Week 4 Discussion Points with No Names.docx

Week 4 Discussion Points with No Names.docx - Week 4...

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Week 4 Discussion Points with Names - Fall 2017 DP #1: Question 1: Patagonia Executive in Asheville Article Does the marketing of sustainability allow companies to increase their prices for product purchase? JC Response: In some cases yes, but in general no. People are starting to expect firms to be sustainable as at least a minimum requirement rather than an extra benefit that they pay more for. They will pay more for a product from a sustainable firm if the product they buy would cut costs or lower risks, or produce other benefits, for the purchaser. On the other hand, if the selling firm has a poor sustainability reputation, even a lower price may not be sufficient to ensure people buy any of their products. One of the reasons that the retail firm American Apparel went bankrupt was that no matter what the price was for their clothing, customers did not trust the company’s management any more (especially after he was indicted on several crimes, including improper accounting, poor treatment of employees, and sexually harassing numerous employees, among other charges.) DP #2: Managing Sustainable Supply Chain Is a low bid policy effective in business? With big organizations a requirement to use the low bidder could be detrimental to the quality of end products in turn causing a decrease in customer satisfaction. JC Response: One of the US astronauts was asked what scared them the most about going into space- his answer was “the fact that the Space Shuttle was built by the lowest-bidder.” Many firms, especially in construction and infrastructure, try to underbid the competition and then if they win the contract, they try to get extra money after the contract is signed for a variety of reasons, such as unforeseen events, extras, or contesting the contractual terms. However, firms have suffered major losses, and in some cases bankrupt the company, especially if the contract was a fixed-price contract. Look at what has happened to Toshiba’s Westinghouse subsidiary, who bid $5billion to build a nuclear plant in the South a few years ago, and the project is threatening to bring down the entire parent company because the cost of the nuclear plant has ballooned to $25billion, much of which the electric utility buyer refuses to pay the added costs. DP #3: Sustainability and M&A It's not just about due diligence: How much time do you think a company merging with or acquiring a non-sustainable business will add to the already time consuming process? Would it be more effective to change the business model completely or to just add sustainable tactics to the business? JC Response: Buying an unsustainable company is a big risk, as one never knows what skeletons may be hiding in the closet. Both changing the business model and 1
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adding sustainable tactics will probably be required, and best done as quickly as possible!
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  • Fall '18
  • Dr. Cusack
  • The Land, Tragedy of the Commons

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