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CHAPTER II LITERATURE REVIEW 2.1.

INTRODUCTION
The purpose of this chapter is to review the existing literature on environmental sustainability in general and in the car industry in particular as well as look at how such environmental sustainability can contribute to the competitive advantage of the car manufacturers. It would begin by defining what is sustainable development and discuss the aspects of sustainable framework practices applicable to manufacturing industries. It would also go on to define competitive advantage, the different types of competitive advantage and then finally discuss the benefits of environmental sustainability and its contribution to competitive advantage of car manufacturers.

2.2. ENVIRONMENTAL SUSTAINABILITY
Environmental sustainability involves laming decisions and taking action that are in the interests of protecting the natural world, with particular emphasis on preserving the capability of the environment to support human life. (Dechant K. and Altman B, 1994) It is an important topic at the present time, as people are realising the full impact that businesses and individuals can have on the environment. The main of environmental sustainability in business is to reduce the negative impact on the environment. Environmental sustainability is to only about reducing the waste that the company produces rather it is development process that will lead to businesses becoming completely sustainable in the future. (Shrivastava P., 2007) Currently, environmental sustainability is a topical issue that receives plenty of attention from the media and from different governmental departments. Businesses can impact the environment in the following ways: • Damage caused through logging and agricultural cleaning which leads to damaging the rainforest. • • • Polluting and over fishing in oceans, rivers and lakes. Polluting the atmosphere through the burning of fossil fuels. Using unsustainable farming practices.

4.5.NEED AND PRACTICE The oil crisis of the 1970s and the Japanese boom brought about a worldwide restructuring of the automobile industry that was greatly fuelled by the emergence of environmental paradigm (Medina and Nareiro 2003).1 billion by 2020. high costs market saturation and therefore. There is also cut throat competition in the industry that is characterised by over capacity.d. the pressure for constant innovations and product development (Martinuzzi. Thus. it is important to undertake a formal process for approaching sustainability. It is a truly global industry with dominant multinational players contributing to environmental damage worldwide. The international car industry is the greatest generator of waste and scrap worth billions of pounds annually. the pollution caused by cars are bound to get worse and not better unless car manufacturers themselves make dramatic changes (Burns et al 2002). Sustainability is a systemic concept that includes eco-social. SUSTAINABLE DEVELOPMENT IN THE AUTOMOBILE INDUSTRY . The emphasis for sustainability has presented lot of opportunity for companies in all kinds of businesses as they endeavour to adopt sustainable practices in the light of pressures for environmental protection. There is sufficient evidence of the damage caused to the environment due to cars. Given the polluting and damaging effect of cars on the environment. Kudlak. Further cars are a primary reason for depletion of world resources (Freund and Martin 1993). 2. M&S for example embarked on a five year plan to reduce dangerous green house gas emissions (Rose 2008) whilst Google installed solar energy systems at their head office in the US (Meville 2010). as stakeholders become more sophisticated. environmental and technological aspects and hence highly multi-disciplinary. Hence in recent . organisations are pressurised to adopt sustainable development practices.2. ENVIRONMENTAL SUSTAINABILITY AND THE AUTOMOTIVE SECTOR Hitchcock and Willard (2008) contend that "sustainability is a hot business trend and organisations are pursuing it in order to get greater success than others". Cars are considered extremely energy intensive as petrol can consume greater energy and emit greater green house gases than other types of vehicles (International Energy Agency 1993). Now however. Paterson (2000) claims that road transport accounts for 48% of nitrous oxide emissions in OECD countries on an average and 60% of this comes from cars. Faber and Wiman 2011). either as a result of stringent environmental regulations such as 20% renewable energy use by 2020 (Barosoo 2008) or increasing expectations for environmental friendly products from customers. It is predicted that given the current rate of growth in the number of vehicles on the road there is an expected increase from 700 million at present to 1.). Years ago companies could just meddle at random green efforts to earn a gold star in the marketplace. UNEP (2003) provides statistics of 25% of carbon di oxide emissions coming from transportation of which 85% is contributed by road transport and cars being responsible for 90% of all carbon monoxide emissions. Orsatto and Clegg (1999) observe that the car industry is the economic sector that is more emblematic of the modern era and also that one that causes greatest pollution. Cars are also a major contributor for acid rains (Mikler n.

Resource Reduction: This component of the framework allows us to understand if the company is able make the maximum out of the minimum resources. This component aims to analyse how environmentally sustainable the products of the company is. Volkswagen. Sustainable Process Design: This component aims to understand if the production process of the company has minimum wastage and creates less pollution to the environment. . This framework basically has five components which can be represented as below: (Wimmer W. 2. Toyota has been integrating a host of product designs which has been instrumental in producing vehicles that are both environmentally sustainable and leave the least environmental foot prints. Ford.. GM. Training and Education: This component of the framework aims to understand if the company is committed to training its staff and its customers to take up environmentally sustainable practices. Toyota is known for its very efficient and intensive production process that has the least wastage of resources. Omar and Igusa 2012). SUSTAINABLE PRACTICES FRAMEWORK Figure 1: Sustainable Practices Framework RECYCLING SUSTAINABLE PRODUCT DESIGN RESOURCE REDUCTION TRAINING AND EDUCATION SUSTAINABLE PROCESS DESIGN The sustainable practices framework can be used to analyse the environmental sustainable practice of Toyota.times car manufacturers have ventured into green technology initiatives to obtain competitive advantage in the global marketplace (Shatouri. BMW and Mercedes Benz are close competitors with each other to produce ecofriendly cars.6. Honda. This component will analyse if the company is able to reduce the resources used for production through efficient and ethical practices. These authors stated that manufacturers like Toyota. 2010) Sustainable Product Design: This refers to the features of the product of the company.

Whiteing A. (Miles M. 2012) It has also been discovered that a number of affluent customer who can afford high luxury cars also prefer to use Toyota Prius as their vehicle of choice because of the benefits it provides to the environment. Prof Browne M.Recycling: This component of the framework will analyse if the company is able to recycle its waste and sue for a more productive use. Many companies are endorsing their environmentally sustainable practices are made visible to the customers in various ways. and Zhexembayeva N.. It has . It has been argued that the incorporation of environmental.7. Wal-Mart. The more sustainable the competitive advantage. Some of the examples that can be applied are HP.P. health and social values in to the core business activities is the answer to maintaining enduring profit and growth. it has been found that an increasing number of customers prefer the products which are environmental friendly. This provides the firm with the ability to sell its products at a lower cost than the competitors. (Laszlo C. 2000) Embedding environmental sustainability can stand as a new opportunity for employees and stakeholder’s new opportunities to find meaning in organisational life. There are basically two main types of competitive advantage as proposed by Porter (1985): comparative advantage ad differential advantage. The modern car manufacturers are integrating an environmental sustainability strategy to its organisation such that it can keep up with the likes of Toyota and Honda. 2. Embedding sustainability has become a core business strategy for many companies in various sectors.. and Dr. A differential advantage is created when a firm’s products or services differ from its competitors and are seen as better than a competitor’s product by customers. and Siemens etc. (Prof Mc Kinnon A. This component will analyse the practice that company employs to manage waste and make productive use out of it. McDonalds. and Covin J.. the more difficult it is for competitors to neutralize the advantage.. 2011) In the automotive industry. Comparative advantage or cost advantage is a form’s ability to produce a good service at a lower cost than the competitors. COMPETITIVE ADVANTAGE Competitive advantage gives a company an edge over its rivals and an ability to generate greater for the firm and its shareholders. this allowing the company to generate a larger margin on sales.G.

.been fund that there is a specific market for environment enthusiast who are ready to endorse the strategy of the company.