Innovation and Risk Management:
Introduction:
Globally a lot of the environmental issues can be solved by building business strategies around radically more productive use of natural resources. Through the acquirement and use of these business strategies, business problems can amazingly be solved at a profit. Analysts have proven that the potential of the earth to maintain life, and hence economic flow and activity is always endangered by the way we extort, process, move, and dispose off large amounts of resources.
It is then clear that with an ignorant and narrow focus, our industries concentrate only at the usable resources of the globe’s ecosystems while assuming the larger and most important services provided by these systems for free. Hence both resources and ecosystem services originate from the earth and at times from the same biological systems however they are both two dissimilar things. Forests, for example, provide both the resource of wood fiber and water storage as an ecosystem service. This study thus focuses on putting forward a new approach that not only protects the biosphere but also for improves competitiveness and profits through the adaption of natural capitalism.
The Environment:
The ability of humans to make tools has grown and developed to such an extent that individuals are now able and more than ever trying to shape the environment for personal and selfish interest. This makes us impolite inhabitants of our own world, increasing, rather than lessening the ecological risks. Disasters which include volcanic eruptions, tsunamis, earthquakes, diseases and climate change can be exacerbated either by our very actions or lack of them.
Due to climatic change the earth is warming up and present there is scientific proof that it is evident and happening, this is said to be specifically human- induced. Thus with the global warming increasing day by day, there is decrease on the species and inhabitants offering no chance for the flora and fauna to naturally adapt. Climate change then has been seen to be one of the biggest threats facing the earth. Increasing temperatures in various regions and a rise in weather patterns have been witnessed in recent years.
It is thus very important to consider the external environmental factors as a significant component of external analysis while conducting a strategic analysis or doing market research as it helps in giving a certain overview of the very different macro environmental factors that any industrious company has to take into consideration. Hence the PESTLE analysis should be used to provide and lay out a context in regard to an organization’s or individual’s role in relation to the external environment. The PESTLE analysis stands for “Political, Economic, Social, and Technological, Environmental and Legal analysis. These tools should be held as the key basis for future strategic management and planning as they extremely help in finding out the present situation and status of an organization or individual in relation to their current and external environment role.
Challenges associated with PESTLE analysis:
The process of PESTLE analysis underpins many other analytical techniques such as scenario planning, posing some challenges during its implementation.
Political challenge:
The manner in which a government handles and intervenes in the economy plays a major role in risk and innovation management. Factors such as political instability, labor law, tax policies, trade restrictions and environmental law contribute highly in the growth of an organization.
Technological challenge:
This involves environmental and biological aspects such as the rate of technological change and technology incentives. These aspects determine the least resourceful production level and affect largely an organization’s outsourcing decisions. Moreover noticed technological shifts largely affect the quality, costs and the lead to innovation.
Environmental challenge:
The rise in awareness to climate change is highly affecting how most organizations function together with the services and products they offer. New markets are either being established or destruction of the existing ones is experienced.
Creative Process of Oil and Gas Company Involved in Natural Capitalism:
Global corporations are duly consuming natural resources in very disturbing ways that eliminate the ability of the ecosystem to regenerate our water, air and food supplies. Chevron Corporation is one of the most important global integrated energy company. The company believes in success which is driven by the people surrounding it and their very dedication in achieving their goals the precise way. The company thus achieves this by operating responsibly, implementing new and innovative technologies and executing business profitably by acquiring new opportunities.
Chevron is one of the few leading companies in the world that is very keen in risk and innovation management. It is through its operations that it focuses mainly in restoring the planet by practicing and engaging extensively in natural capitalism. Arguably some of the very unique and simple changes applied to the businesses are administered can lead to astounding benefits for today’s shareholders as well as astonishing benefits for the future generations. Thus the fight to achieve natural capitalism is composed of four key changes in business operations that are crucially interlinked (Amory, Lovins and Paul, 1999). These are the main strategies Chevron as a company recommends its people to put in place for the purposes of securing a purpose driven business operation.
An Examination of Strategic and Operational Decision Taken By the Company:
The Dramatic increase of the natural resources’ efficiency:
Only when a business reduces the unnecessary flow of resources form an alternative form of depletion to a basic form of pollution, it enjoys lucrative business opportunities. Major resource saving highly enables a company to yield higher profits than when engaging in small resource savings both in its manufacturing approaches and other activities (Amory, Lovins and Paul, 1999). In its journey towards natural capitalism, Chevron as an energy company has figured out new ways to design and has participated fully in technological shifts from old to new ones. Chevron is striving to find new and better methods to fill in the world’s growing demand for clean, affordable and reliable energy.
Chevron Corporation deeply involves itself through the establishment and distribution of technology based solutions that contribute to its business growth and global operations. This has been achieved mainly through an approach that involves in-house expertise, proprietary applications and specific strategic partnership. It is through this innovative strategy that Chevron’s strengths in upstream and downstream technologies are built, new emerging energy and venture capital investment (Chevron Corporation data index 2013). Major and important growth in resource efficiency entails the right steps to be undertaken in the correct order. Less change created at the downstream end of energy production often tends to create higher savings upstream. Again the company’s technology venture recognizes and identifies technologies that have the ability to alter energy production and use. It is clear that almost every company that utilizes a pumping system during its operations, for instance Chevron Corporation has put in place cogeneration units that use a fuel-efficient, environmentally responsive procedure to both produce electric power and seam concurrently. This process has proved to be capable of producing electricity twice efficiently as other processes used by the local utility companies. Above all Chevron renders its operations and technological advancement to potential refiners mainly through its two joint venture partnerships which include Chevron Lummus Global LLC and Advanced Refining Technologies LP. This strategic partnership has helped refiners tackle challenges experienced in achieving natural capitalism by Chevron Corporation.
Alter production models to biologically stimulated ones:
It should be noted that the road natural capitalism does not merely seek the waste minimization alone but stresses the ultimate elimination of the very principle or concept of waste. This is provided for and evidenced mostly in closed –loop systems of production which are structured on nature’s design. Here each and every output is either returned carefully back to the bionetwork as a nutrient or is assumed to be an input meant for the production of another product, as Paul Bierman-Lyte from CH2M Hill engineering firm puts it, “waste equals food”. It is through such systems where toxic materials that can hinder the ecosystem potential to reprocess the materials are eliminated.
Chevron Corporation believes energy is precious and very important. Hence this gives the reason as to why they always strive to use it more efficiently while conducting their own operations. Chevron Corporation is very much committed in assisting the other institutions, including universities, companies and schools improve their energy efficiency. In order to meet the very much growing energy needs in the world; conservation and efficiency are the most important and cheapest to the environment. It is through using power more efficiently that helps in the reduction of carbon emissions, protect our endless natural resources and reduce energy costs. Chevron thus uses an energy index to measure its energy efficiency improvements across its entire global operations. The index as of 2012 has shown an improvement of 34 percent since 1992 (Chevron Corporation index data 2013).
The company has continued to explore new biological based technologies that help in creating renewable forms of power more resourcefully. The company has completed and commissioned the very world’s largest solar to steam generation project that is situated in Coalinga, California. To produce steam this project uses solar energy, the steam is used to heat the heavy oil in the company’s adjacent fields, improving the competency of that reservoir.
Move to a solution based business model:
It is usually clear that any traditional business model of manufacturing rests with the retailing of goods. In the new solution based model, value is otherwise delivered as a flow of services. According to Amory, Lovins and Paul (1999), this model brings about a new outlook of value. This acts as a strategy that originates from the buying of commodities as a sign of wealth to another approach where wellbeing is considered by the rapid nonstop satisfaction of altering expectations for value, performance and eminence. This new association tends to support the precise benefit of providers and clientele in a manner that rewards them for implementing closed-loop manufacturing and the first two innovations.
Thus in relation to its focus and drive to eradicate and diminish waste, Chevron Corporation has engaged in making an important swing in its entire business structure which is the third significant strategy towards realizing natural capitalism. The company is focusing its strength on the technologies that will increase the company’s potential to find, develop and produce both crude oil and natural gas from unconventional and conventional resources.
Chevron Corporation again is heavily planning to invest in execution and establishment of new emerging power technologies, which include finding better ways to make non-food based biofuels, growing the company’s renewable power capital and piloting sophisticated solar technologies for their operations. The alteration of a business structure to a service model promises extreme benefits to both the participating business and the economy in general. A service model reduces the instability in the revenue of assets that are essentially found at the core of the industry cycle leading to a significant minimization of the overall instability of the world’s economy. Chevron Corporation believes that the benefit of adopting this model would bring about a powerful economic situation where there will be growth by using less and become much stronger by being leaner and highly stable.
Reinvesting in natural capital:
For business to produce their important services and biological resources more abundantly, they then must first restore, sustain and expand the earth’s ecosystems. As the individual needs increase, the costs endangered by failing ecosystems increase and the environmental awareness of the consumers rises mounting pressure to put into consideration natural capitalism. It is thus clear that the ecosystem is a major supplier of key apparatus for the sake of the earth’s life and is currently failing to secure abundantly its activities. Failure to heavily reinvest in natural capital should pose as a threat to organizations since this can heavily affect a company’s revenues indirectly (Amory, Lovins and Paul, 1999).
The Corporation’s means to take care of the ecosystem is highly based on its awareness in regard to natural world complexity value. The company thus recognizes and appreciates the need to conserve the ecosystem diversity which includes; the wealthy and Earth’s rich life, its genus and bionetwork, and the biological processes that supports them. The company’s biodiversity position strongly shows the company’s assurance in integrating the bionetwork diversity considerations into asset plan evaluations and resolution making as part the Corporation’s ESHIA process. The Corporation hence oversees its entire business operating unist in ensuring that they incorporate biodiversity protection throughout their operations with the assistance of the Corporation’s environmental stewardship process implementation. Hence its safety, health and environment staffs engage in protecting habitats near the company’s operations and always allocate their preeminent duties through the company’s Biodiversity Network.
The Corporation has again adopted a framework for highly achieving exceptional environmental performance known as the Operational and Excellence Management System. This system is cautiously used to put in place and manage issues related to the environment, safety, health, efficiency and reliability. The company uses a high level discipline strategy to manage and recognize any impacts that the company’s activities may have on the ecosystem, for instance through air emissions, water use and waste. It is in this regard that the company uses the specified frameworks recognize and assist projects that focus on improving environmental performance (Chevron Corporation index data 2013).
Global issues affecting the company’s competitive advantage:
Supply and demand:
Global appetite for both crude oil and other energy sources is rising dramatically, with the world’s power consumption and intake projected to rise extremely by more than 40 percent by 2035. This growing demand is highly being fueled by the estimated rise in number of the world’s population with a cool 25 percent in the next 20 years. Most of this growth in population is expected in emerging economies such as India and China. Hence the increase in power demand from economic output and enhanced ways of living are both likely to put additional strain on energy provisions.
Chevron Corporation recognizes fully that the world as a whole needs all the energy that the company can develop, basically in its various possible forms. This gives the reason as to why the company is investing heavily in a broader portfolio of energy resources. The corporation is very certain that it will find and develop new sources for both gas and oil while using the energy more efficiently. Hence, in order to overcome supply and demand challenge, Chevron Corporation plans to invest heavily in the next generation of energy sources and renewable. Thus it should be noted that increasing demand, more isolated and exigent resources, and geopolitical pressures extensively continue to change the world’s energy platform.
Energy policy:
The global alarming urge for energy poses very complex challenges for both the producing and consuming nations. In order to improve the living standards of individuals in the emerging world there should be easy access to reliable and affordable supplies of energy. The various Governments play a very critical part in the deployment and development of new and emerging energy technologies. The Government’s most crucial role involves mainly setting a critical policy approach that promotes power and ecosystem security.
Most importantly in order for organizations to achieve global energy security, global nations need vibrant cooperative energy approaches that address a wide collection of economic, political and ecological issues. Again it should be noted that the world’s70 percent proven oil derivative reserves are majorly owned by public organizations and Governments, it is crucial and significant for both the industries and governments to work together for the purposes of balancing the supply and demand. Chevron Corporation thus through its economic and development approaches has bound to focus on significant initiatives that will broaden and boost its supplies, different renewable energy and obtainable resources more efficiently.
Emerging Energy:
Chevron Corporation assumes to be a global role model in acquiring and distributing energy form crude oil and natural gas. It should be noted that this two derivatives of energy will always remain the world’s critical sources of energy for many years to come. The company is much aware for the purposes of meeting the rising demand of the developing economies, it needs to expand non -conventional and renewable resources by protecting the energy through the most proficient efforts.
The discovery, fabrication and liberation skills that Chevron Corporation has acquired over for the 130 years are very crucial in for the purposes of the company’s current work in implementation of commercial scale renewable resources. Hence the Corporations efforts are very much directed on the discovery and fabrication of new renewable power technologies that are sustainable, scalable and profitable.
Emerging energy has lead the Corporation to undertake a more realistic strategy in renewable energy by mainly focusing and pursuing on technologies that control the Corporation strengths. They include; solar advanced biofuels, geothermal energy and energy efficiency technologies. The Corporation conducts internal research with an aim to partner with the governments, academia and businesses in researching and coming up with other alternative sources of renewable energy. Through this kind of approach the Corporation helps to advance technology and share information that focus on a more renewable energy for the sake of the future generations.
Conclusion:
It is thus very important to note that the decisions that we planet Earth’s inhabitants make today directly or indirectly affects our way of living. Whether the decisions involve buying a family car or investing heavily in a multibillion dollar energy project, they all may have long-term energy implications. Energy production and use in the most environmentally safe manner acts as a platform for higher economic growth and improves the life quality of people around the globe. Hence natural capitalism addresses these kinds of issues by bringing together both environmental economic goals.
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