Ann Colson, president of Deerstone, Inc., a consumer products firm, has decided to follow an environmental improvement strategy. The goal is to increase profits by increasing revenues and decreasing environmental costs. Ann is convinced that revenues could be increased if she could improve the company's environmental image. Customers have been demanding cleaner products, and her marketing manager had indicated that producing "greener" products would definitely lead to an increase in market share. Furthermore, Ann had recently returned from an environmental management seminar and had learned about ecoefficiency. She now believed that costs could be reduced while simultaneously improving environmental performance. She has two objectives in mind: Reduce packaging and reduce production and release of contami¬

nating residues. Ann has decided on the following actions to achieve the desired improvements:

1. Hire two environmental engineers to provide the capabilities needed to improve envi¬

ronmental performance. One engineer would be responsible for a new packaging de¬

sign and reduction process. The other would be given responsibility to redesign prod¬

ucts and processes with the objective of reducing the production of residues. Ann expected the actions to reduce packaging costs and pollution control costs.

2. All employees would be sent to several training seminars to learn about environmen¬

tal management. They would then be empowered to make improvements in environ¬

mental performance (e.g., ways to reduce contaminants and packaging materials).

3. Once the processes and products were redesigned, she would participate in a thirdparty environmental certification program so that customers would be assured that the environmental improvements were valid.

Required:

1. Explain why adding an environmental perspective to the Balanced Scorecard is con¬

sidered to be legitimate.

2. Express the environmental improvement strategy as a series of cause-and-effect rela¬

tionships expressed as if-then statements.

3. Illustrate the strategy using a flow diagram like the one shown in Exhibit 14-14 on page 569 with one important modification: Add an environmental perspective (the flow di¬

agram should then illustrate five perspectiv'es). Place the environmental perspective in between the process and customer perspectives.