My idea to utilize 1144 Overview of
Business Administration to draft the
contents of my Ph. D. dissertation
Hiroshi Fukushi
Executive Summary
The Ten-day MBA is a review of key subjects taught in top ten MBA schools.
I have recently completed an online based MBA program at USQ (University of
Southern Queensland). I found that Silbiger’s book covered many points which I
learnt in USQ. My major project in the Rushmore University Ph. D. program would
be ‘Environmentally sustainable business -a Japanese perspective-‘. Because this subject
requires a full analysis of environment related business in terms of management
and administration, I thought it would be useful if I could use the analytical
method used in the MBA to synthesize my dissertation. For this purpose, I read
the book and tried to pick up key items which could be used as the CONTENTS
of my dissertation. I am going
to utilize the summarized draft list for preparing my Ph. D. course and writing
my dissertation.
1.0
Over view
My reason for wanting to study the environmentally sustainable
business is that I have a
chemical engineering background where I learnt a lot of chemical reactions and
unit processes to help with the efficient production of chemicals. My
background pushes me toward finding not only economically efficient production
but also a waste free clean process with a sufficient waste treatment system.
When I started working for Ajinomoto Company in 1984, environmental concerns
not so significant, however a serious environmental problem would be fatal for
a manufacturing company today. This course 1144 Overview of Business
Administration gives a through review of business administration, which a
company’s executives can use as a complete management checklist of what they
have to learn to run their companies. My Ph.D. dissertation will be
‘Environmentally sustainable businesses’. I am looking forward to writing my
dissertation from a perspective of guiding a business company to be successful
both in business and environment protection. The Ten-Day MBA should help me to
find a general guideline to the necessary elements for success in both
categories. I would like to apply the generalized MBA analytical procedure to
my specific agenda of how to be successful in an environmentally sustainable
business. I have just completed my MBA USQ. I have thought about how to
summarize key points of MBA learning for the same purpose described above,
however The Ten-Day MBA is actually a better and quicker solution, as it
matches my purpose.
2.0
Disciplines of MBA and summary of important points for my dissertation
2.1 Marketing
Steven Silbiger describes Marketing as the special blend of art and
science. Marketing facilitates the highly efficient use of the resources to attract
customers and raise the annual sales. Silbiger refers to the words of Kotler, a
marketing guru, that marketing integrates all the functions of a business and
speaks directly to the customer through advertising, sales people, and other
marketing activities.
As the list of important components of marketing, Silbiger lists six items as important in marketing:
1.
Consumer analysis;
2.
Market analysis;
3.
Review of competition and self;
4.
Review of the distribution channels;
5.
Development of a “preliminary” marketing mix;
6.
Evaluation of the economics; and
7.
Revision of extension of steps 1-6 until a consistent
plan emerges.
Marketing is one of the very important categories in the success of an environmentally
sustainable business, because without proper marketing, customers would not
realize the value of environmentally friendly products or services. For example, if Toyota tries to sell a
car which reduces the emission of CO2 gas into the air, Toyota has to think of
all the aspects of the marketing elements listed above, otherwise Toyota would
not get sufficient customers even if the quality of the eco-car were very good.
Customers have their specific needs and wants and Toyota has to respond to the customers’
requirements by establishing a good marketing plan to sell eco cars. Toyota has
to do a thorough consumer analysis. It is likely that low income consumers
cannot afford to pay a hefty premium to purchase a fuel-efficient eco-car. Market analysis is also important.
In developing countries, the environmental regulations are usually not as
severe as they are in developed countries thus the sensitivity and attention of
consumers to environmental protection could be much lower than in developed
countries. In this sense, environmentally friendly eco cars would be more
likely to sell well in developed countries where people would pay greater attention
to environmental protection. Nowadays global competition is very severe and car
industries are not exceptions. Toyota has to compete against GM, Chrysler, and
Honda in the USA for the segment of eco-cars. The marketing mix can be constructed
according to the strategy of Toyota. Toyota can release world standard eco-cars
or the design and performances of eco cars can be changed, making it specific to
each marketing region. Toyota is neither a non-profit organization nor NGO (non
political organization), so environmental protection is not its only objective.
The sale of eco cars is a business to Toyota, which pays a lot of attention to
profits, stakeholders and the stock market price to keep the company
economically viable. Thus an evaluation of economics is extremely important. As
a general activity to promote eco cars, Toyota has to repeat steps 1-6 as the marketing mix is
an on-going concern for a company
which pursues customers’ and stakeholders’ satisfaction through a sequential routine of market
activities.
2.2 Ethics
I think that ethics could be one of the determinant factors for a company’s
attitude and behavior in terms of environmental protection and how to become an
environmentally conscious company. The author explains that ethics is a relatively
new subject in the MBA curriculum. As a matter of fact, I have learned little about
ethics in my MBA program in USQ. The terms and jargon I remember are ‘social
responsibility’ and ‘sustainability’. Steven Silbiger writes that ethical
issues were introduced in MBA classes to train future champions of industry to
deal with any ethical challenges, which include; environmental issues;
corporate restructuring; employee private issues, diversity issues; sexual
harassment, conduct of multinational companies; and others. From this list I
should pick up environmental issues and the conduct of multinational companies as
items to be covered to complete my main project. Without ethics it is obvious
that companies do not care about protecting the environment. For example, Silbiger
explains that Friedman has a very simple view of companies. That is, Friedman
believes that business’ sole duty is to maximize profit. Further more, Silbiger
mentions that it is up to the government to decide what the laws should be.
Such views of a company’s responsibilities should change as the time changes
and as the government, culture and people change the public perceptions of
companies and their responsibilities. I need to summarize how companies view their
ethical responsibilities for environmental protection.
2.2.1 Relativism
Steven refers two important factors which affect company’s ethics,
relativism and stakeholder analysis. Relativism can explain some of the
companies’ basic philosophies towards environmental issue. Companies hold relativism
does not have absolute value of their environmental policies and try to decide
how to deal with environmental problems depending on the situations. There are
four kinds of relativism: naïve; role; social group; and cultural relativism.
Foe example, cars are running everywhere. Toyota cannot blame that Chinese
manufacturer is making cars with a lot of NOX Gas, this is naïve relativism.
Toyota is neglecting the fact that motor cars are polluting the air of the
earth, this is role relativism. Toyota is always referring industry’s
practices, this is social relativism. I am not sure that Toyota is not applying
the costly maximum available technology to reduce emissions in developing
countries where environmental regulations are relatively loose, if it does not,
this is cultural relativism. As explained already, the philosophy of companies
determine how companies behave. There are other philosophical frame works besides
relativism; natural law; utilitarianism; and universalism. Philosophy of
companies thus form bases how companies approach environmental ethical
problems.
2.2.2 Stake holders analysis
It is heavily important to analyze stake holders for analyzing company’s
behavior over ethical dilemmas. Company has to make profits with the
restriction of satisfying stake holders’ concerns. In this meaning stake
holders are affecting company’s movement in various ways. Since there are many
kinds of stake hollers related with environmental issues thus I need to classify
and characterize stakeholders and analyze effects of them on the decision
making of company’s environmental policies. I made a list of items which I need to
write in my major projects.
2.3 Accounting
Steven explains that accounting is the language of the business. It’s a
rule how to describe monetary status of companies. As for environmentally
sustainable business, accounting by itself plays a special role as environment
accounting. Beside this, the monetary impacts of environmental correspondence
would be of a great interest to stake holders. For example, if a newly
installed boiler of a manufacturing company is working well, the oil
consumption can be much better and this will bring the company more profit and
the reduction in an environmental burden of CO2. The profit can be expressed in
the profit and loss statement. And the newly installed equipment is counted as
fixed asset. The efficiency of the investment can be estimated using a sum of
discounted merit of oil savings in terms of net present value or internal rate
of return. Estimation of economical impacts of company’s efforts to reduce the
environmental burden, eave energy, and new business chances would be
interesting items to be cited in my main projects.
2.4 Organizational behavior
Human resource is not same as machines. OB trains student with human challenges. This
means that only with text book knowledge and skills nothing can be done in the
real human world. I know this trough a 20 years experience with Ajinomoto Company.
Since organizational behavior relates theories with human and organizational
conducts, the area of academic coverage would be very wide. For example, Steven
lists: problem-solving model, psychology lesson, motivation, leadership, creativity,
on-the-job office procedure, power, organizational model and structures, system
theory, organizational evolution and revolution, resistance to change. Again
every items listed should have some relation to the management of environmental
issue in the company.
2.4.1 Problem solving model
Problems related with environments are abundant among various kinds of
stake holders as previously mentioned. Internal stake holders are employees and
out side stake holders could be very aggressive NGOs. Companies should be
equipped with very good problem solving models and actual ability to solve all
possible problems. The theoretical and practical part of the problem solving
should be referred in my main project.
2.4.2 Motivation
If there is a company which positions it as the leader of environmental protection
in an industry, I would assume that employees, management and the organization
as a whole should have very high motivation to be an environmentally friendly
company. Otherwise it is a fake company only to imitate the fashion, trend of
the world that the environmental protection is something important, something
appeals to the sales and the growth of a company. I would like to find out that
successful company is truly motivated for environmental protection or just
following the trend and utilizing the trend as one of the advertising or
appealing procedures.
2.4.3 Vision and leadership
A clear vision combined with a strong leadership should be prerequisite to
be a successful company in the area of environmentally sustainable business. In
a long term it is obvious that every regulations related with environment
should be getting tighter. It is now when the investment and development shall
be made for the future. Visions should state the picturesque images how
companies would like to be. To realize the visions in the future there should
be a commitment and a very strong leadership towards the goal in the future.
The development of a technology or anything new for the future goal would
require a significant amount of preceding investment. Thus how to justify that
expenditure of scarce resources would be totally depending on the visions and
the leadership of the top managers.
2.4.4 Strategy and organizational strategy and organizational
structure
To be effective in carrying out the company’s mission, the organizational
structure should relate its strategy. I should take look at the strategy and
its relation with organizational structure of successful companies.
2.4.5 Culture
Culture plays an important role. Culture of nationality gives a general
colors to the companies belonging to countries. Kanban system of Toyota has
been created under a Japanese culture where efficiencies are always pursued.
The other extreme could be that of the USA. Energy consumption per a capita is
almost the double of other nations. People enjoy freedom of using energy and
materials. Corporate culture is another issue. Every company has their own
cultures. Learning culture is a recent word given to companies which enhances
innovation and renovation through organizational learning. I should study what culture is required
to be environmentally successful or promising companies have in common.
2.4.6 Evolution, revolution and
change
Grainer (in Steven) explains the organization
exhibits five predictable stages of growth called evolutions and five stages of
cruses as called revolutions. This can be readily applicable to companies who
promote environmental sustainability. As companies experience growth, there are
many challenges because of the impact technology, regulations, market and the
competition change. The change of the organizations is not easy. There will be
a lot of resistance. How to cope with these resistances could be one of the key
factors how to become truly an environmentally sustainable business company.
2.5 Quantitative analysis
Steven Silbiger mentions that the capability of performing quantitative
analysis combined with sophisticated analysis charts and impressive language
distinguish MBAs from their non-MBA
peers. Decisions trees are used to evaluate the possibilities such as the expected
monetary value of an initiative. Even though the final decision is made by the
top management team, this probability calculation should help top managers to decide
on the best option with the largest expected monetary value. There should be similar quantitative
analysis methods for environmentally sustainable companies. I will enlarge on this aspect in my
main project. The importance of cash flow analyses, such as the internal rate
of return or net present value, is already explained in the accounting section.
These are useful for judging the efficiency of the cash flow and for deciding
the potential value of investments. Probabilities can be applied to the study of
quality management of the product and of course this is applicable to some of
the studies to reduce the process wastage by raising the process yield, which
can contribute to reducing the environmental burden. Since environmental
analysis would require statistics, the technical field of quantitative analysis
would be an important field of statistics. I need to mention quantitative
analysis methods applied in the field of environmental protection.
2.6 Finance
2.6.1 Financial performance
comparison
Steven Silbiger mentions that, in the eyes of financiers, the sole purpose
of a firm is to maximize its owners’ wealth. In a discussion of environmentally
sustainable business, it is obvious that wealth is not the sole purpose but
wealth with good sustainable environmental performance should be pursued. In my
opinion, even if companies are doing well in terms of environmental protection,
if they are not also doing fine with their financial figures, these companies
are not entitled to be called successful environmentally sustainable businesses.
Business is business, therefore it should pursue wealth maximization, as
Silbiger mentions. In this meaning, finance is also an important category for
environmentally conscious companies.
I am interested in surveying the financial performance of the
environmentally excellent companies and comparing those with the
average of the industries. I would like to find out these relationships. The
stock price and financial ratio are good comparative indicators of financial
performances of environmentally excellent and environmentally sub-optimal companies.
2.6.2 Financial management
Financially, the expenditure on environmental protection or environmental
business can be a good figure for companies to measure how environmentally
conscious they are. Companies pursuing economic gains can use the payback
period, NPV and IRR to determine the efficiency of their financially and
environmentally motivated investments.
2.6.3 Financing decisions
Tax is one important factor for companies to consider in financial
decisions. Tax advantages for any
investments related to environmental protection would give companies reasons to
invest. Any financial help or preferential treatment by the government for environmental
protection could be a good motivation. This kind of tax policy can be strongly related
to the environmental policies of countries and their governing offices. I would
like to survey how successful companies are taking advantage of tax policies or
any preferential treatment. FRICO, WACC
and the relationship between the cost of capital and debt to capital ratio can be
used to analyze the financing companies. Investors’ interest in the financial
management of the company will affect the investment policy, therefore it is a
good topic to cover.
2.6.4 Strategies for growth,
merges and acquisitions
Companies’ strategies will dictate the financing policies. Mergers and
acquisitions can be exciting topics in this area in which to get expertise and
experience.
2.7
Operations
First of all, environmental protection cannot be done without this section,
i.e. production and operation management.
Environmental concerns are widespread today. They include all the kinds
of emissions to air, water and soil; control and preservation of the natural environment;
control of gene manipulation, noise, radiation, epidemic disease, and etc. I
need to have a good classification system to understand the environmental
operational concerns so I can summarize each problem of each category
systematically. Since the list of environmental problems could be a very long
and widespread one, I need to focus on some representative area or generalize
the analysis procedure to handle every category from the same point of view. The
role of technology in reducing emissions is also important. The direction of environmental technology
should be summarized.
2.8
Economics
Macroeconomics is important in forecasting
business opportunities in specific regions and countries. Combined with environmental
regulations, macroeconomics would give information on fundamental conditions of
interest to companies wishing to participate in environmental business or
environmentally sustainable business in the region. It would be interesting to know
the relationship between macroeconomics and the opportunities for environment-related
business. The international policy and argument over CO2 emissions also affects
the business chances and the macro economy itself, thus it would be an
interesting study to research the relationship between three factors, politics,
the macro economy and opportunities for environment-related business. Country
analysis, as explained by Steven Silbiger, is one of the important procedures
for the analysis of this topic.
2.9 Strategy
2.9.1 Industry analysis and strategy
Personally, I believe strategy is the most
important topic for companies that aspire to become environmentally sustainable
businesses. Steven Silbiger agrees with this opinion, saying strategy gives MBA
students the chance to put all the new skills to work. The strategy of
successful environmental business can be analyzed with the MBA methods such as:
The Seven S model; Industry analysis using SWOT, 5 Forces Model and Value Chain
Analysis and Product Portfolio.
2.9.2 Competition tactics
Analysis of the kinds of competitive tactics
among the companies is interesting. There might be differences between general
tactics and tactics specific to businesses related to the environment.
2.10 Concerns of other areas
Politics, regulations and standards are not
covered in Silbiger’s book, however this area are very important topics in the
study of environmental business. Areas to be covered in my main projects are: those
areas related with regulations; politics; NGO movements; Standards (ISO) and
public concerns.
3.0 Conclusion
A draft list of contents for my mayor project in Rushmore Ph.D. program has
been made by referencing key subjects explained in The Ten-Day MBA written by
Steven Silbiger. The draft list is summarized in Appendix-1. I am going to use it
to set my original course work and to write my dissertation.
Appendices,
Appendix-1
1.
The definition, what is environmentally sustainable
business.
1-1.
The environment of the earth today.
1-2.
The environmental problems we have to solve
1-3.
The definition of environmentally sustainable
business.
1-4.
What is required to be environmentally sustainable business
1-5.
The kind of environmentally sustainable business.
2.
Regulations and standard
1-1.
Regulations and standard.
1-2.
ISO 14000
1-3.
Japanese regulations and standard.
1-4.
Kyoto proposal on CO2 reduction plan
3.
Quantitative analysis
3-1
Evaluation
systems for environmental impact
3-2
Ecology and
evaluation system
3-3
Environment
management ranking system
3.
Marketing
3-1
Business and consumes
3-2
Big opportunities
3-3
How to find a marketing chance and make it a business
3-4
Environmental monitoring business
3-5
Market potentials and risks
4.
Strategy
4-1
Pursuit of efficiency Recycling business model
4-2
Challenge for zero emission from factories
4-4 Open policy of environmental data
4-5 Change strategy
4-6
Case studies
4-7
Asahi beer
4-8
Richo
4-9
Ajinomoto
4-10 Small
companies
4-10 Know
how
5.
Accounting and Finance
5-1
Environmental
accounting
5-2
What
is eco money
5-3
Governmental
supports on economically sustainable business
6.
Economy
6-1
Environmental
economics
6-2
Environmentally
sustainable economy system
6-3
Future
prediction of Japanese industry and economy
6-4
COs
Emission right, economy and business
7.
Challenge in technology and operation
7-1 Technical
challenges of environmentally sustainable business
7-2
Analysis technology
7-3 Reduction
of CO2
8.
Ethics and Social responsibility
8-1 Environmental
problems and social responsibility of business
8-2 Business
philosophy
8-3 Japanese
traditions in environmental philosophy
8-4 Governance
of environment business