Question

MURPHY WAREHOUSE COMPANY: Sustainable Logistics Richard Murphy Jr., the CEO of Murphy Warehouse Company, has spent a great deal of time analyzing sustainable ways to conserve resources, reduce costs, improve the well-being of his employees, and promote his company as an environmentally responsible logistics provider. Murphy also realizes that the benefits of sustainable projects must be weighed against the costs and payback periods of these investments. . • Richard Murphy Jr. is the CEO of Murphy Warehouse Company, a family-run company that began over 100 years ago. • He has responsibility to maintain the financial viability of the company that is now in its fourth generation of family ownership. • One of his biggest challenges is to understand how the company should adapt to a changing business environment while conserving the company’s financial resources and protecting the core business model that has sustained it for so long. • One major force in the current business environment is the sustainability movement, which focuses on the responsible use of natural resources. • Richard Murphy, you are trying to find the opportunities to adopt sustainable practices that also make financial sense to Murphy Warehouse Company. • He has successfully implemented several sustainable projects in his company • He is now faced with deciding to invest over a half million dollars in a stormwater project that presents an unusually long payback period. It is a complicated decision that involves high expense, multiple tangible and intangible variables, and a fair amount of risk that something might go wrong. What do you do? • One of Murphy’s biggest challenges is to understand how the company should adapt to a changing business environment, while conserving the company’s financial resources and protecting the core business model that has sustained it for so long. • A major force in the current business environment is sustainable (green) practices, which focuses on the responsible use of natural resources. • The case depicts Richard Murphy trying to find new opportunities to adopt sustainable practices that also make financial sense to MWC. One of the main goals of the case is to move away from the mindset that green practices are primarily for businesses who are willing to sacrifice sound financial decision making models to pursue ethical and moral imperatives to “do the right thing” for society and the environment. The case strives to show how sustainable practices can be part of running a business that can tout its environmental achievements while maximizing long-term profits. The case provides financial details on the conversion of lawn to prairie so you need to calculate a payback period that shows this project made financial sense 2 The lawn to prairie conversion also introduces several intangible and less quantifiable important benefits, including the reduction in the urban heat island effect, the attractive natural buffers between MWC and adjacent properties, and the attraction of wildlife to the area. Murphy has also gained a great deal of positive publicity for his prairie conversion project by sharing his experience at professional society meetings, local universities, and print media publications. Other projects at MWC that are described in the case provide further evidence that sustainable investments and profitability can go hand in hand. • The purchase of dock blankets • Upgrade in the lighting systems • Painting the ceilings white These are examples where green initiatives and disciplined financial decision making can be complementary. The decision point of the case-when Murphy is evaluating the feasibility of the stormwater project You need to evaluate the pros and cons of the stormwater project, considering both tangible and intangible factors. The payback period should be calculated, using the numbers provided in the case. Your team needs to discuss whether the significantly longer payback period can be justified (compared to traditional business practice and to previous projects at MWC). You need to show that sustainability is part of the “continuous improvement” management philosophy. You can see that the case demonstrates this by mentioning Richard Murphy’s explorations of new energy technologies in solar, wind, and geothermal. He seeks partnerships with local utilities and researches government incentive programs that enhance the financial returns for businesses that adopt green practices. Making sustainability part of on-going company culture and management practice is promoted by the USGBC, LEED, and ISO 14000 organizations, as described in the case. The case also mentions several times that sustainability practice is a necessary part of being a player in the competitive marketplace in terms of attracting clients and building positive public relations.

Can you please Recommend what steps should the CEO take?

Answer 1

CEO should do the following steps to achieve sustainable competitive advantages into the market:

1) He should first identify the core competencies of his organization.

2) Understanding the strategic intent like vision statement, mission of current business operations and major goals to be achieved in near future will be one of the important initiatives.

3) He must analyze the business outcomes and enlist all the major challenges of business operations.

4) It is better to understand the expectations of each stakeholders like customers, employees and government authorities. It will help him to generate confidence among people.

5) He must do an environmental scanning so as to understand the internal and external factors crucial to his business organization.

6) He should make a committee for sustainability in business operations. This will ensure policy making, and implementation of green business development programs.

7) Employees must be developed via training to tackle the challenges of sustainability into practice.