Sustainable business strategy

Pages: 7 (1516 mots) Publié le: 16 juin 2010
First, when you think about Sustainable Business Strategy, you should ask yourself, what makes a business sustainable: what are the key factors to take into account in order to run a business sustainably? And to address this question, I think the Triple Bottom Line approach is really relevant because it takes into account different aspects of how to run a business:
• The economic sides
• Thesocial aspects
• The environmental issues

Indeed, no matter what you think, for a business to be sustainable, it has to be economically profitable: and I truly believe it should be the first criterium to take into account when launching a new business. At the early stages of creating a business, one should think about:
• What is the initial investment?
• What is the Payout ratio? After howmany years will I be able to repay my initial investment?
• Will I generate enough cash flows to reach the payout?
• What should my Return on Investment be for my business to be worth launching?

For example, it has been more than twenty years since my parents started running their own Chinese restaurant in Nice, France. In 1999, my father created, along with my two sisters and me, a real estateinvestment group to buy the walls of our family restaurant as an investment. This group affords us two key benefits: the first is with four members, we can provide a stronger guarantee when applying for a bank loan; and the second is we apply the collected rent to the monthly mortgage to build up our equity. In fact, with a small initial investment, we managed to acquire the walls of the familyrestaurant; this was financed by the collected rent. After several years, the bank loan was payed over and we were still collecting money from the rent: hence we were able to acquire new assets in Paris. As time passed by, bankers trusted us as we were good payers and becoming landlord of more and more assets.

For instance, as a member of this group, my major contribution lied in theacquisition of a 25 square meter apartment in Paris in 2007. I assessed more than 30 flats before finding the perfect one that met the sustainable criteria: in a good location, with good value. My first step was to evaluate its true market value; and because I noted that it needed some work, I managed to negotiate 10% off its asking price. Afterwards, I visited several competing banks to negotiate the bestloan for the investment. Furthermore, I sourced an entrepreneur who was able to carry out all the works, including plumbing and electricity. Every day after work over the course of 6 weeks, I went on site to evaluate the quality of his work. Once this work was completed, it has become a very solid real estate investment.

Now that the business is launched, we are building up our equity on acyclical basis, making sure that the collected rents pay the monthly mortgage. And about every 5 years, when we finish paying off a loan for one of the asset, we have purchasing power to buy another apartment. So this cycle is economically profitable, which is really important to make sure the business is sustainable and can grow.

Furthermore, after a business is launched, to make sure it remainssustainable, you have to pay a great attention to the people working in: indeed the social aspects are really important.
For example, in my first job at Sagem Communications, the management strategy was not clear at all and in spite of the company name, the inside communication was really poor:
• For example, I had no clear boss, so several people were giving me directions so that I had towithstand the pressure of many different departments and people all the more as the company results were not good, so the work atmosphere was very tensed.
• In terms of compensation strategy, it was also not logical: it seemed that the salary increase did not follow any specific process, meaning that no matter how hard you can work, your salary increase will depend more on the people you are good...
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