SUSTAINABILITY

Sustainable Enterprise Economy

Sustainable Enterprise Economy

Introduction

The biggest capitalist problem in present days is how businesses are linked with a narrowed view of short term financial gains, while missing the vital needs of customers and neglecting broader factors that contribute to the long term success (Porter & Kramer, 2011). It is incomplete and immature to view that business needs to be big and profit driven to be successful.

Even though there are conventional advantages that big business has developed throughout the history of capitalism such as economies of scales, brand and marketing power, established customer base, the new wave of technological and environmental revolution is gradually blurring the line between huge multinational firms and purpose driven forces of local startups with a global mindset. Small businesses often provide flexibility, entrepreneurship, more efficient communication and innovative thinking in which large firms lack. However, they face vulnerabilities in areas of finance, takeover risk, and economies of scale distortion. George Harrison gave a cross industrial outlook in which the key to business success is “the line down the middle that we need to pay the most attention to” (Mass, 2014). True business success lies within the leadership to seek balance between profitability and sustainability.

Discussion

Business leaders frequently fall into the controversy of shareholder value versus environmental and social responsibility in terms of profit maximization. Often, business leaders, feel that it must be 'either/or' rather than 'both.' There are positive indications that profit maximization can be achieved with both factors in mind, as true visionary companies are able to be environmentally and socially responsible while producing well above average returns.

Importance of Stakeholder Satisfaction

Satisfaction across stakeholders can be a source of competitive advantage (Palazzi & Strarcher, 2006). Modern businesses must come to accept that they have much more well-rounded responsibilities in areas such as sustainability, social responsibility, and welfare, not just economic missions. Moreover, businesses must realize that true potential can be unlocked through the concept of “Shared Value,” offering utilization of resources, management capability and competencies to bring changes in the form of things that no well-intended government or any social organizations can (Porter & Kramer, 2011).

It can be argued that being solely profit-driven will not keep businesses sustainable and fit for survival in modern day competition. We see companies rise and fall in respected indices such as Fortunes 500 or S&P 500 all the time, as some have failed to adapt within ever-converging markets and increment new technological innovation to survive disruptive changes. Considered as one of the big blue chip stocks, IBM had escaped twice its near-death experiences by directing its focus on sustainability and double-bottom-line benefits.

History of IBM

During 1981, when the first IBM computer was launched, it was dubbed the “greatest company in the world” when a single month sales figure exceeded five-year forecast (Applegate, Austin, & Collin, 2009). However, during the '90s, the IT industry faced a hardware separation business model, where many choices of separate hardware are available and customers stopped buying 'a machine in a ...