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Carbon Foot Print Case Study

Task 1

Introduction

Carbon foot print is a growing concern in the rising global temperature. Carbon foot print can be understood as the total amount of carbon dioxide which is released into the atmosphere as a repercussion of the various activities undertaken by an organization. The carbon footprint calculation may also include other green house gases being emitted which in turn, contributes to the global warming. The aviation industry seems to have a major environmental impact due to the heat emission from the aircraft engines. They also add to climate change and worldwide dimming. Airplanes release particles and gases such as carbon dioxide, hydrocarbons, water vapor, nitrogen oxides, carbon monoxide, black carbon, lead and sulfur oxides which impact the atmosphere.

Comprehensive research shows evidence that although there have been many efficiency modifications made to the air-frames, aerodynamics, engines and other flight operations there might not be a decrease in the carbon dioxide emissions from the air travel because of the projected continual growth in air travel. This report aims to study and analyse whether the demands for a reduction in the carbon footprints of business organizations, especially the airline industry, have an impact on the competitive environment of the airline sector in the near future.

Importance of Carbon Footprint estimation for businesses

Every modern business can adopt a strategy for low carbon emission in its business plan. In todays world, all companies want to play a role in the future of sustainable development by putting efforts towards helping their country reduce carbon emissions. Carbon emissions not only have harmful affect on the environment - they also affect the finances and livelihoods of every business. But with solutions such as renewable energy and free solar energy, reducing carbon emissions has never been easier. Some of the major benefits that a business can get by reducing the carbon foot print are Cutting down on the costs Reducing carbon emissions directly leads to reducing energy costs. Energy needs money, and therefore reducing emissions and moving to cheaper renewable resources will better manage their budgets (Ennis, 2016). As time goes by, companies become more profitable because of these simple changes.

Opportunity to earn Reducing carbon emissions and turning to renewable energy such as solar energy also provides companies with opportunities to make money. Companies can sell any used energy to the grid - and sell out the proceeds.

Attracting new employees As protecting the environment gains popularity, for many people entering the world of work, green policy and corporate social responsibility are key. Therefore, when companies have policies that focus on environmental protection, they will find it easier to attract new employees.
Driving Innovation By ignoring increasing carbon emissions and adhering to ancient forms of energy, companies cannot accept innovation (Ennis, 2016). The adoption of carbon-free energy and renewable energy technologies helps to show that the business is innovative and not stuck in the past.

Build a green future Many companies want to maintain the long-term future of our society. Therefore, if they contribute to the environment, many are willing to make changes and reduce their carbon footprint. Green conscience companies can also use their green programs in their public relations (Ennis, 2016). By addressing issues such as greenhouse gases, companies tend to be more humane and gain public credibility. This in turn affects consumer choice. In fact, research shows that the public is more prone to trusting companies with long-term environmental strategies (Ennis, 2016).

Carbon foot print in the aviation industry

According to the Air Transport Action Group (ATAG, 2018) reports, worldwide flights in 2017 generate 859 million tons of carbon dioxide, while humans worldwide produce more than 40 billion tons of carbon dioxide. In 2017, the worlds airline carried over 4.1 billion passengers and aviation supports more than sixty five million jobs, while 10.2 million are directly linked to air traffic (ATAG, 2018). It is said that the global aviation industry produces about 2 of all human factor-induced carbon dioxide emissions. The aerospace industry is responsible for 12 of carbon dioxide emissions in all transport sources, while road transport accounts for 74. Although air traffic accounts for about 0.5 of world trade, it is more than 35 of value - meaning that air cargo is a very high value, often perishable or time sensitive commodity (ATAG, 2018).

Despite the use of energy in transport, the supply of fresh products from Africa to the UK supports only 1.5 million people and produces less carbon dioxide than similar products grown in the UK. Alternative fuels, particularly sustainable bio-fuels, have been identified as excellent candidates to help achieve industrial goals. Bio fuel-derived sources such as algae, jatropha, and waste by-products have been shown to reduce the aviation fuels carbon footprint by up to 80 over their lifetime (ATAG, 2018). Furthermore, it was found that approximately 80 of the carbon dioxide emissions from air travel came from a flight that flew over 1500 km and for which there is no practical alternative transport (ATAG, 2018). It is also reported that one-third of the airlines operating costs are spent on fuel 33, up from 13 in 2001 (ATAG, 2018). As fuel prices rise, this ratio is likely to continue to rise. This is therefore the main driver of the entire industry to focus on fuel efficiency.

The report further puts forward the climate targets for the aviation industry stating that the aviation industry is focused on improving their fleet fuel efficiency by 15 per annum in the time period of 2016-2020. it is forecasted that from 2020 the total carbon emission from the aviation industry will be capped through the carbon neutral growth and by 2050 the aviation industry predicts to reduce the carbon footprint by 50 of what it was in 2005.
The above stated points help understand the current situation of carbon footprints by the aviation industry. It also gives us a clear idea of what the various aviation companies must strive for in order to reduce the carbon foot print of its business. In the next section it is discussed how reducing the carbon footprint would help the aviation industry or the airlines in gaining competitive advantage over others.

Reduced carbon footprint and competitive advantage

Over the past few years, companies have often been skeptical and uncertain about carbon emissions. However, since real tax incentives and sanctions are applied, the cost of inaction is high. Companies can now realize the advantages of a precise carbon emissions, lower costs, better brand image and increased operational efficiency.
The low carbon footprint reflects efficient fleet management, as carbon emissions are closely related to fuel consumption, mileage and fleet size. The process of accurately calculating carbon footprint can help calculate vehicle efficiency and reduce fuel consumption costs (EIU, 2017). In the recent past, it has also become vital factor in fleet taxation, with companies losing money every year as a result of aging or neutral fleets.

To gain a competitive advantage over others, earlier companies used every means from new technologies to corporate acquisitions, talent management and marketing. However, many people now understand that they can use other competitive tools which are to achieve carbon efficiency or reduce carbon footprint (EIU, 2017). Companies can now easily drive carbon efficiency internally, but they can also reduce the energy consumption and greenhouse gas emissions by buying energy-efficient products for corporate customers and end users.

As discussed under the impacts of carbon emission on business it is seen that reducing the carbon foot print helps in cutting down the cost for a business. In the airline industry specifically reduction in the carbon footprint, helps in gaining competitive advantage (Alique et al., 2014). It has been found that if the cost is reduced will the slow growth of demand the EBIT for airlines can be improved. The airlines would have a short term fixed cost and in the midterm would be able to predict demands and manage the fleet size. The route to ensure the high load factors would become the key to gaining competitive advantage. Anecdotal evidence show that for airlines it is comparatively easy to cut the cost base by 10 by eliminating less profitable routes and thereby, recover at least 50 of the cost as a part of revenue reduction (Carbon Trust, 2019).

Jet Airways may be seen as an example of how airlines gain a competitive advantage by reducing their carbon footprint. Jet Airways uses IBMs integrated emission control system to map carbon emissions and optimizes fuel usage by analyzing each flight in detail. Achieving this important milestone in the strategic outsourcing strategy, Jet Airways can leverage advanced air carbon mapping analysis and optimize their fuel consumption by analyzing each flight in detail (Gupta, 2012). An integrated emission control system provides Jet Airways with a clear process of analyzing and calculating the emissions of individual aircraft, which in turn helps to compare flight records and fuel usage data. This solution also ensures that all flight emissions are calculated and the report is accurate and timely. Not only does this solution help Jet calculate the fleets carbon footprint, but it also helps to optimize fuel consumption and thereby gain competitive advantage. The company also said that the solution provided by IBM helped them save about 6 million a year (Gupta, 2012). The solution helped Jet Airways to increase their flexibility and scalability of operations, and helped to gain a competitive edge and strengthen its leadership position by making the airlines largest costs visible.

Some airlines become more fuel efficient than the others and based on a combination of more efficient aircraft, higher load factor and much more efficient routes, the typical range of carbon emission may be calculated as 95-130g carbon dioxide/ passenger km (Carbon Trust, 2019). The best would be 30 more than the worst case. While there may be a trade off between the average annual costs and the efficiency of the fleet, introducing carbon costs will further increase competitiveness while the difference in load factor would bring out the change. This would further give the more efficient airlines a choice to pass a lower overall cost of carbon per passenger km to their customers and hence, take over the market share from their customers, and still be bearing a low carbon burden which would result in increased profitability. A 30 efficiency advantage would help the airline lower the cost of its ticket by 2 as compared to the competitor and thereby, help in gaining market share and a cost advantage over its competitors (Carbon Trust, 2019).

Conclusion

Through the above analysis it can be concluded that the carbon footprint is a growing environmental concern and business must strive towards decreasing their carbon emission to ensure a sustainable future. The major impacts of carbon emissions are global warming and climate changes which effect the entire ecosystem. It has also been observed that the business can gain competitive advantage by working towards decreasing their carbon footprint. The impact of reduced carbon footprint is direct on the cost incurred by the company and reducing the same can lead to a reduction in the operational cost and further lead to higher credibility and customer engagement.

The impacts have been clearly discussed din the report and the ways in which businesses and especially the aviation industry can gain competitive advantage has been clearly discussed. Decreasing the carbon footprint helps airline to gain market share and gain competitive advantage over their competitors. From the case of Jet airways it can be concluded that if the airlines can incorporate proper systems which relate to monitor and reduce the carbon footprint it can help the companies gain market share and increase their profitability. The efficiency of fleet management was also found to increase if the airlines took measure to monitor their carbon footprint. Lastly it can be concluded that reducing the carbon foot print helps in gaining competitive advantage in the aviation industry.

References

Alique, P. M. et al. 2014. Carbon Footprint as competitive advantage. DYNA Energa y Sostenibilidad, 3(1). Available at http//dx.doi.org/10.6036/ES7289 Accessed on 15 May 2019.
ATAG. 2018. Facts and Figures. Online. Available at https//www.atag.org/facts-figures.html Accessed on 15 May 2019.
Carbon Trust. 2019. Fasten your seat belt Airlines and cap-and-trade. Online. Available at https//www.carbontrust.com/media/84972/ctc764-fasten-your-seatbelt-airlines-and-cap-and-trade.pdf Accessed on 15 May 2019.
EIU. 2017. Carbon efficiency for competitiveness. Online. Available at https//www.wemeanbusinesscoalition.org/blog/carbon-efficiency-competitiveness/ Accessed on 15 May 2019.
Ennis, G. 2016. Why Carbon Emission are important to business. Online. Available at https//www.lowcarbonenergy.co/news/carbon-emissions-important-business/ Accessed on 15 May 2019.

Gupta, B. 2012. IBM analytics to support Jet airways green initiatives. Online. Available at https//www.analyticsindiamag.com/ibm-analytics-to-support-jet-airways-green-initiatives/ Accessed on 15 May 2019.
Task 2

Introduction

Demographics include any type of a statistical data which describes the population of the potential consumers or the target audience. This data may include age, annual income, number of individuals in a household, occupation, education, gender, geographic location, occupation, status of home ownership, race or ethnic background, status of home ownership etc. A small part of demographics is also associated with consumer psychographics, which may includes things such as buying habits, shopping patterns, hobbies, behaviors, values and opinions, general attitudes and travel habits. Demographics have a huge impact on businesses in term of labour availability, production cost, sales revenue which are major dependent on the population, age end other such factors (Alton, 2015). This report aims at discussing the impact of increasing pressure of demographic change on the business operation by critically evaluating a chosen business and studying about the effectiveness of its current response. This would in-turn help in evaluating how the risk of changing demographics can be effectively changed into a business opportunity to boost the organizational and economic growth.

Impact of increasing pressure of Demographic change on business

Demographic change is the main reason why organizations need to adjust their practices to cope with the increasing diversification of the labor market. Diversity changes potential employee funding and employee needs and impacts broader business objectives, such as service delivery. In addition, the changing demographics of a wider population mean that organizations must develop strategies that meet the needs and aspirations of national citizens.

Major demographic changes include

1. Changing family structures, such as parents of parents who become commonplace and parents juggle with work, housework, parenting, and responsibility for childcare.
2. Population assistance puts pressure on health and social services. It also leads to unpaid childcare and can lead to positive aging and thus gradual retirement.
3. The diversity of the workforce is also changing with increasing womens participation and growing ethnic and religious diversity.
4. There is also less support for social services for people with disabilities and increasing health and stress problems.
These demographic changes will have a profound impact on organizations and managers in the coming decades. Its impact includes the need to better understand and perceive different cultures, including their practices and religions. Understand how organizations profit from diversity need flexible work while ensuring that work quality is not compromised create a non-discriminatory work environment better integrate work and life, and make the workplace fit for the family (Bookboon.com, 2019 ).

Diversification brings commercial benefits, including developing economically beneficial partnerships, new markets, compliance, culturally sensitive and appropriate products and services, good at social networking and teamwork, and social and environmental responsibility and encourage people trying to bring your own rewards in terms of sensitivity and awareness.
A good understanding of the customers demographic situation can help with overall business improvement and have a special impact on marketing strategies (Bookboon.com, 2019).

Some of the ways in which customer demographic data can impact business are as follows

  1. Supporting the demographic situation of customers gives a clear picture of the customers buying habits, which in turn helps to develop an effective marketing strategy.
  2. Good demographic understanding helps to determine target price points, as intra-country regions may have different mean annual revenues and therefore a price strategy for a specific target market can be increased.
  3. Deductive approach to customer demographic helps to reduce costly mistakes. It provides understanding of customer psychology and prevents businesses from making marketing or advertising mistakes.
  4. Demography and its study helps to identify customer needs, thereby understanding products or services that would work better on the market. It can also provide inputs for product development and innovation.
  5. Chinas changing demographics and its effect on Ping An Good Doctor
  6. China has an ageing population. This is not because of the increased lifespan alone but also because the number of young population is decreasing which leads to a decreasing number of next generation workers. This a major reason why China has abolished its one child policy and has further encouraged the movement of educating and motivating women to have two children (Deloitte Insights, 2017). But even this attempt has not shown any significant success as the birth rate has not shown any significant change. The steep decline in the number of working young adults has also led to labour shortage which is majorly felt in the manufacturing sector. These rising labour cost has also led to the migration of industries to less developed countries such as Vietnam and Indonesia and has also accelerated the demand for automation (Deloitte Insights, 2017). In general these demographic trends have favoured the service industry while putting pressure on the manufacturing industry. The demographic changes have increased the demand in the health care sector with the increasing health consciousness of the people and therefore, there is an increased demand for better services.
  7. In light of the above demographic factors the Chinese government is now determined to move up the value chain by incorporating the use of robots and artificial intelligence and also by promoting the use of digital technology.
  8. Utilizing this opportunity of the changing demography and an increasing aged population the Chinese health-care market saw the rise of a innovative business which has grown manifolds in a short period of time. Ping an Good Doctor is Chinas largest online health-care platform. It had an IPO of 1billion and has been successful in transforming Chinas healthcare problems into opportunities (Lovett, 2018). It has demonstrated the best way of handling and gaining opportunity out of the changing demographic pressure. It has through its innovation and technology brought forward a cost effective and two track solution to the impending crises and how to pay for the aging and chronic diseases.
  9. The Good Doctor app has good understanding of the Chinese consumer and has understood the customer needs according to the demographics.
  10. The Chinese consumer has extremely low expectations in terms of face to face time with their doctor and they are most likely to spend three to five minutes with the doctor. The Good Doctor capitalizes on this and provides the consumer a fifteen minute consultation time which is highly appreciated by the consumer. The company has also incorporated AI to accelerate the process of the tele-health consultation. They use machine learning to understand population level issues such as widespread flu in a particular area along with more specific individual issues with prescriptions, longitudinal health record and prior consultations.
  11. The increase in aging-related pathologies observed in recent years has greatly emphasized the need for a personalized care system that can be extensively and easily integrated into the patients daily life. Good Doctor app has clearly focused on this demographic need and worked towards developing a mhealth system which is a solution to such problems.
  12. Future Strategy of the company
  13. The Ping an Good Doctor aspires to build AI powered unstaffed clinics which would include a smart medicine cabinet which will have the capability to dispense more than 100 medications. In 2018, the app also showcased a small unstaffed clinic which is supposed to employ artificial intellingence where the patients have the possibility of sitting in a 3sqm clinic and discuss their concerns with an cloud doctor (Lovett, 2018). This is an AI Doctor who would understand their symptoms and prescribe he medications accordingly.
  14. The role of the AI doctor would include gathering the medical history of the patient from previous online database and thereby, develop a diagnosis plan which would be provided to a specialist consultant through telemedicine (Lovett, 2018). These miniature clinics also known as the One minute Clinics also have the capability to connect the patients with a doctor from the in house medical team. This proposed system includes a smart medicine cabinet where the patients would have access to the medicines prescribed after the diagnosis (Lovett, 2018).
  15. This strategy is expected to be a success keeping in mind the current demographic need of China. Due to increasing population and lesser educational facilities China has been facing a shortage of doctors. The World Health Organisation estimates that China has only 1.8 doctors for every 1000 people and therefore, the government has set health as a priority (Koh, 2019). Therefore, keeping in mind these demographics it is a successful strategy to be able to merge digital health and artificial intelligence in order to be able to sustain and build a niche in the Chinese market.
  16. In a report by the Health Policy and Technology Journal, it was clearly stated that there is need for apps like Good Doctor keeping in mind the Changing climate of Chinese Healthcare. Currently, over 16 of the population is above the age of 60 while, 20 of the population suffers from chronic conditions. The report also stated that there are issues as hospitals are not able to fulfill medical demands hence, the use of mobile information and communication technology such as the mhealth are gaining popularity in China (Sun et al. 2016). With the increasing mortality rate in China the life expectancy has almost doubles which can be attributed to the progress in the health-care system. The report also highlighted that the average age of people using the mobile health is 30 and the elderly still show less reliance on mobile health which could be attributed to the lack of policy. But, the market still shows tremendous growth potential. The market for mobile health services in China is currently growing at annual growth rate of 50 and the development in this domain have potential to make it an important component of the Chinese health care market.
  17. This offers tremendous growth potential for Good Doctor app. This app has become a great success in China and has tackled the demographic pressure to its advantage. The major reason for consumers to choose the app are the five USP which it ensures that are a local presence with expertise of global standards, provides comprehensive health cover, is focused towards making the users healthier, it offers a wide range of products which meet the various medical and financial needs and has personalized services and tools which guide the consumers through the health care system.

Conclusion

Through the above discussion it can be clearly understood that the Lovett, L. 2018.changing demographics effects the business environment globally. There are many demographic factors which increase the pressure eon the operating environment of the business. While, some businesses may succumb to this pressure but there are businesses like the Ping an Good Doctor app which has successfully transformed the demographic challenge into a business opportunity and has shown tremendous growth in the Chinese market. The report also discussed in detail about the changing demographics and implications of an aging population on the business environment. The report identifies the need for technological advancement and automation in the Chinese market. The report also identifies need for AI development and implementation in the manufacturing set up.

The company discussed in this report shows tremendous growth potential and has a future strategy of merging automation with healthcare facilities. It talks about the AI operated clinics which would be greatly accepted in the Chinese market keeping in mind the crisis in the market related to less number of doctors. From the report, it can be concluded that at a global level there is an increasing pressure because of the changing demographics which may include several factors such as the aging population, increase in the number of one parent households, changing income and employment numbers etc. These factors play great role in the strategic positioning of the business. The company selected in the report above shows an innovative solution towards efficiently managing the pressure of changing demographics.

References

Alton, L. 2015. How customer demographics influence your business. Online. Available at http//customerthink.com/how-customer-demographics-influence-your-business/ Accessed on 15 May 2019.

Bookboon.com. 2019. How democratic changes will impact organizations and managers. Online. Available at https//bookboonglobal.com/how-demographic-changes-will-impact-organizations-and-managers/ Accessed on 15th May 2019.Deloitte Insights. 2017. Demographics under the spotlight, by country. Online. Available at https//www2.deloitte.com/insights/us/en/economy/voice-of-asia/sept-2017/demographics-countrywise.html Accessed on 15 May 2019.Lovett, L. 2018. Ping an good doctor showcase AI Powered, unstaffed clinics. Online. Available at https//www.mobihealthnews.com/content/ping-good-doctor-showcases-ai-powered-unstaffed-clinics Accessed on 15 May 2019.Koh, D. 2019. Ping an Good Doctor expands reach to 265 million registered users in 2018. Online. Available at https//www.mobihealthnews.com/content/ping-good-doctor-expands-reach-265-million-registered-users-2018 Accessed on 15 May 2019.
Sun, J., Guo, Y. et al. 2016. mHealth for aging China opportunities and challenges. Aging and Disease, 7(1) 53-67.

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