For this case analysis, read the Nike mini-case (The Mini-Cases: 5 Companies, 5 Strategies, 5 Transformations (harvard.edu)

and pay attention to the many components of the ecosystem in play. Use the framework presented in the Case Analysis and Presentation activity you completed as a guide for your analysis. Explain the choices made by the managers by answering the following questions:

• How did they respond to the legal and other challenges facing them? What was the basis for these decisions?
• What were the elements of the company's strategy and how did their response to the challenges impact the strategy?
• What were their options?
• What was their final choice?
• How did their choice impact the company?
• As a legally astute manager in charge of guiding the company, what would you have done in the same situation?

Refer to the reading to support your explanation.

The Mini-Cases: JUSTODIT NIKE 5 Companies, 5 Strategies, 5 Transformations From repositioning an entire organization to rethinking design RioTinto approaches, supply chains and government collaborations, sustainability-related concerns are prompting many businesses to make major shifts. Here are mini-case glimpses of Nike, Rio Tinto, GE, Better Place and Wal-Mart. BY SAMUEL FROMARTZ 86 SUSTAINABILITY ISN'T A one-size-fits all strategy that a company can implement by fol- lowing a set of rules. Rather, it springs from challenges each company faces in its own markets. Take Nike Inc., whose brand is synonymous with cutting-edge design. As part of its strategy to reduce the amount of material in its shoes, and thus waste, redesigning the athletic shoe became a core element of its approach to sustainability. To be sure, there are common elements in how companies try to capitalize on sustainability - reducing energy consumption, lowering carbon footprints and becoming more efficient consumers of water, less wasteful manufacturers and more thoughtful corporate citizens. But the specific path each company takes depends on what it views as most critical to its business. For a start-up like Bet- THE LEADING QUESTION ter ple, LLC, an electric vehicle provider based in Palo Alto, better place What changes California, that might mean locating in countries around when a com- the world most receptive to the electric car business. For pany acts on Wal-Mart Stores Inc., sustainability might mean greening sustainability? the supply chain. FINDINGS But one thing is certain: Sustainability is less a target than an Strategies differ approach, which is why it is continually being refined. As com- widely, according to the unique panies ramp up understanding, they also push the envelope of challenges of what can be accomplished. In short, learning more about what opportunities each Walmart > company confronts. they do has led companies to change how they do it. First steps always Though it takes investment and commitment, the rewards lead to unexpected further options. are measured in energy cost savings, new product design, Actions often customer engagement and employee commitment. Together, lead to new sources of competitive all these attributes amount to the one thing any business un- advantage. derstands: competitive advantage. COURTESY OF MEE, &-This document to authorized torose onlyby Roan Rahimandeh Nobari in BL6274-423-1217 at Scamera KiddE SLOAN MANAGEMENT REVIEW 41SUSTAINABILITY WHAT TO DO Nike From Labor-Practice Compliance to Design Offensive BACKSTORY: Stung by a campaign against its labor practices in the 1990s, Nike embarked on a long process to ultimately reinvent its operations and meet broad sustainability metrics by 2020. CHALLENGE: Can you move beyond"compliance" and capitalize on sustainabil ity by integrating it into the fabric of a company-from design and manufacturing to the supply chain? KEY MOVES: Nike began taking a deep look at its operations in the early 1990s, after One of GE's high-powered it faced a firestorm of criticism over labor practices at its Asian suppliers, The carly ef- but low-energy LED Ights. forts were siphoned to a team focused on compliance and social responsibility. A turning point came when the team began to ask about the long-term impli- cations of the company's product design and manufacturing decisions. Where did the product materials come from? Were they toxic? What happened at the end of a product's life? Looking into manufacturing, they found it took three shoes' General worth of material to produce just two- one shoe, in effect, ended up as waste, at a cost of $700 million a year. As a result, the goal of zero waste got the at- tention of senior managers. It became one of several long-term goals to Electric reach by 2020-along with zero toxic materials, closed loop systems and sustainable growth and profitability. Nike also created an in- An Opportunistic Push Into house index to measure product design against these goals. Sustainable Business The company brought partners into the process, like Dow Chem- ical, DuPont and BASE, because it knew it could not achieve its BACKSTORY: General Electric Co. decided goals without working within the supply chain. sustainability was a business opportunity Then it began reinventing the design process, If the athletic rather than a cost and pushed into the field in shoe were streamlined to cut waste and material by reducing 2005 with its ecomagination initiative, But the the number of components, production efficiencies could products and services weren't only for its cus- offset the cost of more sustainable materials. tomers - they first transformed GE. IMPACT: Nike began implementing zero waste and stream- CHALLENGE: How do you create a new business lined production around its Considered in sustainability and move into the major leagues? line of athletic footwear and apparel. KEY MOVES: GE began looking at sustainability That leading-edge line now comprises as part of a demographic trend, realizing that scar- 15% of its products. The company aims to city would increase with population growth. convert all athletic shoes to its Considered Energy and water use, waste, carbon emissions- Design standards by 201 1, all clothing by all would decline among the most efficient and 2015, and all equipment like balls, gloves and sustainable companies, GE saw a profitable busi- backpacks by 2020. Under the new design and ness opportunity in helping companies along this production methods, these products reduce waste by sustainable path. So it set up its ecomagination up to 679%, cut energy use by 379% and slash solvent use unit to offer environmental solutions. by 809% compared with other Nike products. GE also gambled that carbon would eventually O V "I think that the days of, 'Hey, boss, just tell me what to do and I'll get it done,' that's not the ER future. The future is about 'Let's figure out how to take the world in a different direction HEARD and let's all go there together."-STEVE FLUDDER, VICE PRESIDENT, ECOMAGINATION,GEbe a cost, following the implementation of pre- vious regulatory regimes such as limiting acid rain. Although the precise way carbon would be Rio Tinto regulated was unknown, as it still is, the com- Mining the Social Dimensions of Its Vast Operations pany had little doubt that regulation would come to pass. Rather than wait, GE joined a cli- BACKSTORY: Given its business of mining over 5 million tons of rock a day, Rio mate coalition with nongovernmental Tinto has a big footprint. The mines are expensive, take decades to fully develop organizations to press for a cap-and-trade sys- and are not portable if something goes wrong. To reduce the political and eco- tem in order to build certainty into the future. nomic risk and thus ensure steady returns, Rio Tinto has sought to win the backing Within the company, GE began engaging em- of local communities, governments and the societies in which it operates. players to see where energy savings could be found. CHALLENGE: How does a company obtain a "social license" to operate, and nur- That might include turning off the lights when a ture the local labor force that it needs? factory was idle or even installing a switch so that KEY MOVES: About a decade ago, Rio Tinto came up with the concept of working lights could be turned off. Ecomagination sold so- within communities on outreach and social and economic development. At the time, lutions within GE, whether the project involved the company was developing a mine in Madagascar that was a source of contention installing LED lights on a factory floor, recycling with NGOs, which were worried about threats to biodiversity and the local commu- water at a nuclear facility or offering combined nity. Ninety percent of the island had already been cleared by farming, grazing and heat and power generation units at a plant in Aus- charcoal production; the mine was situated in one of the island's last pristine regions. tralia. Within GE, managers began to be measured The challenge was to create an operation "respectful to the environment, respectful on how much energy savings they had achieved. of our employees, that is seen to be sustainable," said CEO Tom Albanese. IMPACT: The company so far has saved $100 A plan was developed to protect the environment and create economic opportun million from these measures and cut its green- nities in the communities surrounding the project, setting up standards and goals for house gas intensity -a measure of emissions the company to meet. These in turn aligned with broader company policies on envi- against output-by 41%, according to the com- ronmental stewardship, social well-being, governance and economic prosperity. pany's sustainability report. The work inside GE Putting this strategy to work, Rio Tinto created a long list of measures, including became a proof of concept to external customers Policies to protect biodiversity and water quality around mine locations grappling with similar issues, Ecomagination Employment for aboriginal peoples living near its mines targeted C-level executives to build this business, Training programs to shift employees from manual labor to skilled positions since most problems cut across divisions (im- "Plans for the day when mining would be done, seeking to prevent "ghost towns" proving energy efficiency, for example). Goals for greenhouse gas emissions and energy use So far GE has invested $4 billion in this ef- IMPACT: Through these coordinated initiatives, Rio Tinto has obtained what it fort, much of it in research and development. calls a " social license to operate." The company felt an urgency because it recog- But it reaped sales of $17 billion in 2008, up nized a global brand risk if it operated without such a license. Rio Tinto also 21% from a year earlier, and is striving for $25 helped form the International Council on Mining & Metals, which encourages billion in sales in 2010. sustainable practices across the mining sector. stacking iron ore in Rio Tinto's Wandicongina mine in Western Australia. This document is authorbed for use only by Roin Flahimzadeh Mohan 274-423-1217 at Southern Methodist University 2021.better place A trade show display in Japan, one of Better Place's selected markets. Better Place Charging Ahead in Favorable Regulatory Climates BACKSTORY: Better Place saw a future in electric cars and a demand for ways electric vehicle, Add on gasoline taxes and a bur- to recharge them. But how soon will electric charging stations make sense? geoning wind industry, and Israel appeared the CHALLENGE: What's the fastest way to bring the electric "filling station"-a perfect habitat to nurture electric vehicles - and technology of the future-to market? thus electric refilling stations. KEY MOVES: Shai Agassi founded Better Place in 2007 on a straightforward Coming in a close second was Denmark, which rationale: Oil is finite, petroleum prices will inevitably rise and global warm- has a strong green consumer movement and has ing has created the impetus to reduce carbon emissions. Electric cars will be committed to cutting carbon emissions by 21% by part of the emissions-reduction answer, as long as they have refilling stations. 2012. Better Place also partnered with the city of Co- Still, there was a big gap between that knowledge and the kind of favorable penhagen for the rapid deployment of electric policies needed to create a critical mass of electric cars, at least in most markets. recharging stations. In addition to these two leading- So Better Place decided to analyze which geographic areas had already edge countries, the company is working in Australia, made political and cultural strides toward favoring electric vehicles - in es- the United States (Los Angeles) and Japan to roll sence, "outsourcing" its work on regulatory policy change to communities in out recharging stations which it was already underway. IMPACT: By identifying favorable locations, Better Among Better Place's criteria for identifying hospitable locations for op- Place is accruing a competitive advantage in remov- eration were that the public had to be receptive to electric cars, therefore ing a major barrier to the widespread adoption of creating an underlying market, and the government had to be creating a po- electric cars. It has also positioned itself to be the litical climate to bring electric transportation to life. At the top of its list of first to reap the benefits when battery pack recharg- nations was Israel, which wants all new cars to be electric by 2020. Urban cen- ing facilities and infrastructure are more universally ters in Israel are also less than 150 kilometers apart (about 90 miles), and 909% accepted, by having proof of concept in hand in of car owners drive less than 70 kilometers per day, perfect for a short-haul leading-edge nations.Low prices Clearah 88 Wal-Mart Repurposing the Supply Chain BACKSTORY: Wal-Mart, the largest retailer in the world, with over 7,800 stores, has been working steadily to improve sustainability. From installing Livebetter SUSTAINABLE green roofs to rolling out a more efficient trucking COFFEE fleet, the company has moved forward internally, but now it is bringing its suppliers along. CHALLENGE: How do you green the supply chain? KEY MOVES: Wal-Mart has been pushing sustain- ability since adopting the strategy in 2005, establishing goals of being 100% fueled by renew- able energy, producing zero waste and selling products that will sustain the environment. So how does that happen? In one famous exam- ple, the company began working with Unilever ple in 2005 to sell concentrated laundry detergent in a 32-ounce container (equivalent to 100 ounces under a previous formulation). Consumers got a more powerful detergent in a smaller package. Three years after rollout, the new container had The Sam's Choice sustainable coffee display inside . Wal-Mart. saved 80 million pounds of plastic resin, 430 mil- lion gallons of water and 125 million pounds of The first initiative, rolled out earlier this year, involves a questionnaire sent to cardboard, according to a company fact sheet. More more than 100,000 suppliers. It polls them on four categories their energy and importantly, it became an industry standard, greenhouse gas emissions, waste and quality initiatives, "responsibly sourced" prompting other packaged goods companies to materials and ethical production. switch to concentrated detergent as well. Products are also being measured through their life cycles, Collaborating with Wal-Mart's zero waste initiative is also moving academics, retailers, NGOs, suppliers and government in a consortium, Wal- forward. The company, which is aiming to elimi- Mart's goal is to build a global database of product information. As environmental nate all its landfill waste by 2025, was able to reduce business consultant Joel Makower wrote on his blog, http://makower.typepad. waste by 579% between 2008 and 2009. It did so by com, "the consortium's mandate is to focus on how to evaluate products, which improving inventory management, increasing do- Wal-Mart hopes will become the basis for standards, ratings, or other product- nations and ramping up recycling (including 25 level evaluations that it would use in its stores." billion pounds of cardboard). That data will be used to develop an index consumers can use to evaluate prod- Now it is striving to push these criteria down ucts, though it's still unclear how that information will be measured and presented. into the supply chain on a three-stage path. First, Nor is there a timeline for rolling out such an index. it wants suppliers to rate their products on sus- IMPACT: Wal-Mart wants its sustainability index to be open to all, becoming a tainability criteria. Second, it wants to gather data standard to measure and communicate the green credentials of a product and on product life cycles. Third, it is creating a sus- thus becoming "a tool for sustainable consumption," In the process, the exercise tainability index that will increase transparency of measurement itself may reap rewards in more efficient production, less waste for the consumer. and lower emissions- all of which are also cost-saving measures. Samuel Fromartz wires frequently on sustainability topics and is the author of Organic, Inc: Natural Foods and How They Grew (Harcourt, 2005). Comment on this article or contact the author at smrfeedback e mit.edu. Reprint 51112. Copyright @ Massachusetts Institute of Technology: 200% All rights macread