Sustainability: A shift from "I" to "we"

Globalization has increased awareness of environmental concerns, including carbon emissions, animal extinction and global warming. In response, treaties like the Kyoto Protocol and the Copenhagen Accord aim to place an element of control and social responsibility to alleviate and manage some of these negative bi-products of globalization. In general there has been an increase in environmental policy in international business.

Compliance with environmental policies can be costly and in general, " At the level of the firm targeted by  international environmental policies, the corporate response in terms of compliance depends upon its expected economic benefits (Rugman & Verbeke, 1998)." Rugman & Verbeke (1998) posit that the focus should shift to firm-level strategic decision-making rather than government policy making. Managers must not only be aware of environmental issues, but they must also have a strategy to deal with environmental regulations (Rugman & Verbeke, 1998).

McGuire (2010), suggests the following elements as part of such strategy: development of green management modules, establishment of a green contract, environmental scenario planning, environmental auditing, green product redesign, environmental labeling, corporate consciousness, and environmental outreach. Interestingly, it is also suggested to place focus on Human Resource Development (HRD) to promote and remind organizations of their social and moral responsibilities and to foster environmentally responsive innovation and change (McGuire, 2010).

In addition, Tilbury (1995), posits that education is the key to fostering change. The UN Conference on Environment and Development (UNCED), highlighted the need to integrate the complementary disciplines of development education and environmental education, positing that, " Education is critical for promoting sustainable development and improving the capacity of people to address environment and development issues (Tilbury, 1995)." Perhaps this is also why there has been such a push in summits and conferences on sustainability.

In contrast, many feel that there is no issue when it comes to the environment and economics. For example, The World Business Council for Sustainable Development sees no conflict between the growth of the global market and environmental stability, “we can have an open vigorous and healthy trading system and achieve sustainable development”(Hopwood, Mellor & O'Brien, 2005). Furthermore, Pangloss posits, "to improve the “environmental quality of the developing world, securing growth so as to lift these people out of hunger and poverty is of the utmost importance since … only when we are sufficiently rich can we start to … deal with environmental problems (Hopwood, Mellor & O'Brien, 2005) ”.  Maybe the real issue here, is not at the government or firm level, but rather, a lack of appreciation and lack of close links between the environment and society at the individual level. To take this a step further, perhaps culture that is the real culprit here. " The fundamental source of conflict in this new world will not be primarily ideological or primarily economic. The great divisions among humankind and the dominating source of conflict will be cultural (Lee, 2013)."

So  how can we curb emissions without, at least less, hurting our economy? Perhaps businesses need to shift their perspective on sustainability from nuisance to opportunity- " offering avenues for lowering cost and risk or even growing revenues or market share through innovation." And perhaps that innovation can be passed along to emerging economies to help them get on board with preserving the environment while continuing economic growth (Hart & Milstein, 2003). Naturally, we will need a shift from  "I" to "we".  Is this possible? Thoughts?

References:

Hart, S. L., & Milstein, M. B. (2003). Creating sustainable value. The Academy of Management Executive, 17(2), 56-67.

Hopwood, B., Mellor, M., & O'Brien, G. (2005). Sustainable development: mapping different approaches. Sustainable development, 13(1), 38-52. Retrieved fromhttp://nrl.northumbria.ac.uk/9387/1/Mapping_Sustainable_Development.pdf

Lee, J. W. (2013). Week 3 Compiled Lecture Notes [PDF document]. Retrieved fromhttps://onlinecampus.bu.edu/bbcswebdav/courses/13fallmetad655_ol/Week03/metad655_W3.html

McGuire, D. (2010). Engaging organizations in environmental change: A greenprint for action. Advances in Developing Human Resources, 12(5), 508-523.

Rugman, A. M., & Verbeke, A. (1998). Corporate strategy and international environmental policy. Journal of International Business Studies, 819-833.

Tilbury, D. (1995). Environmental education for sustainability: Defining the new focus of environmental education in the 1990s. Environmental Education Research, 1(2), 195-212.

Global Competitiveness Index: Pay Attention to the Sources of Data!

This week's moral: pay attention to the source of data! I have to be honest with you, after learning about the GCI composition, I am pretty annoyed. Wait till you read this!

The Global Competitiveness Index (GCI) is "a highly comprehensive index for measuring national competitiveness, including microeconomic and macroeconomic foundations of national competitiveness. (set of institutions, policies, and factors that determine the level of productivity of a country) (Liu, et al, 2001)." Productivity, in turn,  determines the rates of return obtained by investments in an economy, hence in theory, there is value of the index information for a business manager to gauge business opportunity through examining growth potential. (Liu, et al, 2001)  Indicators are often used to rank countries and to monitor changes within countries over time and they can even serve to spur debate and policy reform (Kaplan & Pathania, 2010). But, upon further investigation of the elements and actual composition of the index, this may not be the case! Lets explore.

The GCI is composed of 12 pillars such as innovation, market size, education and training which are

aggregated into a single index (Liu, et al, 2001).  The data from the Executive Opinion survey is used for the calculation of the GCI as well as contributing as a prime data source for the World Economic Forum’s  other industry-specific projects (Kaplan & Pathania, 2010). Respondents are asked to evaluate the current conditions of their particular operating  environment on a scale of 1 to 7,. A typical survey question includes: “Intellectual property protection in your 3  country is weak and not enforced,” with 1 denoting strong agreement and 7 denoting strong disagreement (Kaplan & Pathania, 2010).

If you ask me, there's just a little too much perception involved in this equation! I'm actually pretty annoyed to learn that global competitive ranks are based on soft perceptual data! What happened to hard data and facts! As a manager, I would definitely be skeptical to use this information. Furthermore, whenever I look at data, I always investigate its source, so lets investigate a little into the people who established the GCI.

The World Economic Forum (WEF) has attracted the economic and political elite for over 30 years. Director of Communication and Public Affairs of the WEF notes that ‘the WEF has succeeded as facilitator of initiatives. Now, it’s time to be more outcome oriented and become a catalyst.’ Contrasting viewpoints suggest that the organization is "a private authority exercised on a global scale by informal and weakly institutionalized non-state actors ( Graz, 2003)." The WEF has been negatively described as a “big cocktail party” or elite club (Graz, 2003). Furthermore, members are solicited to develop projects between themselves, which, if successful, are later subsidized by the Foundation.... some of them vie with other initiatives to bring new evidence to influence the policy agenda (Graz, 2003)." So, with all this self-interest surrounding the GCI, can we use the data and trust it to be unbiased? Not according to my research! 

 

Step one in any business investment venture is risk assessment. I would HIGHLY recommend looking into other MORE CREDIBLE avenues such as outside consulting firms and publishing firms, namely, Standard & Poors Rating Group, Harvard Business Review's Global Risk Navigator, Euromoney  [one of my favs :)] (Ball, 2010). Depending on someone's opinion such as that of the GCI is certainly not worth my money! 

 

What's you take? 

References:

Ball, D.A., Geringer, J.M., McNett, J. M. & Minor, M.S. (2010). International Business: The Challenge of Global Competition. New York: McGraw-Hill.

Graz, J. C. (2003). How powerful are transnational elite clubs? The social myth of the World Economic Forum.New Political Economy, 8(3), 321-340.

Kaplan, D. S., & Pathania, V. (2010). What influences firms’ perceptions?. Journal of Comparative Economics, 38(4), 419-431.

Liu, D. Y., & Hsu, H. F. (2001). Competitiveness Review: An International Business Journal incorporating Journal of Global Competitiveness. Kybernetes, 38(3), 559-580.

Get a visa by investing into the US!

Did you know you can get a visa by investing into the US?

An EB-5 visa permits "entrepreneurs (and their spouses and unmarried children under 21) who make an investment in a commercial enterprise in the United States and who plan to create or preserve ten permanent full time jobs for qualified United States workers, are eligible to apply for a green card (permanent residence) (USCIS, 2013)."

Up to 10,000 visas may be authorized during the year and you must invest $1,000,000, or at least $500,000 in a targeted employment area, thus also enabling the possibility for  permanent residency. (USCIS, 2013)."

Jay Peak ski resort in Vermont has taken full advantage of this opportunity, offering investors from over 56 countries monthly updates and a 4 to 6 percent annual return on investment. They also get two weeks' accommodation with skiing and golfing privileges (O'Neill, 2011).

Interestingly, "Critics rail against the program for its immigration implications, but not many of the critics live in Vermont's Northeast Kingdom, where reliable jobs are scarce. "This has allowed us to develop facilities and services that make the resort a 12-month resort," said Stenger, who was named the Vermont Chamber of Commerce's 2011 Citizen of the Year. "It lets us employ our workers year round. It's a win-win for all (O'Neill, 2011)."

What's your take?

References:

O'Neill, D. (2011). Ski dollars in exchange for visas. Retrieved on November 2, 2013 from http://xgames.espn.go.com/skiing/article/7304426/foreigners-investing-jay-peak-ski-area-exchange-us-visas

U.S. Citizenship and Immigration Services. "Green Card Through Investment". Retrieved November, 1, 2013 from http://www.uscis.gov/green-card/green-card-through-job/green-card-through-investment

Foreign Direct Investment: Change is the new constant.

Change is the new constant.

Perhaps the most significant changes are those concerning technological innovation, political attitudes and economic policies. For example, transportation and automation enabled reliable long-distance trade, the global depression in 1929 propelled a move to inward-looking polices by many governments, and the lowering of tariff barriers and the increase in international trade after the end of World War II (Brooks, Weatherston & Wilkinson,  2010). Such changes have enabled globalization to flourish; thus opening up the possibility of a more manageable world where distance is no longer a concern in business (Brooks, Weatherston & Wilkinson, 2010).

The new international business environment is causing the path to market expansion to change. Of significance is the enablement of Foreign Direct Investment (FDI). Most interesting effects are seen in developing countries, who are now becoming investors! In 2011, developing and emerging countries invested $457 billion abroad; equivalent of roughly one-third outward FDI of advanced economies! (Stiftung, 2013) Interestingly, cross-border investments were drivers of global economic integration long before globalization was synonymous with international division of labor, however the speed of the global division of labor has accelerated at a rapid pace; "the global map of cross border investment flows has changed" (Stiftung, 2013).

Perceptions have changed as well. In the 1960's, the prevailing explanation of international capital movement relied on a neoclassical trade and financial theory of portfolio flows, capital was assumed to be transacted between the buyer and seller; offering no role for the MNE (Dunning & Rugman, 1985). There was no separate theory on foreign direct investments (FDI), until Stephen Hymer's seminal dissertation (Dunning & Rugman, 1985). Hymer's approach focused on the MNE as the institution for international production as opposed to international trade. Such an approach extended territorial horizons abroad; thus opening the door for the acceptance of the concept of FDI (Dunning & Rugman, 1985).

 

But the changes in the direction of investment flows and new players pose much risk. Lee suggests that FDI does not always return the profits imagined and often (especially when dealing with developing nations) profits will be achieved only on a long-term horizon (Lee, 2013). Other disadvantages include the overestimation of profits and poor investment decisions (Lee, 2013). Research also suggests that "long term growth associated with FDI is seen primarily within countries where human capital, financial markets and infrastructure show comparatively high levels of development (Stiftung, 2013).

Swift changes are causing MNE's to consistently seek opportunities to gain market share in the new global playground and in the case of technology regarding the Monopolistic Advantage Theory,  there is a major benefit of control established by FDI.  This is due, among many elements, to oligopolistic industries possessing technological, marketing, finance and other advantages over indigenous firms (Ball et al., 2013, p. 83). “Such investment brings with it not only resources, but technology, access to markets, and (hopefully) valuable training, an improvement in human capital (Stiftung, 2013)." One example is the Japanese electronic manufacturing firms entry into the United States during the period 1976–1989.  Japan had a strong competitive advantage over local firms to reduce the hazard of failure (Chang, 1995).

The biggest risks are those fueled by our perceptions; interestingly perceptions are all over the place when it comes to FDI! In the 1970's FDI was seen as a monster and 2 decades later as the savior, only to return back to hostility with globalization; critics blamed "all encroaching multinationals for crowding out local business and undermining government autonomy (Stiftung, 2013)." Perhaps it is also perception that is the driving force for the rising levels of protectionism. Maybe it is as simple as focusing on understanding each nations position, embracing change of perspective from our own to putting ourselves in the other persons shoes, both on a cultural level as well as a business needs level when it comes to FDI? 

Perhaps creating necessary conditions and perceptions where countries see business efforts in a positive win-win light (team effort) as opposed to feeling under attack, would help to facilitate direct investment flows.  What are your thoughts? How would you accomplish such a feat? Is it at all possible, in a society driven by so many stigmas?  Maybe we just need to "market" the idea of FDI better-what approach would you take? Are previous successes and failures of FDI attempts even a valid reference point in a global marketplace where change is the new constant?

 Looking forward to your input :)

-Joanna Pawlowska

References:

Ball, D.A., Geringer, J.M., McNett, J. M. & Minor, M.S. (2010). International Business: The Challenge of Global Competition. New York: McGraw-Hill.

Brooks, I., Weatherston, J., & Wilkinson, G. (2010). The international business environment: challenges and changes. Pearson Education Limited.

Chang, S. J. (1995). International expansion strategy of Japanese firms: Capability building through sequential entry. Academy of Management journal, 38(2), 383-407.

Dunning, J. H., & Rugman, A. M. (1985). The influence of Hymer's dissertation on the theory of foreign direct investment. The American Economic Review, 75(2), 228-232.

Lee, J. W. (2013). Week 1 Compiled Lecture Notes [PDF document]. Retrieved from https://onlinecampus.bu.edu/bbcswebdav/courses/13fallmetad655_ol/Week01/metad655_W1.html

Stiftung, B. (2013). Shaping globalization: New trends in foreign direct investment. Germany: Bertelsmann Foundation.

Traditional Marketing Mix- Creating a Push and Pull Strategy

We already know that “There are four components of promotion-mix i.e., advertising, personal selling, sales promotion and public relations. Thus, promotion mix is a company’s total communication programs which consists of different blends of its components and which is used to achieve the company’s marketing objectives.” (Heenaa 2011)

To explore this further- lets discuss the traditional mix concept of personal selling with the new ‘’toolbox’’ of the web.

“To review - Personal selling is a personal communication with one or more prospective buyers(viewers) for the purpose of selling a product or service. Personal selling is considered to be the most effective tool because of various characteristics” (Heenaa 2011) which are listed below:

- it involves personal interaction, hence feedback is received immediately; (can’t we utilize this concept to ‘’pull’’ info from the client with intent to establish a product that suits their needs (personalization) by utilizing blogs and discussion forums? There are plenty of company blogs and discussion groups which target an audience to pull info with intent of personal selling ‘’push’’)

- it is quite flexible, salesman can adjust communication according to the level of customer’s under-standing. ( whether is be a tangible or intangible product – can’t marketer’s utilize web platforms such as Facebook to ‘’pull’’ information from clients on their needs and just as easily adjust communication online after analysis? And even quicker then with more traditional media? To than “push” a product that is relevant?)

- it is more persuasive; buyers can be convinced about the utility of the product; (through the use of web 2.0 platforms- such as Facebook and Youtube, can’t the web platform be utilized to study market groups-understand client needs and ‘’pull’’ the data together and then offer an “educated” product? And can’t this educated product be persuasive by nature- since it exudes value by satisfying the client’s needs ? Also- can’t the web itself be utilized as a personal selling platform ‘’push’’ – and do an even better job than traditional media- since now you can interact with other people/friends via a 2 way dialogue to get reviews, on-demand product demos and interactive 3-d models of tangible and intangible products?)

- impressive salesman leaves an impression on the prospective buyer; it may increase sales in the future. (Can’t we utilize CRM systems to maintain an attentive impression to the client so that we can continue to ‘’pull’’ data in at attempt at a more successful ‘’push’’ of products?)

As you see in this example, the 4 P’s can be utilized successfully for either a push or pull strategy, and the beautiful thing is that the web has provided an even easier platform to accomplish either task or both simultaneously. The success lays in noting the differences in approach, ultimately by implementing the traditional marketing mix model/framework with the new mind-set of promoting client interaction on a new technology platform.

Heenaa. (2011) ‘’Marketing Mix” Retrieved from http://www.oppapers.com/essays/Promotion-Mix/780904

How To Apply the Traditional Mix on the Web 2.0 Platform

In Laudon’s text we learn that a marketing strategy by definition is “ the plan you put together that details exactly how you intend to enter a new market and attract new customers. “ (Laudon 2011) Therefore, I do not see how focus should not be placed on integral components such as product, price, place and promotion when developing and implementing a marketing strategy.

To prove my point further lets use Flickr as an example of why the 4 P’s should remain an integral component in marketing strategies. Notice how each of these sections stresses focus on the customer.

“Flickr has to make decisions about how to tell customers about its product. Should they do advertising? Should it develop features that make it easy to share photos – so customers actually tell other customers about Flickr? Flickr can also embed technology that makes its photos more widely available so that more customers consider using it as a photo sharing site.” (Cannon 2010)

PRICE: Flickr should not neglect important decisions such as level of its pricing and whether to offer some added customer benefits such as services for free. Should they include introductory price promotions, group discounts, freemium models etc.

PRODUCT: “Flickr’s “Product” has evolved over the years. Flickr started as an online massive multiplayer game (Game Neverending) – that had a small photo sharing feature. Early on Flickr was really just a chatroom that allowed for real-time photo sharing. The “Product” continued to evolve in response to customer use, input, and feedback and internal innovation. Flickr has over the years added tags, groups, favorites, and interestingness as features. These represents just some of the product decisions that Flickr managers needed to make.” (Cannon 2010)

PLACE: “How much bandwidth to offer? Do they sell their services through stores – possibly allowing people to go to Walgreens and upload/download photos from kiosks? (Not saying all these ideas are good – but by having the 4 Ps, it opens marketers up to potentially creative new approaches to meeting customer needs.).” (Cannon 2010)

PROMOTION: Flickr can use web and social media such as blogs to promote their product. This creates a personal and interactive experience for the customer- without the cost of personal selling.

As you see through this example, if used properly, the 4 P’s provide successful framework without losing sight of the customer and should remain the focus of a marketing strategy.

Cannon, J. (2011) “Defending the 4 Ps of marketing on the web” Retrieved from http://teachthe4ps.com/marketing-strategy-planning/defending-the-4-ps-of-marketing-on-the-web/

Laudon, T. (2011). e-commerce: business. technology. society. Upper Saddle River, NJ: Prentice Hall.

The Value of Traditional Marketing

It’s interesting to point out that in all the research that I have done this week, it is so easy to find information on why the 4 P’s are dead as opposed to the value the traditional marketing mix brings.

Also, in my research I found many instances where marketing is so misconstrued into the model of “marketing = advertising and selling”. And if you utilize the 4 P’S in such a fashion, then naturally your business model will fail to recognize the customer. (Cannon 2011)

Additionally, with new technology such as the internet, utilizing the 4 P’s poses a much more difficult challenge – leading marketers to want to replace the model.
In the article “Don’t Abandon Traditional Marketing Methods: Integrate and Interact” by Greg writes: While social media is an important element to business marketing, it’s not a replacement for proven forms of promotion. (such as the 4 P’s) With its low cost, easy barrier-to-entry and seemingly widespread reach, it’s tempting to think social media can replace other forms of marketing. But it’s important to remember that social media in and of itself isn’t a marketing strategy: It’s but one promotional tool in the smart business marketing toolbox. (www.bizshifts-trends)

With all that said, do you think marketer’s are quick to dismiss the 4 P’s simply because they do not have a plan as to how to integrate web 2.0 into the marketing mix successfully? Or are marketer’s forgetting the true definition of ‘’marketing strategy”? Does “marketing” need to be redefined to promote and establish a universally accepted model which accounts for web 2.0 – to help marketers adopt this new technology into their marketing plans?

My opinion- In general, I think it is pretty silly to dismiss the framework the traditional mix provides- a framework that has been used for decades, and proven to be a successful foundation in marketing. I also think marketer’s need to learn to embrace the new challenge and keep in mind that a house cannot stand without a strong foundation.

Cannon, J. (2011) “Defending the 4 Ps of marketing on the web” Retrieved from http://teachthe4ps.com/marketing-strategy-planning/defending-the-4-ps-of-marketing-on-the-web/

www.bizshifts-trends (2011) Retrieved from http://bizshifts-trends.com/2011/02/21/is-traditional-marketing-dead-age-of-internet-clicks-views-tweets-blogs/