Sustainability and Strategy - HILTON HOTEL - Essay Example

?Sustainability and Strategy – Hilton Hotel Introduction Hilton Hotels & Resorts or commonly Hilton Hotels is an international business chain of hotels and resorts. The company was founded by Conrad Hilton in 1919, and now it is owned by Hilton Worldwide. Hilton hotels across the globe are owned by or managed by individual operators and who are supervised by Hilton Worldwide. As of 1943, the Hilton hotels business chain became the United States’ first coast to coast hotel chain. Currently, there are more than 530 Hilton branded hotels operating worldwide in 78 countries, serving the interests of millions of people. As the company engages in large scale operations, it evidently produces huge volume of waste materials. The company’s waste dumping activities raise potential challenges to the environmental sustainability policies of the United Kingdom. This paper will conduct a PEST analysis on the waste issue of Hilton hotels; and it will critically evaluate how each PEST element relates to the successful management of the company. Pest analysis on the waste issue of Hilton Hotels Political factors The waste issue of Hilton Hotels in UK involves many political aspects. Evidently, the entire European Union maintains strict regulations on waste disposal with intent to confront with the challenging environmental crises such as global warming and green house effect (United Nations Environment Programme, 2002, p.25). Recently, the UK government in particular has framed an array of environment sustainability policies so as to preserve the ecological balance. According to the UK’s Department of Environment Food and Rural Affairs, “the Natural Environment White Paper is a bold and ambitious statement outlining the Government’s vision for the natural environment over the next 50 years, backed up with practical action to deliver that ambition”. In this context, the Hilton’s rubbish dumping activities have been adversely affecting the whole country’s environmental safety notions. Since Hilton Hotels chain is an international corporate giant, their illegal rubbish disposal activities will pass a wrong message to other industries of the nation. It will also impede the successful implementation of the government’s environmental policies. Hence, the government is less likely to adopt a liberal approach towards Hilton Hotels even though they evidently contribute to the GDP of the country. Since environmental sustainability constitutes the nation’s major vision for the next several decades, it may take some stringent actions against Hilton Hotels if they continue with the illegal practice. Economical factors While analysing the economic spectrum of UK, it is clear that the nation is ranked at sixth in terms of nominal GDP and seventh in terms of purchasing power parity. The UK provides high business freedom (94.6) and trade freedom (87.6) in order to foster mercantile activities in the country (The Heritage Foundation, 2011). Hence, the country neither intervenes in the business operations of a firm nor imposes much restriction on its operational privacy. To some extent, this favourable situation assists the Hilton Hotels to skip the current environmental policies of the country. Since effective waste management could significantly benefit the economic growth of the country, the Department of Environment Food and Rural Affairs (DEFRA) has formulated a number of waste reduction policies. During the last year, the Defra conducted a detailed Review of Waste Policies in the country so as to ensure that existing policies and regulations are adequate enough to meet the environmental sustainability needs of the country (DEFRA, 2011). As Wintour, Elliott and Mulholland (2008) point out, the UK Prime Minister Gordon Brown’s press releases reflect that the country still has a lot to achieve in ensuring effective waste disposal. Admittedly, the UK government does not foster business activities which may hurt the long term sustainability of the country. Hence obviously, the current economic policies of the country raise potential challenges to the operational efficiency of Hilton Hotels because of their improper waste management practices. Social factors There are a large number of environmental organisations working in UK including British Ecological Society, Environmental Law Foundation, Ethical Consumer, Fairtrade Foundation, Friends of the Earth UK, Greenpeace UK, Foundation for International Environmental Law and Development, and Waste Watch (Greenphase, n.d). Such organisations raise their voice against the increasing environmental exploitations better than the governmental authorities do. Organisations like Greenpeace have millions of supporters across the globe and hence Hilton Hotels cannot successfully continue their business operations in the country without the support of such social groups. As Nussbaum (2008, p. 18) points out, modern management theories consider social responsibility as an integral part of a firm’s business strategy because this concept has the potential to influence the profitability of business houses. Therefore, it seems that modern organisations, particularly multinational corporations allot a large portion of their revenues towards the development and implementation of corporate responsibility programmes. At this juncture, the Hilton Hotels business chain cannot continue its improper waste management practices in the long run. Evidently, the social structure of the country also will not support the thoughtless activities of the organisation with regard to waste disposal. Technological factors The technology has undergone tremendous changes over the past few decades replacing almost every scope of human labour. Varieties of technologies are available today to deal with waste treatment; they include but not limited to anaerobic digestion, composting, incineration, nuclear reprocessing, and thermal retreatment (Harvey, 2010, p.474). Since there are a wide range of technologically improved waste management methods, Hilton Hotels cannot effectively defend their waste dumping activities. In addition, the modern technology is capable of identifying the degree of waste materials produced but not recycled by a company, Hilton Hotels cannot conceal their improper waste management activities from the public or authorities. Penny (2003, p.167-168) points out that since food waste constitutes a major portion of the UK’s total rubbishes, concerned authorities give specific emphasis on food waste management by specifically focusing on R&D activities for the development of improved waste treatment techniques. It is evident that lion’s part of the waste produced by the Hilton includes foods substances. Hence, the UK environmental authorities would specifically focus on this organisation and use highly developed technologies to assess the volume of waste being dumped. Admittedly, the technological factors will also raise barriers to the careless waste dumping practices of Hilton Hotels. How the identified PEST factors affect the company success The PEST analysis on the Hilton’s indicates that the political, economical, social, and technological factors associated with the issue play a great role in determining the operational efficiency of the organisation. Firstly, the business cannot sustain in the UK market for a long time unless it completely adheres to the country’s policies regarding environmental safety. It is necessary for any organisation to get government support from the country in which it operates in order to effectively operate in the country’s market; otherwise, it may fail in the long run. If the Hilton continues its operations in the same manner despite strong environmental regulations of the country, the UK government may adopt a hostile approach towards the organisation. As part of this, the government may exempt the firm from tax subsidies and other operational concessions, and such a condition will certainly hurt the profitability of the firm. In addition, the identified political factors associated with the issue could negatively influence the minds of general public; and this situation would adversely impact the market stature of the firm. Similarly, the economic factors related with the issue are also a subject matter of the market success of Hilton Hotels. To illustrate, when the UK government curtails the tax benefits and other concessions for the Hilton, it will raise the firm’s operational expenses and thereby reduce its profitability. Since environmental pollution is a public sensitive issue in UK, the Hilton Hotels may sometimes face social movements; and such a situation would force the company to temporarily stop its operations, which in turn may end up in a profitability decline. As discussed earlier, technology has developed enough to convert waste materials into other forms of energy or new products. Hence, the improper waste treatment practices of the Hilton prevent the company from earning additional profit that could have been acquired from recycled products. Finally, the UK government may impose heavy fines on the company if it violates the environmental policies of the country. Therefore, proper waste treatment is essential for the company to maintain a positive cash flow and thereby to boost economic growth of its business chain. An organisation cannot withstand market competition effectively if the society in which it operates is opposed to the practices of that organisation. Statistical data show that hotel waste constitutes a sizeable portion of the total waste produced in UK. Once the society is aware of the intensity of this issue, they would turn against the Hilton and progressively boycott the products and services offered by the firm. Once the Hilton business chain loses consumer trust, it would be a cumbersome task for the organisation to regain its consumers and market repute as well. Therefore, scientific waste treatment practices are necessary for the company to meet the interests of UK society and market. Finally, strict adherence to the existing waste treatment practices would greatly assist the Hilton to take maximum advantages of the UK market. As we discussed earlier, currently a variety of environment-friendly methods are available to refine waste and therefore the government will deeply evaluate the efficacy of waste management approaches of the company. As Wiseman (1982) points out, nowadays investors and other external parties such as credit lending agencies evaluate the waste management polices of a firm before investing in it or allowing them credit. Most of the investors do not like to invest their money in organisations that practice poor waste treatment techniques. It is clear that technologically improved waste treatment tactics would add to the corporate responsibility operations of an organisation and thereby to the firm’s goodwill (Reduce, reuse, and recycle). Likewise, technological application in waste management may assist the Hilton to position its business chain at the top of UK hotel industry. On the other hand, the current stance of the company on waste issue provides it with certain advantages. For instance, the waste dumping activities of the management aid the firm to reduce its operational costs by trimming down waste recycling costs. The proper waste treatment practices may sometimes adversely affect the productivity of the firm as this process requires extra time and labour. Therefore, this environmental issue assists the firm to increase its productivity and thereby profitability although this strategy would fail in the long run. Environmental management approaches The identified environmental issued and associated impacts can be addressed using Environmental Management Approaches (EMS). It is advisable for the firm to adopt environmental impact assessment and life cycle assessment to deal with the waste issues. 1. environmental impact assessment (EIA) An environmental impact assessment can be defined as a critical evaluation on a proposed project to identify its possible positive or negative impacts on the environment. In addition, this concept also analyses the natural, social, and economic aspects of the proposed project. In the view of Warnken and Buckley (1998), this EMS greatly assists concerned parties to determine whether or not to proceed with a particular project by scrutinising the environmental aspects of that project. According to International Association for Impact Assessment (IAIA), decisions formed by an environmental impact assessment must be justified in the light of detailed environmental researches and public opinions on the possible environmental impacts of the project. Stewart-Oaten, Murdoch, and Parker (1986) state that modern managements consider this method as a support for decision making rather than a decision making tool. The tool of EIA has been in use since 1960s; and this method involves technical evaluation that would assist decision makers to frame thoughtful strategies. The developmental activities of a firm cause direct as well as indirect effects on the environment. As compared to other existing methods, the EIA is the effective technique to identify the indirect effects of a project. The EIA follows a landscape approach to analyse the different aspects of a project and to point out its far reaching impacts. There are several methods including industry specific and general methods to carry out EIA in accordance with the requirement of the situation. According to European Commission’s guidance, EIA involves, ‘project preparation, notification to competent authority, screening, scoping, environmental studies, submission of environmental information to competent authority, review of adequacy of the environmental information, consultation with statutory authorities, other interested parties and the public, consideration of the environmental information by the competent authority before making development consent decision, announcement of decision, post-decision monitoring if project is granted consent’. Although the scope of this method is criticised, many countries across the globe mainly use this method to evaluate the feasibility of a project in terms of environmental sustainability. By practicing this method, operators can easily analyse the environmental impacts of the Hilton’s waste issue. Hence, this strategy would be beneficial for the Hilton business chain to identify its environmental feasibility of their future projects so that it can easily decide whether to proceed with those projects or not. In addition, the environmental impact assessment may assist the organisation to make additions or to withdraw some features of the proposed project so as to meet the environment feasibility criteria of the UK government. 2. Sustainability reporting The concept of corporate sustainability reporting evolved from the olden practice of environmental reporting. The practice of environmental reporting began in the late 1980s by companies working in the chemical industry. The concept of corporate responsibility reporting is a fairly modern trend which was developed over the last two decades. Most of the multinational corporations now prepare an annual sustainability report as part of their social responsibility policies. A wide variety of ratings and standards are used for this purpose. Although companies may target different aims through a corporate sustainability report, it mainly intends to improve the international operations of the company and to convince investors. This method measures, monitors, and reports organisations’ effectiveness in current operations in order to improve their sustainability performance in future. The quality sustainability reports are prepared on the basis of guidelines issued by the Global Reporting Initiative. “The GRI Sustainability Reporting Guidelines enable all organisations worldwide to assess their sustainability performance and disclose the results in a similar way to financial reporting” (Global Reporting Initiative, 2011). Hence, this concept would really benefit Hilton hotels to effectively identify waste issue and implement suitable policies to deal with the problem. While practicing this EMS strategy, the Hilton management will be forced to resolve the issue as its sustainability report may be evaluated by its all stakeholders including general public. Since the GRI guidelines constitute a specific and well structured framework for the reporting process, the organisation need not to take much effort to measure, monitor, and report the issue. While analysing the competitive landscape of the Hilton business chain, it seems that the corporation competes with global players like Starwood Hotels & Resorts Worldwide, Choice Hotels International, Intercontinental Hotels, and Marriott International. The Hilton’s competitors more effectively deal with waste management than the Hilton hotels do, and many of these competing firms have developed improved technologies to recycle the waste substances in order to keep environmental stability. Conclusion Evidently, political, economical, social, and technological factors along with the environmental issue raise potential challenges to the sustainability of the Hilton’s operations in UK. The UK government is highly concerned about people’s health and environmental sustainability and hence it will not allow the Hilton to continue its operations in the country unless it develops adequate approaches to address the waste issue. Nowadays, environmental management approaches have significant importance on the environmental safety as these approaches specifically guide organisations to comply with environmental regulation policies (European Commission, 2001). The environmental impact assessment and sustainability reporting are two environmental management approaches that can be effectively applied to address Hilton Hotels’ waste issue. References DEFRA: Department for Environment Food and Rural Affairs n.d, ‘Natural environment white paper’, Viewed 07 December 2011, DEFRA: Department for Environment Food and Rural Affairs 2011, ‘The economics of waste and waste policy, Waste Economic Team & Environment and Growth Economics,pp. 1-42, Viewed 07 December 2011, European Commission 2001, ‘Guidance on EIA: Scoping’, Environment Themes, Viewed 07 December 2011, Greenphase n.d, ‘UK organizations and pressure groups’, Viewed 04 December 2011, Global Reporting Initiative 2011, ‘Sustainability reporting: Most complete guidance ever’, Viewed 07 December 2011, Harvey, LDD 2010, Energy and the new reality 1: energy efficiency and the demand for energy services, Earthscan, UK. 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