Assignment:
Reading the following chapter are given below is:
Foundation of manegerial Economics and Decision Making Under Risk and Uncertainty
Firm Objectives
Read the articles Jessica Alba's Triple Bottom startup raises $25 million and The bottom line of corporate good
In reference to the articles, discuss how firms incorporate the triple bottom line concept into traditional business concerns over profitability. Respond to at least two of your classmates' posts.
Guided Response: In 300 words or more, please, provide your response to the above discussion question. Comment on how customers can influence firms to pay more attention to the preservation of the natural environment. Respond substantively to at least two of your classmates' postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.
Respond to Part 1
The triple bottom line is defined as "a framework or theory that recommends that companies commit to focus on social and environmental concerns just as they do on profits" (Kenton, 2019, para. 1). The article "Jessica Alba's Triple Bottom Line Startup Raises $25 million" discusses Jessica Alba's reasons behind founding The Honest Company. She along with Christopher Gavigan founded The Honest Company to provide non-toxic, environmentally-friendly products for babies and families. As a mother of two, she realized there is a challenge with finding baby products without some type of toxic substance. Although The Honest Company has made a profit, the business was founded due to Alba's environmental concerns.
The triple bottom line theory consists of three bottom lines which are profit, people, and the planet. Profits represent the profit and loss associated with corporate profit. People represent the social responsibility of an organization. The planet represents how environmentally responsible firms are (Kenton, 2019, para. 3). In Alba's case, she felt socially responsible to create products that are better for children to use. Her products are non-toxic which represents environmental responsibility. Firms incorporate the three bottom lines mentioned. Her business announced a 25 million financing round with 52 million in total funding (Field, 2013, para.1). Based on these figures, The Honest Company is making a profit as well.
Customers can influence firms to pay more attention to environment preservation by patronizing more companies who are intentional about protecting the environment. The Honest Company is one of those companies as the company provides a code of conduct to its suppliers. If suppliers do not comply with the code, The Honest Company does not use the supplier. The code of conduct ensures that suppliers comply with "human rights and environmental and documentation standards" (Field, 2013, para. 5). Also, customers can discontinue the purchase of products with harmful chemicals if companies refuse to reformulate and/or remove the products from stores.
Field, A (2013). Jessica Alba's Triple Bottom startup raises $25 million Forbes.
Kenton, W. (3 May 2019). Triple Bottom Line (TBL).
Respond to Part 2
The triple bottom line (TBL) consists of three key pillars for success in business and recommends businesses focus more than just profit. "There's more to a business that just money (Forbes, 2019)." This approach reflects businesses focusing on people, plant, and profitability.
Those that adopt the TBL believe that if they prevail in all three of these aspects, they are promoting a well-rounding business. Personally, I think the TBL approach is great and helps manage a company on more than just profit. That's not to say profit isn't important but incorporating people and planet into a business model can bring more profit.
The natural environment plays into the planet aspect of the TBL approach. Companies that want to prevail in this aspect may sell certain products or promote "green". Jessica Alba does this by selling non-toxic, eco-friendly products for babies their families. This product is great for the environment which some consumers are checking for before purchasing a product. She is very serious about this pillar to the point she has turned down business from suppliers that do not comply with her business model.
Customers can influence a business to pay more attention to the preservation of the natural environment by taking action. As stated, customers are able to influence change by taking advantage of their power in the market. The popularity increase of organic food took the consumer market by storm and forced businesses to change. Once consumers changed their minds and collectively started purchasing organic foods, all businesses in the food market took notice. Most of them were forced to change with the times just to keep up with the masses.
Consumers can also take action through social media platforms like Facebook and Instagram. There have been many social media groups that have been started to support and go against certain things going on in society.
References:
Douglas, E. (2012). Managerial Economics . [Electronic Version]
Field, A (2013). Jessica Alba's Triple Bottom startup raises $25 million Forbes.
Scott, R. (2012). The bottom line of corporate good Forbes.
Decision Making Under Uncertainty
To save on gasoline expenses, Edith and Mathew agreed to carpool together for traveling to and from work. Edith preferred to travel on I-20 highway as it was usually the fastest, taking 25 minutes in the absence of traffic delays. Mathew pointed out that traffic jams on the highway can lead to long delays making the trip 45 minutes. He preferred to travel along Shea Boulevard, which was longer (35 minutes), but rarely had traffic jams. Edith agreed that in case of traffic jams, Shea Boulevard was a reasonable alternative. Neither of them knows the state of the highway ahead of time. After driving to work on the I-20 highway for 1 month (20 workdays), they found the highway to be jammed 3 times. Assuming that this month is a good representation of all months ahead, should Edith and Mathew continue to use the highway for traveling to work?
How would you conclusion change for the winter months, if bad weather makes it likely for traffic jams on the highway to increase to 6 days per month?
How would your conclusion change if Mathew purchased a new smart-phone app that could show the status of the highway traffic prior to their drive each morning, thus reducing the probability of them getting into a jam down to only 1day per month (where on this day, the app showed no traffic jam, but a jam developed in the meantime as they were driving along the highway).
Guided Response: In 300 words or more, please, provide your response to the above discussion question. Please, show all your calculations and explain your answers. Further, comment on how the conclusions of this problem will change if there was no uncertainty and the highway always had traffic jams, whereas Shea Blvd was always traffic jam free? Is this scenario realistic and why? Respond substantively to at least two of your classmates' postings.
Respond to Part 1
I believe that Edith and Mathew should continue to use the highway for traveling to work. Due to the fact that the highway is the fastest route I believe they shouldn't stop using it.
My conclusion will change for the winter months, if bad weather makes it likely for traffic jams on the highway to increase to 6 days per month because I will suggest that they take Shea Boulevard versus I-20 route. The winter will cause an increase in the traffic jam days and the increase will be six days of traffic jams which will equal more time for the I-20 route: 45min*6 days=270 min + 25min*14 days=350 min for the remaining days, which equals 750 minutes for this route for twenty days. This makes I-20 route for 20 days be longer than Shea Boulevard in the winter with no traffic jams, (700 minutes for twenty days). Based on these findings is why my conclusion will change.
If Mathew purchased a new smart-phone app that could show the status of the highway traffic prior to their drive each morning, thus reducing the probability of them getting into a jam down to only 1day per month (where on this day, the app showed no traffic jam, but a jam developed in the meantime as they were driving along the highway) my conclusion would be as I originally state I would suggest they take I-20 highway. I-20 route is still the fastest route because the app will already show Edith and Matthew the traffic jam and they will save 10 minutes by taking the Shea Boulevard route. If there is a traffic jam on the Shea Boulevard route it would be best for them take the I-20 route. If Shea Boulevard route is 35 min without a traffic jam, with a traffic jam it could be about 55 min, making I-20 route with a traffic jam 45min faster.
Respond to Part 2
It is important to note traffic jams and delays when calculating the commute to work. Based on the information Edith and Mathew found in their attempt to save on gasoline, there are many reasons why I believe they should continue to use the highway for their travel. The first reason I believe they should use the highway is the time they save by doing so. Edith and Mathew would be on the road seven minutes longer per day if they take Shea Boulevard over the highway. During that drive they are also putting more pollution in the air.
Edith and Mathew were smart and calculated the traffic jams for both routes and that data was also factored into the decision. They discovered that the highway jammed up three times within the twenty work days they were finding data. That's only about fifteen percent of the time they can expect to hit a traffic jam. I decided that fifteen percent wasn't enough to warrant taking Shea Boulevard and adding all that extra time to the commute.
During the winter months I would change my opinion and suggest that they use Shea Boulevard for their commute. The reason for this is because anticipating six traffic jams during the twenty days of data collection, alters the playing fields. Now we can expect 30% of their times being traffic jams which makes a huge difference. Also, the winter months are notorious for accidents on the road. If Edith and Mathew are not used to winter months or aren't prepared, it can lead to accidents.
If Mathew purchased a new smart-phone app that could show the status of the highway traffic prior to their drive each morning, it would reduce the probability of them getting into a jam. This would be very beneficial for them as they can check the traffic and make an informed decision on which route they want to take. Also, they can much easier avoid the traffic all together without wasting time in between.