Triple Bottom Line - Research Paper Example

Logistics, Operations and the Environment by Introduction Triple Bottom Line is a phrase that was coined in 1994 by John Elkington, who was the founder of a consultancy named SustainAbility. This was based on his argument that companies should prepare three separate bottom lines. He explained that the first should be the traditional measure of the revenues earned by the corporation, what is commonly referred to as the bottom line. This would be a measure of profit and loss in the company’s accounts. The second bottom line should be people. The people account is a measure of how socially responsible the corporation has been to its consumers and the market as a whole. The third bottom line is the planet account which is the measure of how responsible the company has been to the environment. Therefore, the triple bottom line consists of profit, planet and people. This is used to measure the financial, social and environmental accomplishments of the company over a specified period. A company that does this is taking into full account the total cost of the operations. These may also be referred to as the three pillars of business (Avella et al, 2010). The basis of this concept is the fact that what a company measures is what the company is likely to direct its attention towards. When the companies measure their social and environmental impacts, they will pay attention to these effects. This is arguably the only way the community will have socially and environmentally responsible organizations. The three pillars of business The three pillars of business include the customers, systems and teamwork. Customers are a core aspect considered in the prosperity of a business. They provide the cash flow that sustains businesses. The organization must aim to succeed with its customers so as to succeed as a whole. The motivation of the organisation is to provide the customer with what they want in order to fulfil their needs and perceptions. A good team is created through synergy that is created through trust and working closely together. The executive team in charge should be able to rely on each person in the team. The team members should know their job specifications and fulfil them as expected. The team members should also receive appropriate training following their employment in the organizations on what is expected of them so as to improve efficacy in their work performance. A business should also create specific set ways of doing things and carrying out certain activities which include computer technology, communication and networks. This reduces the time it takes for procedures to be executed. Set instructions streamline business (Avella et al, 2011). International Manufacturing Organizations International and domestic manufacturing organizations differ with reference to the target market. A domestic organization is concerned with selling products within the local economic market, whereas international manufacturing is done on larger scale involving different countries. Domestic manufacturing is considered a less risky venture in comparison to international manufacturing. It also requires lesser financial backing than international marketing. The process of international marketing is more complex, time consuming and demanding in that it targets very many different consumers, each with different tastes, physical environments and cultures. The international manufacturing organizations are in close contact with the global market and the policies and regulations involved with manufacturing on a large scale. Different governments have varied opinions concerning the rules and regulations set to govern the manufacturing process. These organizations need to take into account these differing policies and expectations and try to maintain good relations with all the subsidiary countries they work with (Bradley,1991). Logistics Logistics is the supervision of the flow of the goods, services and information during the production process all through to the consumer. Business logistics involve the following activities, transportation, warehousing, channel management, inventory control, customer satisfaction and order processing. There are two types, inbound and outbound logistics. Inbound logistics are primary logistics, concerned with purchasing and use of raw materials and machinery from suppliers to manufacture the desired products. Outbound logistics are the processes concentrated on the storage and distribution of the final product and flow of information to the marketing channels. An increasing number of manufacturing companies have realized the need for a business planning logistics strategy. Any manufacturing company should develop logistic strategies in relation to the number of customers, their host countries and the production burden. The logistics strategy is important for the manufacturer to respond to the dynamic nature of the supply chain. The main benefit is that the manufacturing company is able to anticipate market changes and adjust accordingly without an impact on the quality of the product. Several steps involved in the development of logistics strategy involve, strategic, structural, functional and the implementation (Kleindorfer et al, 2005). Business planning and strategy The strategic level involves the setting of goals the management should take into consideration the overall objectives if the manufacturing business then they will determine how the organizations logistics are affecting the attainment of these objectives. The structural level of logistics looks closely at the physical level of logistics. This includes, determining the number of distribution centers to commit to, deciding which factories should produce which product and developing shipping policies. The functional level involves assessment of each function outlined by the current logistics strategy to ensure they are functioning effectively. Changes are proposed, seconded and implemented with the aim of promoting the productivity. The implementation level of a logistics strategy is incorporated throughout the entire manufacturing organization. This includes the implementation of new policies, procedures, factory changes and management changes. Each of the above levels of any organization’s logistics strategy must be examined by the organization’s executive team to make sure productivity, profitability and cost saving are at their highest level. The main areas within an international organization are storage, transpiration and distribution (Rudberg & Olhager, 2003). International manufacturing organizations are concerned with the production of products and the distribution of these products across borders. The companies strategically manage the procurement, storage and movement of finished products. Information related to the productions process flows into and through the organization via the marketing channels with the aim of meeting customer needs and achieving cost effective customer satisfaction. Logistics managers are involved in the processing of orders, purchases, inbound transport, production schedules and plans, inventory management and distribution and delivery of the products to consumers (Fatseas & Williams, 2009). Environmental issues The environment encompasses all the external factors surrounding an individual or a business organization. Some of the key environmental issues affection businesses include industrial waste, air and water emissions, the sustainable development of raw materials and the consumer market. Organizations are affected by the above environmental issues due to the various laws and regulations imposed upon them by the governments in the subsidiary countries. Environmental issues have increasingly become part of day-to-day business operations. There is a pattern forming that demands people and businesses understand and respond to environmental issues. Organizations are now required to have background and a basic level of understanding on the following, ecology, environmental economics and decision-making (Greasely). There is an extensive number of species of plants, animals and microorganisms together with different co systems on the planet are all part of the biologically diverse environment. Appropriate measures should be taken to conserve this. Industrial pollution International manufacturing organizations produce waste products during the production process. Environmental laws prohibit dumping of manufacturing by products to regulate how these businesses dispense their waste. Most organizations develop and implement recycling programs others sell what they can of the waste to manufacturers who may use them as raw materials. The negative effect of this is the additional cost to the business in terms of equipment, labor and handling. Industrial pollution leads to environmental degradation that is considered one of the largest problems facing the industrial manufacturing process. The continued effects of pollution on the environment make these factories lees efficient because they poising the air, ground water and availability of natural resources. One of the most significant evidences of industrial pollution and environmental degradation is the ‘sea of trash’, seen in most oceans where industries dump their waste. This leads to negative effects on the aquatic system. The macro environmental factors The macro environmental factors to consider in international marketing include the demographic, economic, cultural, technological, natural and political aspects of the countries the company seeks to expand to. Studying these factors will influence the prosperity of the company and its products in these countries. With respect to the demographic factors, studying the population and age structures in a particular country could help determine whether the product of the company will receive a good response and amass a large clientele. The factors to consider before introducing a new product or company in a new country are the economic and financial state of the market to establish the purchasing power and patterns of spending. The natural factors involve the shortage of product raw materials, level of pollution and ongoing sustainable projects. The company should use these factors to determine a market gap to be filled and the needs of the target consumers in a foreign country. The technological environment encompasses studying the pace at which the technological market in the country changes. In addition, the response the market usually has to new technologies. Research on these past trends may help the company determine whether the business opportunities in that country will be beneficial (Heizer, 2001). A community’s culture will strongly influence its response to certain goods and services. The company will decide, using this information, which of its products will do well in which country. Another important aspect of the environment is the analysis of the entire business environment. This is an analysis of the strengths, weaknesses, opportunities and threats that may be faced by the business in the international target market. Strength and weaknesses can be detected early on. The strengths and weaknesses are related to the internal business environment, whereas the opportunities and threats are related to the external environment. The market analysis, marketing plan, financials and the management determine these. Conducting a thorough market analysis is crucial to the success of a business. The characteristics of the market should be outlined and suggestions of how to capture this market made. The provision and analysis of detailed background information on the managerial and executive team is very important. Expertise and experience in personnel will lead a business to success. Company financials are very important internal environment in an organization. The opportunities available to the company include new and emerging technologies, availability of new materials, market growth and presence of new and changing consumer categories, innovation of new uses for old products, presence of new locations and distribution opportunities and positive changes in the competitive environment. The threats faced by the company will include the shrinking of the existing market, changes in consumer trends and tastes, economic down growth and changes in consumer purchasing trends and power, development of new regulations and policies, new competitive companies, competitive mergers, labor issues, the product may become outdated with growing trends and the expiration of patents. International organizations must be careful not to step on any toes during their work in a host country. They must conform and adhere to the rules in the host country governing production, marketing, sales, warehousing and waste disposal. Another important aspect to consider is labor laws. Operating an environmentally friendly business has become the top priority for most international organizations. The environment has become a key external influence on a business. Business activities are mainly regulated by three main agencies the environmental agency in England, the Northern Ireland and Scottish environment protection agency. Complying with environmental laws and regulations has become one of the major concerns of international businesses. The main laws and regulations are storing and treating waste safely and securely, employee protection from pollution, protecting the environment from pollution and proper use of hazardous substances and waste. To meet these obligations manufacturing organizations focus on proper use f raw materials, the impact of energy use in the climate, waste and pollution produced during the production process and the impact the business has on the employees, the local and international community. These laws and regulations impose additional cost on the businesses, however, there are some advantages that arise from environmentally conscience businesses, these include lower costs on raw materials, reduced waste disposal charges, longer life of assets which are recycled or repaired , trading opportunities with organizations which will only use environmentally friendly suppliers and improved relations with the market. Some of the activities businesses are involved in designed to minimize the overall effect on the environment are the use of recyclable packaging, minimizing or eliminating the use of harmful chemicals, changes of processes that produce harmful byproducts, switching to sustainable suppliers, the use of renewable energy efficient equipment and eliminating unnecessary activities (Kotler, 1996). Effects of the natural environment on a business organization The environment may pose certain risks to a business organization. Climate change is the most significant environmental risk; it has environmental, social and economic impacts. Climate change results in frequent episodes of extreme weather. These may have negative effects on the business for instance, increased cost of insurance due to more damage to resources, disruption of water and power supply, interference of communication and barriers to product delivery. Climate change may result in decreased demand for their products especially if they are nor environmentally friendly. Climate change may also cause various global impacts where overseas suppliers are unable to deliver goods and services due to climate change events and international customers feel encouraged to buy locally. Climate change may result in increased cost of water, energy and other resources. Operations International business is the business conducted between foreign countries. The international business activities include manufacturing, marketing, sales and distribution. In essence, involves all their activities of a business at an international level. International manufacturing does not function in its own vacuum; the operations are expected to remain within the context with both international and regional rules and regulations that are set by appropriate governmental organizations. All the international organizations are distinct, however they have similar characteristics. These include fostering trade relations, promoting air trade purposes, creating trade partnerships and establishing rules and regulations. There are agreements between countries to address common international business issues. For example, the free trade agreements between Mexico and Chile, Japan and China which aim to reduce bilateral trade barriers. The goal of the free trade agreement between Venezuela, Colombia and Mexico and the free trade agreement between Japan, china, Tai wan is to promote trade and investment (White & Lee, 2009). Another important component of operations in an international organization is staffing. The employees should be natives to the subsidiary country, especially the executive team. This is essential for the creation of peaceful relationships between the different counties in an international organization. Positive relationships among employees and between the employees and management are crucial for the proper functioning of operations. Encouraging employees to treat each other with the same respect as external customers, team-building exercises, appreciation of the employees work and creating a reward system, may facilitate this. Encouraging employee feedback is also an important step (Slack & Lewis, 2002). Accountability is a very important issue faced by international organizations. Their annual revenue is large which attracts questionable political and economic power in various countries. Consequently, their organizations are viewed suspiciously and host countries impose trade restrictions on them. All organizations must engage in operations management in order to ensure the decisions made about the production process are well executed. Case study of an international organization British petroleum is a good example of an international organization. Originally, from Britain the company currently has operations in almost every corner of the entire planet. It is extensively involved in the oil and gas industry, it has investments in every aspect within the industry (Avella et al, 2010). Its activities range from exploration, drilling, refining and marketing of oil and gas products. The dynamics demand that the management be well aware of their internal and external environments. There are numerous other players in the oil market resulting in a lot of competition within the trade (Heizer, 2001). Players within the industry therefore have invested in the latest technology as well as a dynamic research and development teams. This is with the intention of effectively dealing with the competition. In matters of operations, this firm is one of the most significant examples of an organization that has well, structured operations system. The business has presence in all the continents of the world. There are employees in all continents who work for the organization. It also has a management and marketing team in all these areas, all these employees work toward attainment of the organizational goals. Management of operations in all these regions is very complex and requires a very knowledgeable management team (Slack & Lewis, 2002). Logistics Logistics is also a very important aspect of the oil trade; oil is bulky and is transported physically from where the mining has taken place to the market. This entails almost all modes of transport: rail, sea, pipeline and road. All this logistics requires skilled human resources to carry out (Shrivastava, 1995). The environment On matters related to the environment and pollution, the activities of the firm have come under intense scrutiny. Accusations of causing oil spills in international water, polluting the ocean and rivers around the Niger delta where it has massive operations and serious claims of environmental neglect have often be thrown at the organization. The organization has however tried to build its reputation and has launched various environmental conservation initiatives. Conclusion International manufacturing organization employs long-term continuity planning to prevent any disruption to the operations. The management of these companies seeks to employ logistical planning and strategy in this process. Business continuity planning in the context of logistics allows and ensures financial performance and operations capability. This paper studies the way in which logistics, environment and operations affect the international manufacturing organization. The combination of strategic logistical planning and operations management in a manufacturing business will confer disaster immunity or buffering and increased revenue in the organization. Employing long term logistical planning will provide an organization with an overall competitive advantage. Understanding the environment surrounding an organization in the global market is very crucial to the success in the international market. Factors influencing the global economy and factors affecting global competitiveness may be used to determine the opportunities and threats available to the organization. As well as, influence on the establishment of bilateral and multi lateral agreements. Globalization is a very important factor in the prosperity of an international business. All these factors lead to the changing business environment (Shrivastava, 1995). Bibliography Avella, L. and Vazquez-Bustelo, D., 2010. 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