Strategy to Use Land Assets in Syngenta - Case Study Example

Contents Title Page Introduction 2 Real Estate and Strategy 3 Sustainability in Real Estate Strategy 5 Risk Management 5 Towards Transparent and Staged Sustainability 7 Conclusion 9 References 11 Introduction This is a proposal for Syngenta, a firm engaged in diverse agri-business operations, and with substantial land assets, to become a specialized owner of industrial estates for production of toxic materials, with common effluent treatment, waste reduction, recycling and renewable energy facilities and resources. ISO 14000 registration and certification systems can help the firm meet social concerns and statutory requirements that will arise as risks and sustainability issues of the recommended strategy to use land assets for toxic and hazardous production processes. Real Estate and Strategy Property management is an integral part of corporate strategy for any line of business (Edwards & Ellison, 2003, pp 82-87). Some companies can use land for cost leadership. Manufacturing from sites in the third world, relocating operations to lower-cost zones of a country, outsourcing non-core operations and diverting space for high-value activities are examples of strategies for land that some firms are known to employ for competitive advantage. Differentiation is a second approach towards competitive strategy, and it has special relevance for a company such as Syngenta. Public concerns about pollution, industrial hazards, consumption of non renewable resources and waste disposal have affected a number of sectors of the economy. The technique of life cycle analysis includes many apparently innocuous production processes and harmless brands in its wake. The cancer-causing potential of ingredients used in cosmetics, and the persistent nature of heavy metals that all electronic goods contain, are striking examples of the potential spread of sustainability threats to types of business that are not hazardous in the public mind (Cosmetics and Personal Care Products Can be Cancer Risks, 2003). The plastic, metal and paper products used in packaging that have to be used again to reduce costs and to lessen consumption, affect all products from various sections of the economy. Contemporary society is not geared to live without many goods which involve polluting and dangerous manufacturing. There is therefore an enormous and growing wave of demand for places where manufacturers can process waste, recover components of discarded products and meet environmental and safety implications of their enterprises. Environmental management is largely civil engineering in ground reality, and there are substantial economies of scale in developing shared facilities. This concept lies at the core of this document’s proposal for sustainable deployment of our properties. There are special considerations related to value development of property assets. These arise from specific dimensions of industrial units, location-specific issues and their relatively lack of liquidity (Scarrett, 1995, p 51). While some entities may use land resources and tenancy rights for cost advantage, Syngenta’s assets in this case should be used for differentiation and focus. There is significant demand for industrial realty where hazardous processes can be managed (Robinson, 2002, p 158). Recycling has relevance for most sectors of the economy, but firms lack space and other resources to disassemble obsolete products, recover reusable materials and dispose off the rest in sustainable fashion. Pressures for manufacturing units to conform to environmental concerns and norms can only increase over time. There are some enterprises, such as the ones which produce toxic chemicals, the very survival of which is now under threat. Any facility where recycling and waste management processes can take place is likely to be in top demand during the foreseeable future. The electronics industry is a clear example, in which plasma screen and integrated circuit manufacturers lack space and methods where returned and unwanted products can be disposed off safely, after extracting reusable metals and plastics. Apple Computers has achieved this status by exception, and it can serve as a model for others to follow (Case Studies, 2002). Most recycling and waste management operations need land assets and civil engineering technology, both of which a firm such as Syngenta has and can sustain for profitable competitive advantage. The company’s strategy can be to serve as an environmental management resource for industries in general. Syngenta’s services should include holding areas for waste, common air and water effluent treatment facilities for tenant units, and facilities to disassemble finished products, extract usable items from them and then incinerate the rest using filters to control air pollution. Sustainability in Real Estate Strategy The increasing need to find substitutes for uncontrolled consumption of non-renewable resources is a major concern of modern development today (Sustainable Development, 2006). This movement has direct implications for real estate because there are serious environmental implications for changes in land use patterns. Industrial estates are especially vulnerable from the sustainability point of view. Pollution, waste management and emergency management issues so dominate manufacturing issues that companies such as Syngenta need to redeploy some of their property assets which are now in the midst of urban environments. The concerns are not limited to the present generation alone, but extend to the distant future as well. Risk Management Contaminated land is such a major contemporary concern, that Syngenta is very likely to face a host of public concerns as we transit to an enterprise which offers environmental management support for third part manufacturers and for units that rent its industrial plots (Keeping, 2002, p 52). The high profit potential of using land for toxic and hazardous industrial processes carries commensurate risk. Hazard and Operability studies (HAZOP), Critical Control Point management (HACCP), Business Continuity planning and an emergency preparedness culture, are key techniques and corporate competencies that we should develop organically and acquire externally as well, so that the company can manage the risks adequately. Syngenta will have to establish that its new activities do not constitute any threat to the surrounding community, and that it has adequate systems to deal with the pollution and hazard aspects of the enterprises which it will serve. The company will need a strong environmental audit safeguard to prepare for such risks (Langston, 2001, p 261). The audit will need an accompanying system of information reform so that external stakeholders stay in the picture with respect to its control systems and safeguards (Paten, and Birkeland, with Pears, 2005, p 356). Syngenta must internally prepare for the scrutiny and outsider interference in our affairs which such changes imply. It will be an opportunity to benchmark the business against the best international standards, apart from realizing superior profits from a highly differentiated service that meets an acute public need. Towards Transparent and Staged Sustainability The Environmental Management System (EMS) of the International Standards Organization (ISO) offers a universal system for organizations of all types and sizes, at any locations, to progressively reduce consumption of non-renewable resources, recycle waste and to reduce pollution in all forms (Fredericks, & McCallum, 1995). The system follows documentation of voluntary standards which are set by the organization in a manner suited to its particular needs. These standards keep improving to keep pace with technology and the capabilities of the organization. The standards are known as the ISO 14000 series, and follow the pattern of the better known ISO 9000 quality standards. ISO 14000 will enable the company to set and EMS which can be a source of competitive advantage. It can offer common treatment and recycling facilities to customers for real estate assets, as well as for helping them attain certified status. ISO 14000 will protect Syngenta from attacks and pressures on its business operations, enhance its image and status as a corporate entity, and provide a uniform basis to control EMS aspects of land assets at diverse locations. ISO 14000 has been used successfully by eminent companies such as Apple Computers and Baxter Healthcare (Case Studies, 2002). Syngenta should aim to be pioneers in using ISO 14000 for property management. Some phases of EMS have become mandatory in EU countries, and other countries are likely to follow this lead. The ISO is currently engaged in developing a new series on human wellness, labeled as the 26000 series, which will increase the scope of system certification. The ISO system takes registrants along a learning curve, so there is a competitive advantage in joining the sustainability aspect of realty before other corporate property owners think of this idea. A likely threat in this respect comes from the green building codes in the United States (Green Building Links, 2006). All companies which build new projects of any kind on real estates in that country have to follow sustainability conditions. It would be logical for them to apply the acquired knowledge in other countries where they may own or acquire property. ISO certification is a strategic commitment which will change Syngenta’s approach to real estate management in a relatively irreversible manner. It will involve top management time, and can cause more harm than good if attempted casually or with inadequate resources. A first step towards achieving ISO 14000 certifications would be to appoint a firm of Consultants who can help with the documentation process and initiate systems audits later. The ISO 14000 series have a number of sub-systems, not all of which are relevant for real estate. Syngenta will need a specialist with broad exposure of applying the system to diverse industries to help it choose the most relevant system components for the stated purpose. The company would also need to appoint an internal coordinator to liaise between the Consultants and various arms and people in the organization. No function or branch of the organization will be untouched by ISO, though it has the option of starting with just one site. Many of its staff members may be uncomfortable with an exhaustive documentation system, for it can appear as threats to personal discretion, judgment and decision-making authority. An individual with broad experience of the company and with wide acceptance across all levels and branches of the hierarchy will be able to deal with anxieties that employees may experience and can help the outside consultant find his or her feet inside company premises at the same time. ISO 14000 will require a dedicated budget, which can be prepared on approval in principle. Time is the most expensive albeit covert spending involved in ISO certification. Budgets apart, the ISO system will need unequivocal, demonstrable and consistent top management support. It must be kept in mind that ISO needs recorded management review at regular intervals, so it will increase accountability as a consequence. The profit potential of the recommended property strategy should weigh in favor of the efforts and resources required for proper implementation. Conclusion Communicating effectively with human resources holds the key to leadership in Facilities Management (Cotts, 1997, pp 45-54). Company staff must understand the new strategy and why it has been chosen to let the firm’s land assets be used for waste produced by others. Technical skills of civil engineering will not be adequate without effective intra-company communication. The present staff complement is unlikely to have the skills required for effective corporate relations; there is the choice of substantial re-training and of new recruitments for key positions. Experts believe that leadership concepts play a crucial role in Facilities Management, and it has been described as a function that requires abundant personal interaction (Cotts, 1997, p 46). Sustainability is a relatively new concept and it is one that has a relatively high profile in public media. Many members of company staff will have established notions about terms such as pollution, hazards, waste and the environment. They may hesitate to accept the thought of Syngenta entering such an apparently distasteful type of activity for making profits. They could face family and social pressures for this as well. The company will therefore have a major leadership and communication task of convincing everyone including perhaps itself, that the task is socially relevant and that it can be conducted to top professional and ethical standards. Core competence in Facilities Management will require that Syngenta is able to respond effectively to emergent situations, while also being sensitive to long term community concerns. Accidents can never be ruled out even in the present scope of business, and contingency planning is a valid management prerogative. The ISO 14000 process will serve to establish business processes in a transparent way, and the documentation will be a great help both internally and for external stakeholders. References ‘Case Studies’, 2002, Transformation Strategies Website, retrieved April 2006 from http://www.trst.com/iso3.htm ‘Cosmetics and Personal Care Products Can be Cancer Risks’, 2003, Cancer Prevention Coalition’ website retrieved April 2006 from Cotts, DG, 1997, The Facility Management Handbook, AMACOM Division, American Management Association Edwards, V & Ellison, L, 2003, Corporate Property Management, Blackwell Publishing Fredericks, I & McCallum, D, 1995, ‘International Standards for Environmental Management Systems: ISO 14000’, MGMT Alliances Incorporated Website, retrieved March 2006 from http://www.mgmt14k.com/ems.htm ‘Green Building Links’, 2006, US Green Building Council website, retrieved April 2006 from Keeping, M, 2002, Sustainable Property Development, Blackwell Publishing Langston, CA, 2001, Sustainable Practices in the Built Environment, Elsevier Paten, C and Birkeland, J, with Pears, A, 2005, ‘Greening the Built Environment’, The Natural Advantage of Nations: Business Opportunities, Innovation and Governance, edited by Hargroves, K and Smith, MH, pp 346-70, James&James/Earthscan Robinson, J, 2002, ‘Environmental Management’, Best Value in Construction, edited by Kelly, J, Morledge, R and Wilkinson, S, pp 152-171, Blackwell Publishing Scarrett, D, 1995, Property Asset Management, Spon Press (UK) ‘Sustainable Development’, 2006, defra website, retrieved April 2006 from Read More