Sustainability and Competitive Advantage

Does ethical leadership provide a competitive advantage?

Start off with Debate

Are sub-prime mortgages ethical?

Are sub prime mortgages a sustainable business model?

Problem

• Businesses need to develop a business model. Within that general framework an overarching concern:

• Make quick profits/low prices?

• Build a reliable customer base/quality?

• Provide a company—quick profits (Use cases or own experience).

• Provide a company—reliable customer base.

• What is the difference?

• Which ones are more common?

• Is there a hybrid? If so, provide an example.

Focus on those differences next

• Purpose: Not to give right or wrong answers. Different business models. My recent experience with car warranties.

• They are making money.• Important as an employee, customer, manager.• Purpose: Ethical dilemmas. Choices to put

yourself into them or avoid them. • Larger—Do companies that strive to be ethical

flourish?

Begin by examining competitive advantage and sustainability.

Competitive advantage.

Provides something other than pricing to gain a market place advantage.

So, Examples. Patents, technology, employees/culture, brand image, flexibility (just in time).

Three components

• Value added. Reduce production costs, or offer premium pricing with improved quality, repeat customer.

• Distinctive—others do not have easy access to it.

• Difficult to imitate

Competitive advantage

• 3 M

• Wal Mart

• Microsoft

• Southwest Airlines

• Does ISU have a competitive advantage?

• Look at the components of each.

Sustainability

• Overused word. Hard to pin down a good definition.

• Sustainable development

• Sustainable communities

• Sustainable environment

• Sustainable production

• Sustainable competitive advantage

What aspects do these share?

• Sustainable includes what?

What is the size of the system?

• One firm?

• One industry?

• One community

• One country?

• One Eco-system?

• How broad do most firms consider their system?

Sustainable competitive advantage

• How can ethics lead to sustainable competitive advantage?

• How does ethical behavior by top management and other employees add value

• Is it distinctive?• Is it difficult to imitate?• WWW.patognia.com• Ben and Jerry’s• http://www.benjerry.com/

What does Target do that is unusual and related to ethics?

Henry Ford and $10/hour for workers.

Heart of the debate

What is the purpose of business?

To be a good community citizen that provides a product or service? Do positive things.

To be a fair price provider of a product or service. Don’t break laws.

• Using ethics as a part of the business model is an example of sustainable business practice.

• Think of “it is a wonderful life”

• How does ethical behavior contribute to a sustainable competitive advantage. Many different ways.

Why do so few firms claim ethics as sustainable competitive

advantage?

• Ben and Jerry’s

• Patagonia.

• Can you think of others?

• It is a matter of degree.

• Is Business Ethics an Oxymoron.

What use does this have?

#1. Job choice. Some of you care don’t care about this. But why is it in your self interest to work in an organization that emphasizes ethical treatment of customers, employees.

How do you discern? What are you told about the company. Are they honest to you?

• You have to live with yourself. Are you going to be more content with yourself wealthy but had to do some unfortunate things to get there (Boiler Room).

• What are you willing or not willing to do to get there?

• Willing to trade a positive work climate and make some good money too.

• #2 Unit leader. Your thoughts and actions influence work unit.

• What business model would you like to follow for your unit? You have discretion at some point.

As a consumer

• Consider sustainable business. Do you pay more for some products like Ben and Jerry’s.

• Do you do business with questionable business people.

• Utilize the BBB.