Differences between Sustainable and Unsustainable Business Models

Features which differentiate a sustainable business from a non-sustainable business enterprise.

A sustainable business enterprise simultaneously coordinates societal, environmental and financial performance while a non-sustainable company considers only its financial outcomes. Increasing shareholders wealth is an ultimate goal of any business, however, a sustainable company would also care about its different stakeholders’ interests, including employees, customers and overall society. At the same time, non-sustainable organization would try to increase net income by any means without taking into account stakeholder’s needs and wants that do not directly correlate with profit.

For instance, advertising industry is the one that actually connects business with customers. Once created, advertisements become public and, therefore, community members represent one of the key stakeholder groups. The stakeholder group could consist of either local or global community members depending on the spread of advertisements produced and distributed by an agency.

Three key motives of community members and objectives to address these motives are as follows:

1. Truthful advertising that does not present subjective assumptions about products/services as facts. For instance, commercial stating that a biologically active additive is a universal treatment would not have credibility with community members. Even though inaccurate advertising primarily influences advertisers it can also adversely affect agency reputation and financial stability. Lost credibility leads to loss of sales and profits by advertisers and, hence, decreases in marketing budgets. From the standpoint of advertising agencies decreased advertisers’ budgets mean reduced revenues.

In order to address this motive advertising agencies need to carefully review information about products/services prior to creating commercials and promotional materials. They also need to avoid over-exaggerated statements that can mislead community members.

2. Socially acceptable representation of information is another motive of community members. For instance, commercials of children oriented goods and services should not contain sexual undertone. Advertisements containing propaganda of socially discouraged behavior is another example.

In this case the objective of an advertising agency would be to make sure that advertisements are in compliance with moral principles and local communities’ traditions in case of locally distributed commercials.

3. Community members are also interested in obtaining information concerning current social and environmental issues, such as illness and pollution prevention.

To address this motive advertising agencies should be engaged into public service advertising. Involvement into non-profit campaigns may not directly influence financial performance, however, in the long run improved reputation and credibility can pay off. Advertisers who pursue sustainable business strategies would prefer to contract with sustainable advertising agencies.

Besides abovementioned, an advertising agency can demonstrate its sustainability by being involved in creating and distributing public service advertising (social advertising) such as anti-smoking or anti-abortion propaganda. Additionally, an advertising agency should follow general sustainability principles, such as energy efficiency and employee development.

We shouldn’t also forget that marketing departments can also represent a part of advertising industry in case they develop ads by themselves. In addition some of the community members would also represent customers as another stakeholder group. In this case sustainability and profitability performance would be even more correlated since community members dissatisfied with unsustainable practices would not want to buy products as customers.


Опубликовал 15 Июль 2012.
Размещено в Sustainable Crowdsourcing.
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