Meeting the Challenge of Sustainable Business (Essay Sample)

Meeting the Challenge of Sustainable Business
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Meeting the Challenge of Sustainable Business
Summary
RusForest must adjust to the geopolitical, social economic, legal and environmental factors in Russia to remain profitable. Business leaders and global corporations have a great influence in the attainment of sustainability in the business environment as illustrated by Shmelev & Shmeleva in 2012. They achieve this through study of emerging and future trends to inform future visions and plans. In studying emerging issues through 2060 scenario, management of the company is able to adjust and plan. Shmelev & Shmeleva (2012) agree that with the emerging issues, management is also able to identify the industry opportunities and threats. The future opportunities available in the industry help the organization reorganize and look for their strengths and weaknesses (Shmelev & Shmeleva, 2012). Through utilization of resources and maximization of profits, the company will attain sustainability. Sustainability on the other hand will always ensure competitiveness of the company with other companies in the industry. Political environment contributes to the decrease in demand of exports through engagement in the attack in Ukraine. Shmelev & Shmeleva (2012) further confirm that the change in climatic conditions has led to a reduction in productivity of forestry companies reducing their possibilities of achieving sustainability. In recommendation, the government and organizations should encourage the planting of tolerant trees in the area. This will help in improvement of the environment through circulation of carbon and increase in timber production (Shmelev & Shmeleva, 2012).
Introduction
Geopolitical, social economic, legal and environmental factors influence the manner in which RusForest conducts business. RusForest is a public company that deals with forestry and its management and shareholders has great experience with the Russian forest industry. The operational office of the company is in Moscow Russia. However, its headquarters is located at Stockholm Sweden. The aim of this report is identifying the geo-political, socio-economic, legal and environmental factors affecting Russia, RusForest, and the forestry industry. Aims of this report will extend to determining how fresh water shortages, waste, land-use, climate change, pollution and bio-diversity loss influences the forestry industry (Korppoo, Tynkkynen & Hønneland, 2015). It will also look into the different ways scenario planning can contribute in the formulation of an appropriate strategy for sustainable innovations that provides value creation and competitive advantage. The report will also look into the different ways RusForest Company can meet the challenge of sustainable business. Currently, the organization produces a wide range of sawn wood products through long-term utilization and control of timber leases. The forestry industry should be sustainable in meeting the increasing demand for furniture and timber products. This report will extensively discuss ways RusForest and the forestry industry can meet the challenge of sustainability (Shmelev & Shmeleva, 2012).
Discussion
Russia falls second in the exportation of softwood swanwood products due to its extensive forest resources. However, the Russian economy has been decreasing recently. Therefore, it will be a great challenge for the country to meet the sustainability of business. RusForest on the other hand have various strategies in hand that can help in dealing with the challenges of sustainability. Shmelev & Shmeleva, (2012) confirm that the 2060 scenario tries to describe the way activities will take place in the future and the factors that might affect the future of organizations and its implication into the natural environment. According to the scenario, economic sanctions highly affect sustainability of the country and make the country a high risk for recession. The various factors in discussion in the scenario will be in illustration below (Shmelev & Shmeleva, 2012).
Geo-Political Factors
Various geo-political factors affect sustainability of businesses in Russia. Most importantly, the attack into Ukraine by the government of Russia has caused many consequences on sustainability of businesses. Firstly, it affects the export market of the countries products and services. Shmelev & Shmeleva, (2012) worry that due to the attacks; there has been development of negative reactions from foreign countries on Russia relationship. For this reason, there has been decrease in exports of the country that highly affects its sustainability. On the other hand, increase in capital outflows from the country has also caused many sanctions from the European Union and the United States. According to Shmelev & Shmeleva, (2012) geopolitical pressure will have a great impact on the Russian businesses and investments and in this case the forestry industry. RusForest Company relies greatly on the export of softwood products and thus reduction of exports will heavily affect its sustainability. From the poor relationship of the government with other governments, there will be reluctance of foreign markets importing from Russia. This will affect the company sustainability negatively (Shmelev & Shmeleva, 2012).
Social-Economic Factors
Socio-economic factors possess great threat to sustainability of businesses in Russia. There is a serious inefficiency in terms of energy in infrastructure, building, and manufacturing stock as illustrated by Parrotta (2011). Another issue affecting the Russian economy is inequality in income ranking the country’s wealth gap as the worst globally. In order to tackle these challenges, the country should cut its consumption of energy by almost forty-five percent. Parrotta (2011) observed that in cutting the consumption of energy, they will improve on their efficiency greatly hence attaining sustainability of businesses. The situation will directly influence RusForest Company. Parrotta, (2011) also notes that the high consumption of energy will affect the company efficiency and effectiveness due to high cost of transport. In return, the high costs in transportation will result in reduction of profits of the company thereby affecting its sustainability. To improve on sustainability of the organization and profits, management of the company decides on developing a harvesting operation in the country that will reduce cost of production. This will also reduce the cost of transport making the company more sustainable (Parrotta, 2011).
Legal Factors
The legal framework of this country promotes a good business environment. The judicial system offers impartial hearing to both locals and foreigners that attract many investors into the country. In 2007, Parry & IPCC established that the environment makes it possible for businesses to thrive and meet the challenges of sustainability. The country’s tax rates are considerate and motivate business growth in the country. Due to this, it will be easier for the company to strive in the forestry industry. The decision of RusForest management to develop a harvesting operation in the country will therefore increase their profits due to the fair tax rates. Additionally, Parry & IPCC (2007) explains that this will lead to the company facing the challenge of sustainability of businesses. The environment also creates opportunities for other investors to invest in the country. Due to the increase in businesses, there will be increase in demand for RusForest products that will increase their probability of meeting sustainability of the business (Parry & IPCC, 2007).
Environmental Factors
According to Russia 2060 sustainability scenario, global warming will largely reduce the sustainability of businesses. Randers, (2012) observes that from the global warming, Russia enormous landmass may become swampland due to melting of the permafrost. The swampland will then affect infrastructure and lifestyle of the citizens. Apart from the lifestyle and infrastructure of the country, it will greatly influence the forestry industry. Due to the swampy land, trees may rot because of the excessive water hence reducing the forestry companies’ production (Randers, 2012). In addition, the swampy condition will make it difficult for harvesting hence reducing efficiency of RusForest. This will reduce the company sustainability as the largest producer of softwood products locally and internationally. Fossil fuels affect the sustainability of the country and the company due to the release of toxic wastes from fossil fuels as explained by Kasischke & Stocks in 2000. Growth of forests will be largely affected by the release of these fuels reducing productivity of the organization. Reductions in productivity will lender the company inefficient in meeting the challenges of sustainability. From the swampy condition because of global warming, there will be shortage of fresh water. Lack of fresh water will merely affect the forestry industry (Kasischke & Stocks, 2000).
Scenario planning contributes to the development of innovative strategies that can help in provision and creation of value and competitiveness. Through awareness of the things to happen in future, organizations are in a better position to formulate strategies that can best tackle the challenges (Kasischke & Stocks, 2000). Most importantly, scenario planning help in the risk control of businesses. They can do this through diversification of their operations thereby reducing the risks of the business. The move also assists in the utilization of resources as well as maximization of profits. RusForest have been on the forefront in innovating ways to reduce cost from the scenario planning (Symon, 2005). This will increase...