Question

How are environmental issues linked to the process choice? Won't being an environmentally conscious firm drive up costs and take away any competitive advantage? Discuss, with examples to support your position

Answer 1

Environmental issues have the major impact on the choice of process. The type of process depends on various factors like industrial waste, sustainable development of raw material and water and the emissions in the air. These issues have the major impact on the type of process, as several laws require the businesses to change procedures and equipment to meet the imposed standards. The businesses try to adopt protective and proactive measures such that their processes does not harm environment in some way or the other.

In the current scenario, firms focus on adopting the process that is environment friendly even if the cost drives up a little. This does not take away the competitive advantage; rather firms can use it as a drive force to attract customers, but making them aware about the harmless process used add up to the competitive advantage.

For example, IKEA, uses lot of lumber to make affordable price furniture and uses sustainable forestry techniques so as to prevent trees. The company also invests in wind and solar energy to an unprecedented degree. Another example is of Nike, that uses recycled aluminum frames and underground energy storage. It also enforces strict emissions standards to reduce overall carbon footprints. Moreover, the world famous brand Johnson & Johnson is dependent on solar power for its energy needs. These companies have competitive advantage and are able to sustain their position across the globe.