BUS 305

1. Chapter 05
Natural Resources
and Environmental
Sustainability
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 5-2
Learning Objectives
• LO1 Describe how geographical features of a country
or region create contextual differences that contribute
to economic, cultural, political, and social conditions
important to international business.
• LO2 Outline the nonrenewable and renewable energy
options available and their broad business
implications.
• LO3 Describe the concept of environmental
sustainability and its potential influence on business.
• LO1 Describe how geographical features of a country
or region create contextual differences that contribute
to economic, cultural, political, and social conditions
important to international business.
• LO2 Outline the nonrenewable and renewable energy
options available and their broad business
implications.
• LO3 Describe the concept of environmental
sustainability and its potential influence on business.

3. 5-3
Learning Objectives
• LO4 Explain the major characteristics of sustainable
business.
• LO5 Discuss the utility of the stakeholder model for
sustainable business
• LO4 Explain the major characteristics of sustainable
business.
• LO5 Discuss the utility of the stakeholder model for
sustainable business

4. 5-4
Geography
Elements of geography
managers consider:
–Location
–Topography
–Climate
–Natural Resources
Elements of geography
managers consider:
–Location
–Topography
–Climate
–Natural Resources Physical elements of
location are
Uncontrollable
Physical elements of
location are
Uncontrollable

5. 5-5
Competitive Advantage:
Porter’s Diamond

6. 5-6
Location:
Builds
Political
and
Trade
Relationships
Location:
Builds
Political
and
Trade
Relationships

7. 5-7
Topography:
Creates
differences in
economies,
cultures,
politics,
social structures
Topography:
Creates
differences in
economies,
cultures,
politics,
social structures

8. 5-8
Separate
Languages
Separate
Languages

9. 5-9

10. 5-10

11. 5-11
3 mountain ranges
create 4 separate
markets, each with
its own culture and
dialect
3 mountain ranges
create 4 separate
markets, each with
its own culture and
dialect

12. 5-12

13. 5-13
Bodies
of
Water
attract
people
and
facilitate
transportation
Bodies
of
Water
attract
people
and
facilitate
transportation
Inland
waterways give
access to
interior regions
Rhine Waterway –
World’s Most
Important
Inland Waterway

14. 5-14
Climate
• Meteorological
conditions:
•Temperature
•Precipitation
•Wind
• Meteorological
conditions:
•Temperature
•Precipitation
•Wind
• Climatic conditions
explain differences
in human and
economic
development
• Climatic conditions
explain differences
in human and
economic
development
“Underdevelopment in tropical nations
is because of the tropical climate.”
The World Bank
“Underdevelopment in tropical nations
is because of the tropical climate.”
The World Bank

15. 5-15
Natural Resources
• Anything supplied
by nature on which
people depend
• Anything supplied
by nature on which
people depend
• Nonrenewable Energy:
– Petroleum
– Nuclear Power
– Coal
– Natural Gas
• Renewable Energy:
– Hydroelectric
– Solar
– Wind
– Geothermal
– Waves
– Tides
– Biomass
• Nonrenewable Energy:
– Petroleum
– Nuclear Power
– Coal
– Natural Gas
• Renewable Energy:
– Hydroelectric
– Solar
– Wind
– Geothermal
– Waves
– Tides
– Biomass

16. 5-16
Energy
Usages
Energy
Usages

17. 5-17
Petroleum
Estimates of petroleum reserves change for a number of
reasons:
•New discoveries in proven fields with improved prospecting
equipment
•Governments open their countries to exploration and production
•Improved techniques in steam and hot water injection enable
producers to obtain greater output from operating wells and open
new areas
•Automated equipment lowers offshore drilling costs. Company can
profitably work smaller-sized discoveries
Estimates of petroleum reserves change for a number of
reasons:
•New discoveries in proven fields with improved prospecting
equipment
•Governments open their countries to exploration and production
•Improved techniques in steam and hot water injection enable
producers to obtain greater output from operating wells and open
new areas
•Automated equipment lowers offshore drilling costs. Company can
profitably work smaller-sized discoveries

18. 5-18
Petroleum
• Crude Oil – cheap source of energy and raw material
for plastics & fertilizers
• Heavy Oil – does not flow easily and can’t be drawn
from wells
• Shale – sedimentary fossil rock yielding 25+ liters of
liquid hydrocarbon per ton @ 500º C
• Crude Oil – cheap source of energy and raw material
for plastics & fertilizers
• Heavy Oil – does not flow easily and can’t be drawn
from wells
• Shale – sedimentary fossil rock yielding 25+ liters of
liquid hydrocarbon per ton @ 500º C

19. 5-19

20. 5-20

21. 5-21
Nuclear
Power
Benefits:
Low pollution
Low carbon emission
Growth in devel nations
Problems:
Radiation
Spent fuel storage
Nuclear
Power
Benefits:
Low pollution
Low carbon emission
Growth in devel nations
Problems:
Radiation
Spent fuel storage

22. 5-22
Coal
49% increase to
2030
Problems:
Pollution
Global warming
Coal
49% increase to
2030
Problems:
Pollution
Global warming
Kyoto Protocol:
UN Framework
Convention on Climate
Change calling on
nations to reduce global
warming by reducing
emissions
Kyoto Protocol:
UN Framework
Convention on Climate
Change calling on
nations to reduce global
warming by reducing
emissions

23. 5-23
Renewable
Energy
Sources:
1) Hydroelectric
2) Solar
3) Wind
4) Geothermal
5) Waves
6) Tides
7) Biomass (ethanol)
8) Ocean thermal
Renewable
Energy
Sources:
1) Hydroelectric
2) Solar
3) Wind
4) Geothermal
5) Waves
6) Tides
7) Biomass (ethanol)
8) Ocean thermal
Photosynthesis is
the Biomass
energy source
Photosynthesis is
the Biomass
energy source

24. 5-24
Environmental
Sustainability
A systems concept of
maintaining something
(environment, society,
the economy, people)
within the economy or
the organization.
Is both local and global.
Environmental
Sustainability
A systems concept of
maintaining something
(environment, society,
the economy, people)
within the economy or
the organization.
Is both local and global.
Stakeholder Model
to Sustainability
Stakeholder Model
to Sustainability

25. 5-25
Characteristics of Environmentally
Sustainable Business
• Limits
– Environmental resources are exhaustible
• Interdependence
– Actions in one ecological, social, and
economic system affects the others
• Equity in Distribution
– For interdependence to work, there cannot
be vast differences in gains
• Limits
– Environmental resources are exhaustible
• Interdependence
– Actions in one ecological, social, and
economic system affects the others
• Equity in Distribution
– For interdependence to work, there cannot
be vast differences in gains

26. 5-26
Stakeholder Theory
• Decision-making
takes into account
all identifiable
interest holders
• Decision-making
takes into account
all identifiable
interest holders
• Addresses
Underlying Values
and Principles:
– Type of relations with
stakeholders
– Tension among
stakeholders can be
balanced
– Profits are a result
not a driver of value
creation
• Addresses
Underlying Values
and Principles:
– Type of relations with
stakeholders
– Tension among
stakeholders can be
balanced
– Profits are a result
not a driver of value
creation

27. 5-27

28. 5-28
Companies with a Societal Context
Consistent with Stakeholder Theory
• Johnson & Johnson
• eBay
• Google
• Lincoln Electric
• Freeport-McMoran
• Interface, Inc.
• Patagonia
• Johnson & Johnson
• eBay
• Google
• Lincoln Electric
• Freeport-McMoran
• Interface, Inc.
• Patagonia

29. 5-29
GLOBAL gauntlet
• How
immediate
is the
fossil
fuel
crisis?
• How
immediate
is the
fossil
fuel
crisis?
• How do we know when oil
reserves reach midpoint and
start to decline?
• Are these risks really above-
ground political issues?
• Is conversation the answer?
• Do developed countries have
moral duty to produce food over
fuel?
• How long till we need to move to
new energy sources?
• How do we know when oil
reserves reach midpoint and
start to decline?
• Are these risks really above-
ground political issues?
• Is conversation the answer?
• Do developed countries have
moral duty to produce food over
fuel?
• How long till we need to move to
new energy sources?