Business Analysis: Business & Marketing Essay

BUSINESS ANALYSIS
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Business Analysis
Part A
Question One
The events in the Rio Tinto case are significantly connected to sustainability for several reasons. First, as revealed by Butler et al. (2020) in The Guardian, Rio Tinto executives decided to blow up the rock shelters despite knowing that these shelters had a significant cultural value to the indigenous people around that area. By doing so, the company destroyed their relationship with the indigenous people, yet they are an important part of the community in which Rio Tinto operates in. This goes against the corporate social responsibility (CSR) concept which is focused on ensuring that businesses are making decisions that have a positive impact on society (Chang et al. 2017, p.50). The company’s action did nothing but destroy some of the things that hold cultural value among the indigenous community. Rebuilding the relationship with the Aboriginal people will be a long and probably costly process for the company, yet its success depends on it. As indicated by Butler et al. (2020), the indigenous investors raised concern over the issues, which is why it was reviewed by the board. Thus, not only did their action affect the community that owns land around the area but also the investors.
Second, when the indigenous groups and investors raised concerns about the actions of the company, the issue became more serious. Investors and other interest groups are as important to companies as employees and customers. These are all essential stakeholders and according to the stakeholders’ theory, companies need to build strong and lasting relationships with all these stakeholders (Chang et al. 2017, p.50). Stakeholders include any person or group affected by the actions of the company or who influence the company’s success. Since the actions of the company affected the investors as well as the indigenous groups and raised concerns, it also endangered the survival of the company. Such actions in the future can cause existing and potential investors to pull out, which will affect the company negatively. Also, such actions that cause public outcry threaten the company’s reputation and shareholder value.
Third, blowing up rock shelters relates to the sustainability of the company because it affects the environmental aspect of sustainability. Mining has always been associated with a negative environmental impact. As part of promoting sustainable mining and ensuring that the social and environmental impacts of mining are mitigated, mining companies are increasingly consulting with local communities (United Nations Development Programme(UNDP) 2018, p.15). Some countries have laws requiring mining companies to consult with the affected communities. When such consultation is absent, the social and environmental impacts of mining are amplified. This is what the actions of RioTinto executives did. They amplified the issue because the indigenous community was not consulted. If anything, the company aggravated the local community, thus threatening any future cooperation.
In summary, the actions of Rio Tinto relates to sustainability because they threatened the core dimensions of corporate sustainability. Corporate sustainability involves balancing the environmental, economic, and social needs of stakeholders (Chang et al. 2017, p.51). The actions affected the community that lives around the cultural site, shareholder value, as well as the environment.
Question Two
Making profits is an important part of businesses, but so is sustainability. Often, the two can present conflicting interests, especially when meeting the needs of one group of stakeholders comes at the expense of another group. This coupled with the idea that profits are a “callous slur” has often created a very complex environment for businesses. However, the business case for sustainability, which refers to how businesses can manage their social and environmental impacts and increase their bottom line (Schaltegger et al., 2017), explores how businesses can deal with this complex environment to maximize both profits and enhance sustainability. One way of achieving this is by engaging all stakeholders to achieve shared value (Whelan & Fink, 2016). When all stakeholders are engaged, especially when the company is trying to find solutions for existing problems, cooperation is enhanced. For instance, Whelan and Fink (2016) indicate that in a mining company, when stakeholders are engaged, it becomes easier for the company to acquire land permits among other essential needs. In this sense, companies can make profits by managing the social and environmental impacts of their business. It becomes impossible to separate the triple bottom line of economic, social, and environmental impact.
Another approach that can help companies view profits and sustainability in the same light is to create a loyal customer base. According to Whelan and Fink (2016), customers are now, more than ever, intent on buying products and services that are considered sustainable. Consumers are paying more attention to how companies treat the community around their area of operations, their employees, and the environment. Companies that are socially and environmentally responsible stand the chance of not only charging premium prices for their products but also increasing their sales revenue by approximately 20% (Whelan & Fink, 2016). When a company creates products and services that are sustainable, customers are more likely to stay. What better way to maximize profit than to do so while enhancing sustainability with the support of loyal customers? Companies can also invest in innovative solutions (Whelan & Fink, 2016). The business world is...