Research Papers
Title: SUSTAINABILITY = BEYOND GREENING + GLOBAL GROWTH AT THE BOP
Reference #: SCMR-WP021-0001
Date: 10/1/2006
Authors: Terry Tremwel, University of Arkansas
Abstract: IntroductionSustainability has become the current buzzword in business, largely due to the need for multinational corporations to be proactive in global government relations and global marketing. Many people assume that sustainability refers exclusively to “Green” initiatives that will add costs to products, services, and the supply chain or network. In fact, sustainability is about reducing costs and developing new markets. Sustainability refers to a branch of global business strategy that encompasses product development, material sourcing, product formulation, material reuse, product targeting and segmentation, product distribution, transportation networks, context-sensitive package development, business line sustainability, global scope, and optimal service to the widest customer base. These categories of focus can be divided into two general aspects of sustainable business effort: “Beyond Greening” and global growth at the “Base of the Pyramid”‧'BOP. According to Stuart Hart (p. 88), strategies for greening include a focus on existing products, processes, suppliers, customers, and shareholders by using an incremental approach that seeks continuous improvement and rationalization of the existing industry. In contrast, strategies for “Beyond Greening” focus on emerging technologies, markets, partners, needs, and stakeholders by using a discontinuous approach that seeks creative destruction of the existing industry and creation of a restructured industry. While some of the categories of focus mentioned above fall both under Beyond Greening and global growth at the BOP, those that are Beyond Greening include: product development, material sourcing, product formulation, material reuse, transportation networks and reverse logistics, and package development. The BOP is defined as the 4 billion people in the world who have annual per capita incomes under $1,500. The applicable categories of focus that fall under global growth at the BOP include all of the focus areas in the first paragraph. In other words, a Beyond Greening strategy contributes to a global growth at the BOP strategy: these strategies are intertwined and inseparable. A Beyond Greening strategy is often a subset of a global growth at the BOP strategy, but some reuse strategies that reduce costs in a top of pyramid economy may not fit a BOP economy. Traditional corporate strategy and economic thinking targets the wealthy and middle classes because, “they have the money.” Some corporations are becoming so large and so ubiquitous in serving these markets that further corporate growth in the home markets of these companies appears to be limited by the size of the traditional target markets. Stock prices get stuck in neutral as an indication of the widespread perception that growth is in the past. However, two paths to growth remain: expansion of product/service offerings to existing markets and finding new “Greenfield” markets in underserved populations. This essay highlights finding and developing new markets. Historically, the wealthy and middle classes were much smaller than they are today. Disruptive technologies were both the cause and the effect of an expanding middle class in renaissance Europe, the U.S. of the Twentieth Century, and in the more recent trend of global growth. One feeds on the other and both trends accelerate.
 
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