Big step towards sustainability
All companies love to reduce costs, but this is not always feasible. Environmental factors can cause major setbacks for a given industry. Select a company in an industry that was recently affected by negative environmental factors for which you would like to implement strategies to reduce costs.
Describe the company and the negative environmental factors that caused major setbacks.
What strategic financial decisions would you implement to help either increase revenue or reduce costs?
Respond:
IKEA, a European furniture retail company, is taking a big step towards sustainability. However, it is still working to find more sustainable solutions to its aggressive consumption of natural resources.
IKEA needs many raw materials to produce furniture and it needs to cut off many trees. It cause climate change due to the lack of trees to maintain the environment. IKEA stressed the bottom line which is people ,planet and environment. Many of IKEA’scustomers empahases on the awareness of environmentaliissues of IKEA.
IKEA sources raw materials from China, and one material that is almost exclusively sourced from China is bamboo. In fact, more than 90% of the bamboo used by IKEA is sourced in China.
IKEA consumes more wood than any other company – 1% of the world’s wood. While the business is working to source sustainably, this can be a difficult transition in the short-term. Even though IKEA is a leader in the “fast furniture” industry, the progression of reducing impact requires modifications that can take years to establish.
IKEA and other major furniture retailers get much of their wood from forests crucial for biodiversity, stripping land of trees faster than is healthy. IKEA is one of the largest furniture retailers in the world and a leader in a booming global furniture market.
IKEA used 13.56 million cubic meters of solid wood and wood-based board materials, not including paper and packaging.that makes up 1% of all wood used around the world.
Sample Solution
I recently chose to analyze a company in the hotel industry that was severely impacted by negative environmental factors. This particular organization is a small, boutique hotel chain located in coastal cities around the world. While they specialize in providing luxurious accommodations for travelers, their business has been greatly affected by climate change-related events such as severe storms, flooding and rising sea levels (Parker et al., 2017). As a result this company has had to invest heavily into repairs and improvements in order to maintain their properties which has put them at risk of closing some locations or even going out of business entirely.
In order to address this issue from a financial perspective I would implement several strategic decisions with the intent of either increasing revenue or reducing costs. One example would be changing up their marketing approach by switching from traditional campaigns emphasizing luxury experiences to ones that focus on sustainability initiatives such as energy efficient lighting or renewable sources of electricity (Tai et al., 2019). Doing so could potentially attract more eco-conscious customers who might want to stay at hotels offering these green options while also helping offset some of the costs associated with these changes over time.
Additionally, I would also suggest launching new specials targeted towards groups looking for cost-effective ways of traveling – especially families since many are likely dealing with budget restraints due to current economic conditions (D’Alessandro & Gazzani 2020). By doing so they can continue attracting customers without compromising on quality while still keeping prices competitively low. Furthermore, if applicable this company may even look into partnering up with local parks or attractions nearby depending on what each location is near (Beaumont et al., 2018). Such arrangements could help stimulate tourism activity thus further driving revenue streams for both participants involved.
Ultimately then, through implementing various strategic decisions it should be possible for this particular organization operating within the hotel industry to reduce costs incurred due to negative environmental factors while simultaneously increasing its overall revenues.
