Вы находитесь на странице: 1из 9

Case

Implementing Corporate South Asian Journal of


Business and Management Cases
Sustainable Development: 3(2) 169–177
© 2014 Birla Institute of Management Technology
A Case of an SME from India SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/2277977914548336
http://bmc.sagepub.com
M. Rakesh Krishnan
C. Ganesh

Abstract
Studies have repeatedly illustrated how institutions struggle to implement sustainable development
models, even when their formal claims indicate strict adoption of principles of sustainable develop-
ment (Sean Markey, 2010). Relevance of innovative and feasible projects for sustainable development
is escalating rapidly among the business community (Brower, 2011). The efforts of many organizations
to recognize sustainable development principles as an important community vision is encouraging, but
only very few of them have proved themselves in successfully translating their goals into action-
able strategies (Sean Markey, 2010). Extra Weave Pvt. Ltd, a small and medium enterprise (SME)
in Allapuzha district of the state of Kerala, India, stands out from the crowd in its remarkable
achievements in sustainability, overcoming initial challenges and issues in implementation of a sound
sustainability development model. This article is a case study of the implementation issues of sustainable
development practices at Extra Weave Pvt. Ltd. The study focuses on how communication plays a role
in the implementation of sustainable development practices in Extra Weave. The study also discusses
how soft system methodology (SSM) was used to identify the issues in implementation and facilitate for
appropriate solutions.

Keywords
Sustainable development, stakeholders, SMEs, informal and formal communication, value creation

M. Rakesh Krishnan and C. Ganesh have developed this case solely for class discussion for programmes
in management education. The authors do not intend to illustrate either effective or ineffective handling of a
managerial or an administrative situation. The case does not represent or endorse the views of the management
about the issues in the case. The authors may have disguised certain names and other identifying information to
protect confidentiality where needed. The case has been compiled from both primary and secondary sources of
information.
170 M. Rakesh Krishnan and C. Ganesh

Introduction

The word sustainability originates from the verb to sustain, as explained in the Oxford Dictionary:
to ‘keep (something) going over time or continuously’. Sustainable development should strive to
address the needs of the present generation without compromising the resources of future generations
(World Commission on Environment and Development [WCED], 1987). It encompasses two key
concepts.
The ‘3P’ approach (people, planet and profit), which describes the interdependence between social,
environmental and economical aspects, is another dimension and commonly used definition to describe
the sustainability issue (Kemp & Martens, 2007). The 3P approach argues that a balancing act is needed
between economic, social and environmental values for survival in the market for long run (Sjoerd
Vijfvinkel, 2011). But how do we strike a balance between these three fundamental but independent
aspects?
India, which is home to one-sixth of the world’s population and only 2.4 per cent of its land area,
and is striving to become a production hub for the world, needs to tax the environment to produce not
only for the domestic consumption but also for other economies (Singh, 2012). Thus, as gross domestic
product (GDP) of India grows close to 8 per cent per annum, the compromise made in terms of environ-
mental issues and impact for future generations turns too costly. The developing nations striving to
achieve higher growth rate on a year-on-year basis have to compete on cost, quality of products
and delivery standards. The relevance of adopting sustainable development practices and the implemen-
tation issues, especially at smaller business units, are unique and confusing. This study attempts to
illustrate the efforts of a small and medium enterprise (SME) for adopting sustainable development
practices and the implementation challenges faced by it.
Extra Weave Pvt. Ltd commenced its operations in the year 2000. The company employs over
400 skilled workers and around 50 managerial staff across different functional areas. The company
specializes in machine-made broadloom matting and area rugs with vertically integrated in-house
production facilities. Interactions with various stakeholders and examination of their audited documents
conveys the existence of practices of highest standards of commitment towards environment and society.
Mr Santhosh V.V., Managing Director (MD), and Mr Fenson, General Manager (GM), stress that
their priority areas lie to achieve cost competence, world-class quality and delivery efficiency, apart from
their fundamental philosophy of sustainable growth of the firm. To meet these strategic goals, Extra
Weave has fully vertically integrated production facility with the latest technology in spinning, dyeing,
weaving, backing, finishing and packing machinery. Their product portfolio includes:

1. eco-friendly area rugs in wool, sisal, jute and composite fibre materials;
2. outdoor rugs;
3. contract carpeting in wool, sisal and polypropylene materials;
4. Axminster carpets; and
5. commercial carpet made with DuPont™ Sorona.

These products have huge application in interior designing like wall-to-wall carpeting, wall panelling,
ceiling, acoustic solutions and workstation panels, besides in outdoor rugs.

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177


Implementing Corporate Sustainable Development 171

Problem Expression
Santhosh is very happy being awarded and recognized by the Kerala state government for Extra
Weave’s outstanding model of sustainable development. He narrates instances of an array of challenges
which he has already overcome and another set of challenges which he foresees in the trajectory of
sustainable development. A number of stakeholders (owners, management, employees and clients) were
interviewed to discover and study the model of sustainable development as adopted by Extra Weave in
a challenging business environment. A combination of grounded theory approach and soft systems
methodology (SSM) was adopted for surfacing and exploring the perceptions of the participants
(Durant, 2005).
Santhosh comes from a traditional Kerala family. His elders were involved in social work and
public service. Santhosh has always carried a strong sentimental liking towards such values and
practised a socialistic approach in his endeavours. He refers to the starting of Extra Weave as his dream
of building this company as an economically and socially meaningful organization. Santhosh had his
higher education outside India and was well exposed to the principles of human rights, environmental
issues and sustainable development. He explains his passionate dream of raising his company to be
a model unit with sustainable development practices. In 2008, Santhosh, together with Fenson, drafted
an outline of action plan of a comprehensive sustainable development model to be implemented at
Extra Weave.
Energy conservation, reduction of wastage, reduction of all kinds of pollutions, implementations
issues, social concerns and other strategic issues were identified as key implementation areas of the
comprehensive plan for sustainable development. Accordingly, an internal audit was conducted to
identify the current issues which needed to be addressed in terms of investments, process changes,
change of mindsets, policies, government permissions, marketing challenges, financial outcomes and
time frame of completion. Table 1 presents a number of identified issues which could be addressed by
the management with the current resources for completion within a time frame of six months. Details of
the problems identified, excluding issues of strategic nature, are listed in Appendix, Table A1.
Santhosh and Fenson also charted out the expected outcomes from this initiative. These are presented
in Table 2.
The plan for adopting sustainable development was implemented by end of 2008. Fenson was
designated as officer-in-charge and was asked to report to the MD about implementation of the plan and
monitoring of the progress.

Table 1. Issues to be Addressed for Implementation of Sustainable Development Plan

S. No. Category of Problem Number of Problems Identified


1 Energy conservation 12
2 Reduction of wastage 12
3 Reduction of all kinds of pollutions 10
4 Implementation issues  9
5 Social concern  2
6 Strategic issues  2
Source: Company information.

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177


172 M. Rakesh Krishnan and C. Ganesh

Table 2. Expected Outcomes on Implementation of the Comprehensive Sustainable Development Plan

S. No. Category of Problem Expected Outcome


1 Energy Conservation Make full feeding of raw materials as needed during the machine running hours.
Gather clear and adoptable suggestions from experienced workmen to reduce
the consumption of energy.
2 Reduction of wastage Convert the by-products normally treated as waste to economically and
socially meaningful products.
3 Reduction of all kinds Implement effluent treatment plants with appropriate capital investments.
of pollutions
4 Implementation issues To get government clearances and to align the human resource to the new
model.
5 Social concern To create and develop a pool of traditionally skilled workers in coir weaving.
6 Strategic issues To develop a respectable positioning for the brands of Extra Weave and a
niche market for environmentally safe products.
Source: Company records.

In 2009, Fenson felt that though there were no new issues in implementation, yet no serious desirable
change was taking place. Santhosh and Fenson faced a dilemma. Fenson remembers Santhosh asking
him, ‘nothing is wrong, but still what is that is wrong?’
It is in this context that Santhosh and Fenson attempted to bring out a worldview (Checkland,
2000) of various stakeholders on the implementation of the sustainable development plan. Each
individual would have a unique perspective of defining, describing and understanding a problem situ-
ation (or a phenomenon). This perspective is referred to as worldview. SSM was adopted to develop the
worldview. SSM is a systematic approach to investigate a problem situation, or a phenomenon, as it is
perceived to exist in the ‘real world’ (Checkland, 2000). SSM focuses on a detailed examination of
the problem situation itself, rather than indicating an optimal solution (Patel & Patel, 2003), and thus
helps translate an unstructured phenomenon in the minds of the participants to a structured model. The
worldview forms a key part of SSM and recognizes that each individual would have different images
of the world and thus, there could be multiple possible descriptions of a problem (Watkin, Kemp,
Williams & Harwood, 2012). Accordingly, the views of different stakeholders, the actual instructions
on implementation and the outcomes were highlighted simultaneously. The summary of the enquiry—
result of responses to open-ended and unstructured questions from each of the stakeholders—is presented
in Table 3.
Based on these observations and learning, Santhosh and Fenson relaunched the implementation
of the sustainable development plan in mid-2010. Today, both of them are proud to announce that the
Government of Kerala has ranked the company in second position in the medium industries segment
(A group) in sustainable and sustained efforts in development1 and pollution control.
The following issues call for an analysis to reach conclusions and discover learning in the implemen-
tation plans to reach acceptable levels of sustainable development.

1. Why did the implementation of sustainable development plan at Extra Weave initially face
challenges?
2. What went wrong in communicating comprehensive plan with various stakeholders?

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177


Implementing Corporate Sustainable Development 173

Table 3. Summary of the Stakeholder Responses

Actual Instructions/
Views of the Stakeholder in Requests on
Stakeholder the Enquiry Implementations Real Outcomes
Enquiry with Ø G
ood for cost cutting. Ø A
void breaks in N
Ø o desirable change
workmen Ø T
he chart on problems machine running to achieved, though
identified, depicted in avoid wastage there was no negative
Appendix, shows the of power. deviation.
possible cost cutting. Ø C
ontinuous feed of
Nothing more. raw materials till the
Ø M
anagement is scheduled machine off
tightening the workload. time.
Ø M
anagement intends Ø C
ost-cutting targets
exercising higher were put forward.
degree of supervision Ø B
y-products are to be
and control. sorted and processed.
Ø M
anagement looking to Ø M
onitor thread rolls
marginal revenues from closing and avoid
by-products without breaking or roll which
sharing the benefit with may lead to breaks on
the workers. machine running.
Enquiry with T
Ø his is a capital Ø R
equest subsidies. W
Ø  as treated at par
government expenditure by the Ø R
equests for with other similar
company. government purchases company.
of Extra Weave
products.
Ø R
equest for
other appropriate
recognitions.
Enquiry with the Ø T
his is a capital C
Ø ustomer’s (industrial I
Ø ndustrial buyers did
supplier expenditure by the buyers) were invited to not recognize value/
company. visit the unit. selling points from the
Ø C
ould therefore C
Ø ustomers were new initiatives.
raise the price of the encouraged to find
products in the near niche markets for
future. products.
Ø T
here are no selling
points with these
efforts.
Enquiry with the G
Ø ood for understanding R
Ø equested the society The message of sustainable
society and seeing a factory. (like schools/students) development did not get a
to observe and learn desired level of publicity.
the best practices in Some agencies were
company. doubtful and viewed this
as an advertising attempt.
Source: Authors’ own.

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177


174 M. Rakesh Krishnan and C. Ganesh

3. How could have the initiative of implementing a comprehensive plan for sustainable development
been converted to a strength by Extra Weave?
4. How could the employees perceive the problem chart (presented in the Appendix, Table A1)?

Discussion
If we look at the instructions given to the workmen, these were all intended to conserve energy and
were a part of the sustainable development plan. But the workmen were given only the instructions to
act a particular way and the real intention of the management was not communicated. The vertical
communication should have raised the concern and appraised workmen on the power shortage problems
in their local areas. The workmen should have been made aware of how conserving energy could bring
down the power cuts and power costs to the local society at large. Thus, they should have been made to
understand the social good of these instructions and this, in turn, should have created the feeling of being
proud for being a part of this initiative.
The state of Kerala has schemes to encourage and support business units taking up convincing
endeavours in environment protection, sustainable development or any social good. Extra Weave,
initially, could project the investments for sustainable development practices only as a capital
investment. They could have, through the local government, brought out the model practices
intended towards social good. This could have led to getting wide publicity as a respectful player in the
sector.
The industrial customers (bulk buyers) could only see a possible hike in prices of the Extra Weave
products from these efforts. Thus, the vendor rating on Extra Weave could deteriorate. On the other hand,
if the customers were educated about the sustainable development practices, the environmental good
such practices can do, finding a niche market and positioning the Extra Weave products as a premium/
green product would have been meaningful. Furthermore, the company should have created awareness
in the consumers market about the Extra Weave brands and their values so that the industrial customers
feel more confident while approaching the consumers.
A good word-of-mouth publicity would have done much more that paid advertisements. The good
practices at the company did not reach the society as the society was not educated with the concept of
sustainable development and environment-friendly products.
The problem chart prepared by the management had emphasis on cost cutting; though the real motive
of the management was to reduce the energy consumption and wastage, and thus to become a model
sustainable development unit. However, the employees got a different view of the intention and they
understood this as only a profit-maximization objective. There should have been communication with
employees to create awareness on the plan; cost cutting is only a proxy of energy saving and waste
reduction. The benefits of such initiative are for the society as a whole.
If the company had a formal and detailed strategy to communicate the benefits and possible value
creation to the various stakeholders, the implementation could have been successful in the first instance.
Figure 1 indicates how important is communication for each stakeholder category for a successful
implementation of a plan. The owners of Extra Weave have shown their genuine interest to establish a
sustainable development approach and in 2010, when they took efforts to establish and explicitly
communicate the value creation for each stakeholder from a sustainable development practices, they got

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177


Implementing Corporate Sustainable Development 175

Figure 1. Implementation of a Strategy Plan—With Whom to Communicate and What to Communicate?


Source: Authors’ own.

recognized as a successful model organization which had incorporated comprehensive sustainable


development principles.

Acknowledgements
The authors thank Shri Santhosh V.V. (MD) and Shri Fenson (GM) for assistance in developing this case and
providing permission to publish the same. The authors record their deep appreciation of the cooperation extended
by Extra Weave throughout the progress of this study.

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177


176 M. Rakesh Krishnan and C. Ganesh

Appendix
Table A1. Details of the Problems Identified

S. Annual Savings Investment Payback


No. Problems Identified kWh/litre/kg ` Lakhs ` Lakhs Months
Payback 0–6 months
 1 Rectify the choking in steam circuit of RF 99,927 3.42 Nil Immediate
dryer-1
 2 Close the steam line to steam dryer when 9,129 2.16 Nil Immediate
dryer is not operating
 3 Operate dryer at 7 m/hr for jute and 12,784 2.08 Nil Immediate
11 m/hr for wool
 4 Pump condensate water to feed water tank 7,117 1.69 Nil Immediate
every hour
 5 Increase the frequency of extractor from 45,416 1.59 Nil Immediate
40 Hz to 50 Hz
 6 Operate surface aerator alternately 43,362 1.52 Nil Immediate
 7 Reduce the receiver set pressure in 20,721 0.73 Nil Immediate
compressors
 8 Close the steam lines when the RF dryer is 513 0.1 Nil Immediate
not operating
 9 Clean evaporator and condenser tubes of 90,000 3.15 Minimum Immediate
chiller and operate one chiller for both RF
driers
10 Arrest leakages in compressed air network 72,574 2.54 Minimum Immediate
11 Rearrange the position of temperature 33,118 12 0.3 Immediate
sensor and install VFD on exhaust blower of
latex backing chamber
12 Improve power factor to reduce maximum 2.73 0.4  2
demand
13 Close the opening between conveyer and 5,565 1.3 0.3  3
both ends of dryer
14 Replace secondary pumps with energy- 37,584 1.32 0.48  4
efficient pumps
Payback (6–12)
15 Recover the heat of hot water after dyeing 55,179 13.1 10  9
from dyeing cabinets
16 Interlock chiller with dryer 15,000 0.53 0.4  9
Pay back > 12 months
17 Replace primary pumps with energy-efficient 5,040 0.18 0.21 14
pumps
18 Replace entire steam line and increase the 53,357 12.61 18 17
steam pipe size
19 Interconnect creel light and loom and switch 9,900 0.34 0.5 18
off creel light under normal operating hours

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177


Implementing Corporate Sustainable Development 177

S. Annual Savings Investment Payback


No. Problems Identified kWh/litre/kg ` Lakhs ` Lakhs Months
21 Redistribute the load to improve the 4,896 0.17 0.3 21
loading of auto transformer
22 Provide partition in carpet stitching table 3,120 0.11 0.2 22
23 Replace T 12 FTL with T5 FTL with 10,368 0.36 0.7 23
electronic ballast
24 Clean the heat exchanger tubes in dyeing To be estimated
cabinets
25 Insulate dyeing cabinets To be estimated
Source: Company records.

Note
1. Extra Weave Pvt. Ltd was awarded second position in the medium industries segment for sustainable and sus-
tained efforts in pollution control and for initiatives in environment protection in 2013 by the Kerala State
Pollution Control Board.

References
Brower, H.H. (2011). Sustainable development through service learning: Pedagogical framework and case example
in a Third World context. Academy of Management Learning & Education, 10(1), 58–76.
Checkland, Peter (2000). Soft systems methodology: A thirty year retrospective. Systems Research and Behavioral
Science, 17(1), S11–S58.
Durant, G. (2005). Soft system methodology and grounded theory combined—A knowledge management
research approach? The actKM Online Journal of Knowledge Management, 2(1). Retrieved 27 October 2005,
from  durantlaw.info/sites/durantlaw.info/files/soft%20Systems%20Methodology%20and%20Grounded%20
Theory%20Combined.pdf
Kemp, Rene & Martens, Pim (2007). Sustainable development: How to manage something that is subjective and
never can be achieved? Sustainability: Science, Practice, & Policy, 3(2), 5–14.
Patel, D. & Patel, S. (2003). The cognitive process of problem solving: A soft systems approach. Brain and Mind,
4(2), 283–295.
Sean Markey, S.C. (2010). ‘Back of the envelope’: Pragmatic planning for sustainable rural community development.
Planning, Practice & Research, 25(1), 1–23.
Singh, K.K. (2012, January 9). Environmental challenges in India: An overview. Imphal Free Press. Retrieved 9
January 2012, from kanglaonline.com/2012/01environmental-chllenges-in-india-an-overview
Sjoerd Vijfvinkel, N.B. (2011). Environmental sustainability and financial performance of SMEs. Scientific Analysis
of entrepreneurship and SMEs. Zoetermeer: SCALES.
Watkin, Laura Jane, Kemp, Paul S., Williams, Ian D. & Harwood, Ian A. (2012). Managing sustainable development
conflicts: The Impact of stakeholders in small-scale hydropower schemes. Environmental Management, 49(6),
1208–1223.
World Commission on Environment and Development (WCED) (1987). Report of World Commission on
Environment and Development: Our common future. Oslo: WCED.

M. Rakesh Krishnan is Assistant Professor, Department of Business Administration, Rajagiri College


of Social Sciences, Ernakulam, Kerela, India. [E-mail: rakesh@rajagiri.edu]
C. Ganesh is Professor and Head, Department of Commerce, University of Kerala, Thiruvananthapuram,
Kerela, India. [E-mail: ganesh_menon@yahoo.co.in]

South Asian Journal of Business and Management Cases, 3, 2 (2014): 169–177

Вам также может понравиться