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The PGS-framework - A Study of Alfdex's Environmental Strategy

Ejlertsson, Josefin LU and Gustafsson, Emelie (2011) FEKP02 20111
Department of Business Administration
Abstract (Swedish)
The possibility to make environmental strategy a part of the core strategy through a framework called inside-out/outside-in was suggested by Porter in 2007. Researchers have also stated that the output of implementing a certain strategy ought to be valued during strategy planning. The two areas; environmental strategy and profitability analysis have although not frequently been combined, and thus there is a lack of frameworks on how to perform a profitability analysis on an environmental strategy. As a result, examples of generated profitability from an environmental strategy are also few. The purpose of the thesis is to develop a framework for describing and analyzing the potential profitability of a company’s green strategy as a part of... (More)
The possibility to make environmental strategy a part of the core strategy through a framework called inside-out/outside-in was suggested by Porter in 2007. Researchers have also stated that the output of implementing a certain strategy ought to be valued during strategy planning. The two areas; environmental strategy and profitability analysis have although not frequently been combined, and thus there is a lack of frameworks on how to perform a profitability analysis on an environmental strategy. As a result, examples of generated profitability from an environmental strategy are also few. The purpose of the thesis is to develop a framework for describing and analyzing the potential profitability of a company’s green strategy as a part of the core strategy. The purpose is further to apply the framework in a case study. In order to fulfill the purpose, a deductive study has been performed. The theoretical framework was constructed first, based on Porter’s theories concerning competitive advantage and corporate social responsibility (CSR) (inside-out/outside-in) together with profitability- and life cycle assessment (LCA)-tools. Thereafter the developed PGS-framework (Profitability of Green Strategy) was tested on a relevant case company. The methodology has been a combination of quantitative and qualitative methods, and data has been collected from primary sources such as interviews and surveys (mainly empirics), and secondary sources such as literature (mainly theories). The PGS-framework is a tool for performing a profitability analysis of implementing a green strategy as a part of the core strategy and it enables a framework for combining green strategy and profitability. It consists of 5 steps and is developed from the inside-out/outside-in analysis (suggested by Porter in 2007) by adding the sub-steps of LCA, five forces framework, the NEP-Scale, profitability analysis, including industrial ecology and profitability drivers. The most contributing factors to why the environmental strategy generates revenue are the discovered (unique for this company) profitability drivers; to be proactive and to have proper knowledge. The present value indicates a profit of 5,4 Million SEK, or 0,26 % of the total yearly turnover, as a result of implementing the green strategy into the core strategy. The PGS-framework has a Porter-approach, but the inside-out/outside-in analysis in step 1 shows similarities with strategic frameworks developed by other researches, why the framework is considered having a somewhat general approach. (Less)
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author
Ejlertsson, Josefin LU and Gustafsson, Emelie
supervisor
organization
course
FEKP02 20111
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Environmental Strategy, Profitability Analysis, Competitive Advantage, Inside-out/outside-in analysis, PGS-framework
report number
221/2011
ISSN
1651-0100
language
English
id
1973488
date added to LUP
2011-06-03 10:21:38
date last changed
2011-06-03 10:21:38
@misc{1973488,
  abstract     = {The possibility to make environmental strategy a part of the core strategy through a framework called inside-out/outside-in was suggested by Porter in 2007. Researchers have also stated that the output of implementing a certain strategy ought to be valued during strategy planning. The two areas; environmental strategy and profitability analysis have although not frequently been combined, and thus there is a lack of frameworks on how to perform a profitability analysis on an environmental strategy. As a result, examples of generated profitability from an environmental strategy are also few. The purpose of the thesis is to develop a framework for describing and analyzing the potential profitability of a company’s green strategy as a part of the core strategy. The purpose is further to apply the framework in a case study. In order to fulfill the purpose, a deductive study has been performed. The theoretical framework was constructed first, based on Porter’s theories concerning competitive advantage and corporate social responsibility (CSR) (inside-out/outside-in) together with profitability- and life cycle assessment (LCA)-tools. Thereafter the developed PGS-framework (Profitability of Green Strategy) was tested on a relevant case company. The methodology has been a combination of quantitative and qualitative methods, and data has been collected from primary sources such as interviews and surveys (mainly empirics), and secondary sources such as literature (mainly theories). The PGS-framework is a tool for performing a profitability analysis of implementing a green strategy as a part of the core strategy and it enables a framework for combining green strategy and profitability. It consists of 5 steps and is developed from the inside-out/outside-in analysis (suggested by Porter in 2007) by adding the sub-steps of LCA, five forces framework, the NEP-Scale, profitability analysis, including industrial ecology and profitability drivers. The most contributing factors to why the environmental strategy generates revenue are the discovered (unique for this company) profitability drivers; to be proactive and to have proper knowledge. The present value indicates a profit of 5,4 Million SEK, or 0,26 % of the total yearly turnover, as a result of implementing the green strategy into the core strategy.  The PGS-framework has a Porter-approach, but the inside-out/outside-in analysis in step 1 shows similarities with strategic frameworks developed by other researches, why the framework is considered having a somewhat general approach.},
  author       = {Ejlertsson, Josefin and Gustafsson, Emelie},
  issn         = {1651-0100},
  keyword      = {Environmental Strategy,Profitability Analysis,Competitive Advantage,Inside-out/outside-in analysis,PGS-framework},
  language     = {eng},
  note         = {Student Paper},
  title        = {The PGS-framework - A Study of Alfdex's Environmental Strategy},
  year         = {2011},
}