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Free «The impact of environmental change on international business strategies» Essay Sample
It is considered to be irrelevant to discuss the impact of environmental change on international business based on scientific debate. According to international business community environmental or climate change implies the looming market shift. The basic reason for the environment change is advancement in technologies and changes in consumer requirements. For example in 1980’s the use of typewriter is completely decreased due to the raise of computer technology. Such environmental change results both winners and losers, also gives good opportunities as well as risks. Hence all business people know future is carbon-constrained world and companies in that point of view have started their actions to reduce GHG (Green House Gas). Few companies in USA resist the other companies with label Kyoto capitalist and carbon cartel, but this level of resistance is very risk for international business strategy (Hoffman.A, 2005) Most of the companies try to save their strategic investments and seek for best business chances in that particular market landscape. The environment change and subsequent policy in GHG emission reduction generate systematic risk in national income, energy prices and entire economy which also make reputation and physical risks at the industry and company sectors. In such situation of environmental change the more vulnerable industries are aluminum, steel and electric utility, also the oil and gas industries. In fact European and Asian companies are more prepared to face environmental change than American companies. Very few business sectors are in safe position from this climate change and unavoidable market shift. The three important points to be considered by the business peoples are warning signs of future market shifts identify the business frameworks to link environment change to business interest and to develop some methods to integrate business strategy and climate change in order to contribute to the bottom line. (Hoffman.A, 2006) A recent survey conducted by Pew Centre on Global Climate Change showed nearly 31 companies reported that policy of US government on environment change is coming.
The main stream of those samples predicted that national policy will be established in the year 2010 and 2015 which will set the price signal to help companies to prevent their sector from environmental change. Policy not only focusing about the carbon constrained world but also paid attention on financial factors. The financial service companies like Bank of America, Chase, Citigroup, Goldman- Sachs and JP Morgan have implemented guidelines for lending and promoting energy technologies. The juncture of fiduciary liability and environment strategy is focused highly while considering corporate sector. An exceptional lawsuit filed against five largest American companies by New York city and eight states demanding that they cut CO2 emissions. This made insurers to express their apprehension about the liability if the environmental risk is not disclosed. The physical risks due to the environmental change are also in case. The insurance industry concerned about $46 billion in losses due to natural disaster in the year 2004 and business interruption losses in industry is $83 billion in the year 2005.These kind of physical risks highly affects the industry like fisheries, real estate, forestry, agriculture, tourism and health care. The scientific community developed research and produced data to slow down its progress and alleviate the effects. These are assumed as signals for companies to focus the environment change in order to lessen the loss. Nowadays many American companies are attending this issue with more care, due to competitive environment change which is the output of climate change (Margolick & Russell,2001).

Business Interest and Environmental Change

The adoption of voluntary GHG reductions varied according to the type of industry. The strategic positioning of company is a basic reason for its success. Hence following are the seven basic frameworks for strategic benefits.
Operational Improvement: The business interest and climate change interlink is forged in this frame work. The GHG emission reduction, process optimization through reducing rate of material utilization, by lower energy costs and reducing transportation costs. The big questions of so many companies are “How energy efficient is our operations? Is our company at the limits of efficiency?’ an assessment of GHG emissions and reduction opportunities often reveals new insights into taken-for-granted or under-studied operational parameters. Due to this few companies realized more in distribution and transportation (Semans & Juliani, 2006)

Anticipating and influencing climate change regulations

The regulatory agreement is considered as a cost of running business, the regulatory landscape of climate change is intricate and emerging on various levels. To structure strategic position of business according to the environmental change regulation mangers should implement multi-pronged approach. They should have the awareness of policy standards in regional, national and international level. They should be ready to face the standards whenever they appear. They should have the capacity to influence the shape of standards. Companies that can anticipate and influence regulations are, in effect, setting their own programs as the regulatory standard

Accessing new sources of capital

The capital availability is straight way related to GHG trading issues. Government subsidies are introducing financial incentives to condense GHGs. Further trading directives are coming from inter firm trading. The higher official of climate exchange and other experts usually estimates annual market strategy in respective year. Those estimates may include contingencies and that must be taken into account in strategy of environmental change.

Improving risk management

In the risk management frame work strategy, definitely GHG reductions decrease the financial risks. According to CERES (Coalition for Environmentally Responsible Economics) $7.4 trillion of corporate assets are in danger by environmental change. So the coalition board decided that institutional investors and senior executives cannot ignore such costs. So the risks are enormous in both physical and financial.

Elevating corporate reputation

There is a high possibility for companies to improve their reputation by implementing GHG reductions. It will impact on environmental investment strategies, communities that manipulate construction and corporate expansion. Even impact employees those produce services and goods, consumers those purchase services and goods.

Identifying new market opportunities

New strategic directions can be identified through green house gas reductions. By measuring environmental costs and risks companies can exit the risky business. New market chances will also get arise when company prepared to face the change in consumer preferences, regulatory program trends and community concerns. In this competitive business world, many organizations have some experience in handling the issue of climate changes. However these companies have given less priority when compared to other issues. These issues are uplifted to the top-line protection to the business opportunity. This does not mean that the initiative taken by the Companies is to enhance the popularity of the product. The main focus of the environment free product is to ensure that the environment factor is maintained in the product. The designed product must produce well to the people as well as give profit to the company. Goldman Sachs in its new product development given priority to the company’s reputation, improving the competitive position in the market and to develop the new products that has some concern over the climate changing issues. Many companies have turned the wheels into the technology to stimulate the business. For instance DuPont introduce their product Biomass Feedstock’s into market, keeping in mind that these types of product have good growth in market in the coming years.
This biomass is used to create products like polymers, chemicals fuels, biomedical materials and applied biosurfaces. They have setup the goal that the 25 percent of the revenue generated by the company should come from these products. Nearly the two-third of the company’s employees is involved in this mass productivity. Sorona® polymer is one of the well developed product manufactured jointly by the DuPont and Tate & Lyle Plc. In the agreement between these two companies, 1,3-propanediol has to be produced by the DuPont. This ingredient is the key component in the manufacturing of Sorona® polymer. 1,3-propanediol is prepared by the fermentation and purification of the Corn Sugar. In the year 2006 the development of the modern biofuels are manufactured by the DuPont and BP. They made a mutual agreement to develop the bio fuels that is not having any limitation in the production. These two companies are indulging in this joint venture to create the Bio-Fuels for the future purpose. One day the world will look turn around their heads towards the Bio-Fuels. The Shortage for the Petrol has becoming more and more nowadays. Surely there will be a great demand to the Bio-Fuels in the coming years. The first product of those companies is the Bio-Butanol which is introduced in the year 2007. This product is supplied to UK through the Gasoline (Cogan, 2006) Aluminum Recycling is the future of the aluminum products. The aluminum will create opportunities in the market by concentrating more in this sector. Alcoa is the company wants to produce aluminum using the recycling process. The amount of energy spent on producing the primary aluminum is 50% greater than the energy spent on the aluminum by recycling. The company also assured that the aluminum manufacturing must be through the aluminum recycling through the year 2020. Increasing the aluminum manufacturing through the recycling is the long term objective and goal set by the Alcoa. These will definitely saves lot of energy and will be a environment friendly one.

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