reduction in greenhouse gas emissions with appropriate actions being taken iii) Ensuring efficient management of farm waste iv) Enhancement of biodiversity in the company’s 21 locations (Ted, 2015) v) Ensuring that its lands are protected in a bid to protect ecosystems The social sustainability objectives The company’s social sustainability objectives are aimed at safeguarding human health and welfare, animal health, welfare and genetics, human rights, workplace environment, business integrity, workers and the community by ensuring that the company conducts its business in a socially sustainable manner. The following are the proposed social sustainability objectives for the company; i) Protecting the health of both the consumer and the general public ii) Safeguarding the health and welfare of the livestock iii) Ensuring that the livestock breeds and choice of production system are suited to the local climate, soil, pest and diseases (Condon, 2016) iv) Ensuring the health and safety of employees are safeguarded v) Ensuring workers are competent and are adequately compensated vi) Ensuring the business is conducted ethically and with integrity vii) Ensuring that the company positively contributes to the local community and the firm is a responsible steward of the rural environment. The sustainable balanced score card also contains the traditional perspectives which are also affected by business sustainability. The objectives are explained below; Customer perspective In this regard, the company aims at ensuring customer satisfaction by delivering products that are sustainably produced and which do not harm their health. Thus, the perspective is also affected by the sustainability perspectives. The objectives related to customers include; i) Sustainable production to ensure customer satisfaction (Figgie et al, 2017) ii) Customer concerns actively solicited, actively judged and transparently addressed Financial perspective This is the ultimate goal of the firm and is achieved on meeting all the other objectives in other perspectives (Cokins, 2013). Thus, the objective includes raising profitability and hence all the metrics related to profitability. Internal process perspective The objectives in this perspective are part and parcel of environmental sustainability and include Energy sourced from renewable sources, recycling of pastoral activities by-products and limiting greenhouse gas emissions. Learning and development perspective This is also part of the company’s social sustainability perspective as it is mainly concerned with safeguarding employee welfare while ensuring they have development opportunities. The balanced score card The company’s projected sustainable balanced scorecard can be found in appendix 2 Indicators through which the objectives would be measured The following are the indicators through which I would advise that sustainability objectives at Paraway be measured with in a bid to ascertain their achievement; Environmental sustainability objectives and the respective indicators Proper management of soil air and water- The indicators in this case would include maintenance of good soil structure, biodiversity and structure. This would be achieved through soil testing on an annual basis. The essence of using soil testing is because it would give an indication of whether the soil is in good biological and physical health (Andreas and Stefan, 2005). Another indicator would be the percentage of the company’s grazing lands that are covered by vegetation. If 100 percent of the grazing lands are covered by vegetation, then it will indicate good physical health of the soil free of soil erosion. This will also give an indication that we are not overgrazing which would lead to soil damage. The indicators for water will include the availability of clean water in our firms where tests are conducted regularly to determine the degree of contamination, the litters of water that are recycled annually and absence of destroyed water sources from our livestock activities. The justification of these indicators is because it ensures that we recycle as much water as possible in a bid to minimize water extraction hence ensuring its availability, testing water to establish its cleanliness will ensure we are not polluting it through chemicals and pesticides as well as animal waste while absence of destroyed water sources will ensure that all water sources within all our locations are well protected from destruction either by animals or through human activities. Clean air indicators would include minimal levels of odors and ammonia and other gases produced by the livestock (Kalender and Vayvay, 2016). This would ensure that our activities are not polluting the air as to negatively impact on the health of ecosystems, human and animal health. Climate change- Indicators include reduction in greenhouse gases emissions and carbon concentration per unit of output. The indicators are chosen as they would ensure our damage to the environment is continually minimized and we contribute to climate change prevention. Waste- Indicators would include liters of water recycled every year, kilograms of biogas produced and tons of waste whose disposal can be accounted for. The indicators are chosen as they will ensure that we continually manage our waste sustainably while reducing damage to the environment. Land use- None of our sites should be in a high conservation value land and no ecosystem ought to be destroyed within our sites (Ax and Bjornenak, 2005). The indicators are important in ensuring that our choice of locations as well as their management does not interfere with the environment. Social sustainability perspective objectives and respective indicators The indicators of social sustainability will include; Human health and welfare - Indicators include the number of humans injured in our sites and the number of humans who get sick from our activities. The indicators are important since we do not want our livestock practices to harm any person’s health or welfare. Animal health, welfare and genetics- Indicators include the number of sick animals, the number of animals suffering from prolonged hunger and thirst, the number of animals who are not properly housed, number of injured animals and number of animals behaving abnormally (Reefke and Trocchi, 2013). The essence of these indicators is because our practices ought to ensure sustainable production ensuring that our animal health, welfare and genetics are well protected and hence we ought to have no sick animal, they ought to be well fed and housed and any abnormal behaviour in our animals should be our concern and appropriately addressed. Human rights and workers welfare- Indicators include lack of industrial disputes, provision of training and development opportunities, fair remuneration, lack of communal disputes, and number of corporate social responsibility activities and lack of any child laborer (Crawford, 2005). The essence of the above indicators is because it they ensure that we coexist well in the communities we operate in while our employee welfare is well catered for thus ensuring that we have motivated employees and a community that is friendly to us since they have given us a chance to exist. Eventual impacts of the indicators chosen The sustainability indicators chosen above will eventually have a positive impact on the company’s ability to achieve its overall objectives. The environmental sustainability indicators will for instance ensure a continuous supply of clean grazing lands to our animals, no climate change and the overall health of our environment (Vienda, 2014). This will eventually lead to healthy animals and hence high quality products to our customers. This will have the effect of increasing our market share and hence our profitability. On the other hand, proper management of waste will lead to some cost savings owing to elimination of health hazards as well as waste reduction. This would eventually lead to increased profitability for the company. The achievement of social sustainability indicators would similarly lead to the achievement of our overall objectives. Ensuring animal welfare is well taken care of will lead to healthy animals and hence quality final product for our customers thus increasing our market share while cutting on costs and hence increasing profitability. Enhanced human welfare will ensure that our employees are always available, satisfied and motivated meaning that they will give their best (Kaplan and Norton, 1996). This would result in high quality production which would lead to increased revenues and hence profitability. On the other hand, it is likely to lead to reduced employee costs which would eventually lead to improved profitability. Establishing a sustainable community is important for our company. Our sites are found in our communities and it is also where we source our employees and part of our market. In addition, good neighbors will also protect our welfare and this will eventually lead to improved profitability. Conclusion This report has looked at the essence of incorporating sustainability objectives into a company’s overall objectives. The report has also explained the essence of a strategic map and has also incorporated sustainability objectives in developing Paraway Pastoral Company Limited’s strategy map and sustainable balanced score card. The issue of sustainability has been found vital to the achievement of the company’s objectives and hence the company’s SBSC has been developed by incorporating additional perspectives of non-market or social sustainability perspective as well as environmental sustainability perspectives. The various indicators for the achievement of the various objectives related to the above perspectives have also been laid down with their justification explained. 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Appendices: Appendix 1: Strategic Map Paraway Pastoral Company Limited’s Strategic map Non Market Perspective Financial perspective Environmental Perspective Customer perspective Internal Process Perspective Learning and growth perspective Appendix 2: Sustainable Balanced Score Card SBSC perspectives Strategic Priorities Objectives Measures Targets/Indicators Initiatives Financial Financially strong ROCE Asset Turnover Profitability Reduced-environmental costs -Increased marketing efforts -Reduced costs of operation -Reduce environmental costs -ROCE up 10% -Asset Turnover up 8% -Reduce environmental costs -10% -Increase marketing efforts -Cut cost of production -Recycling, proper waste management Customer -Delight target customers -Create green customers -Sustainable production -Increase market share -Increased sales revenue -Increased sustainable production efforts -Increase marketing efforts -Gross profit increase -20% -10% 10% Reduce harmful waste and emissions -Increased marketing budget Internal Processes Enhance sustainability in internal processes -Reduce greenhouse emissions -Use renewable energy -Recycle waste -Reduced CO2 and harmful gas emissions -Use biogas energy -Recycle water and animal waste -Reduce harmful emissions by 20% -Increase biogas production by 20% Increased waste recycling by 50% -Initiate new grazing methods -Build biogas production systems -Sell manure and set up waste recycling system Learning and growth Motivated and prepared workforce -Employee satisfaction survey -individual employee productivity -Strategic competency -Fair and ethical treatment - competitive compensation -Training and development opportunities Satisfaction increase -10% Productivity increase- 20% Competency increase-50% -establish feedback mechanism -provide right production tools and environment -Introduce training and development opportunities -Pay competitively Non-Market -Ensure environmental sustainability -Ensure social sustainability -Manage resources responsibly -Reduce harmful emissions -Sustainable waste management -sustainable land management -Enhance animal health and welfare -Enhance human health and welfare -Enhance communal coexistence -Increase corporate social responsibility -Institute measures for sustainable use of resources - Reduced CO2 and harmful gas emissions -Recycling programs -reduce soil and ecosystems pollution -Measures to reduce sick or injured animals -Introduce work health and safety policy -Introduce CSR initiatives Reduce pollution by 50% Reduce harmful emissions by 20% -Increase biogas production by 20% Increased waste recycling by 50% -Reduce animal sickness and injuries by 50% -Reduce WHS issues by 80% Increase CSR budget by 50% -Initiate new grazing methods -Build biogas production systems -Sell manure and set up waste recycling system -Immunization and treatment programs -Put in place a WHS policy - Come up with new CSR inniatives Read More