Financial Records That Indicate Commitment to TBL
This aspect of the triple bottom line emphasizes a company’s social influence. It is critical to distinguish among a company’s different stockholders. Organizations have always prioritized shareholder returns as a measure of success, which means they try to produce benefits for people who own stock in the firm (Miller, 2020). As businesses have adopted sustainable efforts, their attention has turned to producing value for all stakeholders affected by company actions, mainly clients, workers, and residents.
Simple business methods to assist society include establishing equitable employment processes and promoting employee involvement. They may also reach beyond the organization to affect change on a bigger scale. Many corporations, for example, have developed effective strategic alliances with nonprofit groups with the same purpose-driven aim (Hill et al., 2019). The sales and marketing department maintains crucial data in this regard, with member donations being one of the most critical data. The contributions have increased people’s confidence in the company.
Another component of the triple bottom line has focused on having a beneficial influence on the environment. While corporations have traditionally been the most significant cause of climate change, they do have the potential to accelerate meaningful change (Miller, 2020). Many company executives are increasingly aware of their need to do so. This endeavor does not fall simply on the hands of the world’s greatest corporations—virtually every organization has the potential to adopt adjustments to lower its carbon emissions. Modifications such as choosing ethically produced resources, reducing power use, and simplifying shipping methods are all positive moves. The global health and beauty company is seeking to reduce its carbon footprint by 3% by the end of the year.
A company’s effectiveness in the contemporary world is primarily determined by its financial results or the profits it makes for investors. Long-term planning activities and critical corporate choices are often meticulously crafted to increase earnings while minimizing expenses and dealing with risks (Miller, 2020). One of the goals toward increasing profits indicated for the global health and beauty company is to grow its market share by the end of year one.
Alignment of the Strategic Plan with KPIs
One of the items the company can leverage to improve performance is collecting consumer data. Collecting consumer data improves the business’s overall performance regardless of the industry, the demographics of consumers, or the products/services a company provides. The most crucial rationale why several businesses gather consumer data would be that it allows companies to gain a more profound knowledge of how their customers behave, identify their general characteristics, and uncover methods to enhance the consumer journey.
Data allows the organization to comprehend precisely what the consumers need from the business, the merchandise they seek, and how they like to engage with the brand. If the business learns more about its clients, it can tailor the whole company to meet their demands better. One may also increase the communication to the targeted audience, optimize the site for better usability, and even more.
The company can also purchase carbon offsets to improve the environment. Global warming continues to rank high in the broader public’s list of problems as a notable long-term problem for the economy, which will outlive the present economic downturn. People, companies, non-governmental institutions, and regulatory agencies, among others, are seeking solutions to reduce their environmental effects.
The entitlements to these cutbacks are offered to buyers as carbon offsets, which they may use against their pollution footprints to lower their net climate effect (Lovell et al., 2009). These carbon offsets are purchased for a number of reasons, including accepting accountability for pollution, which can be decreased, developing innovative solutions through funding clean-energy initiatives, and demonstrating responsibility for global warming remedies.
Greenhouse gas (GHG) emissions may be reduced by using carbon offset certificates, which are both accessible and affordable. Instead of lowering a company’s GHG emissions directly, offset credits are frequently utilized to make up for such emissions (Lovell et al., 2009). Most companies are unable to eradicate their carbon emissions via internal methods; thus, they must rely on carbon credits to achieve this goal. Carbon offsets should still be used cautiously, especially if the company also pursues carbon neutrality.
As the company seeks to enhance profits, design changes must be the starting point. The company is to lower the quantity of plastic it uses while also ensuring that it comes from sustainable scrap. They will have to make all of their plastic packaging reusable, and they will need to work at a faster rate and intensity to get there. Refillable, reusable forms are one option. However, the company must ensure that all its customers back this idea.
Engaging in refilling has a variety of commercial and ecological benefits. Suppose recyclable packaging is properly developed and used for suitable items. In that case, it has the potential to minimize solid waste as well as the quantity of natural resources required to package and distribute goods to the customer.
Relationship between TBL Data and KPIs
The marketing and sales department will collaborate with other departments to collect customer data. Such data will mainly come from new members. The members will be required to, among others, provide data relating to their demographics, date of birth, and ethnic backgrounds. The data will be collected voluntarily, so only those willing to provide it will do so. The goal is to establish how many new members who are joining the organization come from minority communities. The goal is in line with the KPI of enhancing people’s relationships. Notably, the financials that will be used to attain this goal will hardly be distinguishable from other normal company costs. The expenses to be incurred will be used to hire personnel and cater for increased salary and pension remittances, as indicated in the income statement.
Regarding planet issues, the company will measure the cost of carbon offsetting relative to sales. The goal is to ensure that the cost of carbon offsetting accounts for 1% of the total sales. Companies use carbon offset expenses to construct projects that minimize carbon emissions in the long run. The seller of the offsets uses the revenue generated to construct projects that will go a long way to ensure that new projects are designed in an environmentally friendly manner. As far as financial records are concerned, the cost of paying for carbon offsets will be recorded as inventory in the financial statement. On the other hand, the gross sales will be captured as revenue in the consolidated income statement.
The company incurred new costs when it was installing equipment that can be used to recycle plastic products. Further expenses went into ensuring that the already existing equipment is repaired to ensure that they recycle plastic products effectively. It is worth noting that the cost of undertaking these sustainable initiatives was high; hence, the company sought to benefit from government subsidies and tax exemptions. Most governments provide these incentives to encourage more companies to adopt sustainable production processes. The company tried to leverage government subsidies.
The Contribution of Individual Departments to Financial Performance
The administration function is one of the basic units of most companies. The unit performs many roles, such as filing documents and ensuring effective correspondence (Hill et al., 2019). However, their roles are not just limited to filing documents. They perform critical organizational tasks such as interviewing new staff and monitoring overall organizational budgets. Based on the SWOT analysis conducted earlier, one of the main weaknesses identified by the company is the industrial pressure to adopt products that have a limited impact on the environment. The administration has a significant role to play along this line. They must control the public image of the company to avoid consumer apathy. A good public image is good since it encourages more customers to patronize the company, translating into positive financial results.
The Customer Service Function
The customer service function is gradually gaining importance as far as organizational delivery of company goals is concerned. Its significance has been fuelled by the growing expectations on the consumers’ part. This calls for companies to have in place a professional customer service staff who can adequately address customer needs. Based on the company’s SWOT analysis, one identified opportunity is enhancing the consumer base through social media interactions. The company will use the customer service function to increase its online presence to address customer concerns on social media. A company that addresses customer complaints adequately is likely to make more income because it will receive more return clients.
The Distribution Function
The primary role of the distribution function is to ensure that goods reach the final consumer (Hill et al., 2019). However, its functions are not limited to arranging and delivering merchandise. They need to ensure that the delivery process is cost-effective and devoid of obstacles. One way to ensure effective distribution is to plan routes well, such that there are no chances of back-tracking. This method will keep fuel costs low and save time. Another essential strategy is ensuring delivery vehicles do not operate empty to save on fuel. It is helpful to make use of computer programs that will be used to ensure that effective routes are established. Based on SWOT analysis, the company lacks effective customer segmentation. Hence, ensuring effective distribution will go a long way to ensure losses are limited and the company’s financial performance improves.
The Finance Function
The finance function is considered one of the most critical functions as far as business is concerned. The financial department could mean the failure or success of the business. Some of the core functions performed by the department include chasing payments and making payments for any purchases made (Hill et al., 2019). Companies are now using computer packages to record any financial transactions made, and these packages require money. The efforts made by the finance department in pursuing money due to the organization and making internal savings influence an organization’s financial performance.
Hill, C. W. L., Jones, G. R., & Schilling, M. A. (2019). Strategic management: an integrated approach: theory et cases (13th ed.). Boston, Ma Cengage Learning.
Lovell, H., Bulkeley, H., & Liverman, D. (2009). Carbon Offsetting: Sustaining Consumption? Environment and Planning A: Economy and Space, 41(10), 2357–2379. https://doi.org/10.1068/a40345
Miller, K. (2020, December 8). The Triple Bottom Line: What It Is & Why It’s Important. Harvard Business School. https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line
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In this project, you will demonstrate your mastery of the following competency:
Assess the current performance of an organization through analysis of financial statements.
In Project One: Applying Strategic and Operational Thinking, you prepared Key Performance Indicators (KPIs) for the marketing and sales departments of your product line.
Now, the CEO has provided you with a revised set of KPIs. You need to apply these KPIs toward the analysis of a proposed marketing and sales initiative to increase loyalty card memberships in neighborhoods with predominantly low-income populations, whether the populations are in rural, suburban, or city locations.
The CEO wants this analysis so that she can chart the sustainability and growth of the initiative while assuring it meets standards for Corporate Social Responsibility.
The CEO has provided you with several documents, available in the Supporting Materials section of this project. She wants you to use the provided Triple Bottom Line Balanced Scorecard to assess the strategic plan’s compliance with the KPIs and summarize your findings in a memo.
Complete the following to provide the analysis required by the CEO:
Identify the financial records that indicate commitment to TBL.
Outline which financial and other records marketing and sales maintains where TBL can provide data.
Using the TBL scorecard, evaluate the alignment of the strategic plan with KPIs. Remember, there may be multiple outcomes of this exercise. Your focus should be to apply your understanding of the scenario and evaluate the plan accordingly.
Which ideas in the plan support the KPI criteria? Cite specific ideas that meet the criteria.
Explain how they meet the criteria.
In your memo:
Describe how the TBL data relates to the KPIs.
Identify which additional TBL financial line items are needed to measure the cost for each criterion.
For example, should there be a line entry for hiring temporary workers?
Referring back to the SWOT analyses from Project One, explain how functional considerations of individual departments contribute to financial performance.
What to Submit
To complete this project, you must submit the following:
KPI and Triple Bottom Line Balanced Scorecard
Complete and submit the KPI and Triple Bottom Line Balanced Scorecard. In the scorecard spreadsheet, identify one additional KPI, a related SMART objective, and its measurement criterion. You need to do this for all three elements of TBL: people, planet, and profit. You have been provided with one example for each TBL element.
In a Word document, write a memo outlining your analysis. Ensure that the memo is organized by TBL element with a header for each segment of your analysis. The Word document should use double-spacing, 12-point Times New Roman font, and one-inch margins. This memo should be no more than 6 pages in length, and include references cited in APA format. Consult the Shapiro Library APA Style Guide for more information on citations.
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