PICMET ’11

PORTLAND INTERNATIONAL CENTER FOR MANAGEMENT OF ENGINEERING AND TECHNOLOGY

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TECHNOLOGY MANAGEMENT IN THE ENERGY-SMART WORLD

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PICMET ’11 PORTLAND INTERNATIONAL CENTER

FOR MANAGEMENT OF ENGINEERING AND TECHNOLOGY

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A Systems Approach to Analysing Environmental Decisions in the Automotive Industry

Breno Nunes1, Frederick Betz2, David Bennett3, Duncan Shaw1

1Aston University, Aston Business School, Birmingham, B4 7ET UK 2Portland State University, Engineering and Technology Management Dept., Portland, OR 97207 USA 3University of South Australia, International Graduate School of Business, Adelaide, SA 5000, Australia

Abstract--This paper uses systems thinking to analyse

environmental decisions and their interactions in the automotive industry. The motivation comes from the findings of an environmental decision making investigation undertaken from 2006 to 2010. Using data from 10 case companies, five principles of systems thinking theory were identified in a visual pattern analysis to undertake the assessment by considering the soft systems around the automotive industry and some other manufacturing companies (e.g. roots definition, interdependence, feedback loops, hierarchy, etc). The results show the implications of environmental policies and decisions relating to production processes and automobile design. For example, incremental choices for better fuel economy can lead to more intensive use of cars resulting in very little overall pollution reduction. Likewise, the introduction of disruptive technologies for zero emissions vehicles (e.g. electric cars and fuel cell initiatives) require wider systems adjustment in order to accept the radical innovations involved, which comprises a feedback loop of “no infrastructure, no zero-emissions cars, no infrastructure”. Finally, the analysis of systems also suggests that within the automotive industry the wider environment will ultimately have a significant impact on the drivers, the selection of options, and even the performance of environmental decisions.

I. INTRODUCTION

The generalist nature of systems approaches has indeed helped us understanding and solving complex problems albeit that did not happen without resistance and controversy. Fifty years after the Industrial Dynamics concept was introduced by [1], the effectiveness of systems approaches is still discussed. A clear message by [2] tried to create a path for General Systems Theory:

“Modern technology and society have become so complex that the traditional branches of technology are no longer sufficient, so approaches using a holistic view or systems thinking, and of a generalist and interdisciplinary nature, become necessary” [2].

Indeed, systems approaches have been found in several branches of science as shown in Figure 1 developed by [3]. Nevertheless, the scepticism about how practical systems approaches can solve complex problems and replace the traditional reductionist approaches still persists. [4] argues in favour of systems thinking despite the fact that, in his opinion, general systems theory (GST) has failed in its application.

While the application of systems approaches is still full of controversy, their principles are much more respected and will continue to be. The main reason is because the principles of systems theories tend to reflect the reality and complexity of events, while the application, use, and success of systems tools are vulnerable to not only known factors (e.g. availability of data, certainty of causal relationships, etc) but also unknown factors (e.g. uncertainty of social behavioural changes, etc). Very few would argue against the evidence of ability and competence of self-organising systems such as biomes, social systems, and market dynamics. However, the solutions given by system theorists are far from gaining wider acceptance. The problem seems to reside more on the systems models and tools, and of course their outcomes, rather than on the principles of systems theory. This is especially true for social sciences, where human behaviour is far from being predicable for most of the time. With similar controversy due to the gap between models and reality, the recent non-linear models for climate change have still not been accepted without questions. For instance in biology, where there might be a higher certainty levels and models may reflect better the reality in some fields (e.g. cellular biology, ecosystems, neuroscience, etc), systems theorists have achieved a much respected status. For these reasons, this paper uses a systems fitness concept, based on the systems principles rather than in systems tools or models, in order to enhance the understanding of environmental decision making in the automotive industry. Using an evidence-based methodology, the authors collected real environmental decisions from automotive companies and analysed them under the lens of systems principles.

II. THE PRINCIPLES OF SYSTEMS THEORIES

Systemic models are intended to better understand complexity and help problem solving in many different fields of knowledge (as shown in Figure 1). Due to the diverse origins of systems theories, models may be derived based on different approaches such as living systems, operations research, systems dynamics, systems engineering, cybernetics, organisational theory, etc. Regardless of its roots, systems theories share the same underlying principles within their generalist nature. This section of the paper presents five key principles of systems theories, which together form the systemic fitness framework. These selected principles were found to be more appropriate for analysing the automotive sector together with the environmental

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Figure 1 – Roadmap of systems approaches by [3]

decisions taken when shaped by characteristics of this industry. The five principles that compose the systemic fitness framework were identified in a visual pattern analysis of three main systems theories, mainly: general systems theory, industrial dynamics, and soft systems methodology. a) Systems Boundaries

One of the most basic underlying principles of systems theories is the idea of defining the boundaries of the system [5]. The holistic view of systems approaches should not impede the careful understanding of boundaries to systems, and of course, the notion of systems within systems.

The main reason associated with the selection of this principle is the need to draw boundaries so as to visualise complexity, interactions, and the impact of companies’ activities on wider systems such as society and the environment as shown in Figure 2. Fundamentally, economies only emerge within societies which live in a wider ecological environment.

b) The interactions between the elements of the systems

Another selected systems principle for the analyses conducted in this study is the definition of the elements of the system not only based upon ‘what’ they are but also ‘how’ they influence each other [7]. The application of this principle in the systems analysis will lead to the identification of

Figure 2 – Source:[6]

relevant feedback loops between the system elements. In addition, the elements’ interaction may define the level of self-organisation of a system. Figure 2 also helps in understanding these interactions. Economic activities can

Environment 

Society 

Economy 

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have positive and negative effects on both society and environment; but also societal and environmental factors can lead to decrease or increase of economic activity [6]. For example, natural disasters can reduce economic activities in a severe way. c) Delays in the systems processes

In a complex systems environment, cause and effect may not be closely related in time and space [8]. This is another important underlying principle of systems as it will help in assessing today’s policies, strategies, and ultimately decisions based on their impact on both short and long term.

Thus, a careful analysis should indicate whether short-term results are being satisfactory without the expense of greater losses in the future. d) The whole is greater than the sum of its parts

This principle refers to the fundamental property of wider systems being assessed at a higher hierarchy than subsystems (narrower systems) [8]. Similar to the conflicts between short and long term views, an isolated improvement of a subsystem should not happen at the expense of the worsening of the wider system.

Within this logic, the property of hierarchy appears as enabling a systemic assessment to evaluate the contribution of each element for the benefit of the whole system. Key elements could hold valuable function where small changes can produce big results [1]. e) Roots definitions for sustainable behavioural change in systems

The differentiation between causes and symptoms is crucial in order to promote a sustainable change in systems. If incentives or control orders are aimed towards symptoms only, the roots of the problem will continue unchanged and the system will self-organise to its status quo.

This principle of managing problem roots is essential for any effective systems approach. The misunderstanding of the problem will lead decision makers to costly and time-consuming choices. [9] highlights the importance of distinguishing how an unstructured problem is perceived from its ‘real’ roots, particularly in human activities. A person will provide their worldview of a problem which may not necessarily be the same as how others perceive problem. The search for the roots of the problems also looks after a common understanding of the cause and effects within the system in a defined boundary.

III. SUSTAINABILITY OF THE AUTOMOTIVE INDUSTRY

The benefits of cars are clear; they provide a door-to-door

transportation system, the means of gaining access to life’s necessities and employment, and a source of pleasure and social status. However, despite these benefits there are environmental burdens as well: local air pollution,

greenhouse gas emissions, road congestion, noise, mortality and morbidity from accidents, and loss of open space to roads, car parks and urban sprawl [10].

As evidence of this the automotive industry is still struggling against economic, environmental, and social challenges. [11] point out the many economic challenges currently facing the industry: notably over-capacity; saturated and fragmenting markets; capital intensity; and persistent problems with achieving adequate profitability. Strong dependence on fossil fuels and large consumption of raw material head the list of environmental problems. As a result, in a near future it is expected that the sector will face strong pressures and the need to take initiatives in order to reduce the environmental burdens from car use, production processes, and its final disposal.

[12] highlights the importance of preparing the organisation for change. He explains that a crisis or organisational jolt may motivate companies to address the necessary changes, and in fact he says that the first step to accomplish successful change in an organisation is to “establish a sense of urgency”.

For the automotive industry, the “sense of urgency” has become clearer since Brazil, Russia, India and China (BRIC countries) entered the league of big consumers. Road transportation is strongly dependent on basically one type of energy (fossil fuels) and is responsible for 57% of World’s oil consumption [13]. The increase of transportation in the BRIC countries will increase consumption, and therefore oil prices, affecting personal mobility worldwide. Moreover, improving efficiency of engines to gain high fuel economy will not solve completely the problem because the number of cars and their power are steadily growing.

Corroborating this hypothesis, [14] claims that the rapid growth of the vehicle fleet in China has also brought great challenges to the country’s energy security. The author highlights that if China’s vehicles per capita were the same as the USA, the oil demand there would exceed worldwide production by 18%.

Pollution control regulations tend to see transportation as a target. As vehicles are responsible for one quarter of total green house gases emissions [15], a stricter regulation for cleaner cars is expected as well. In the USA some initiatives are already taking place in California, which is leading an ambition to have a zero-emission fleet on the road [16].

[17] have anticipated the challenges of cost competition and the vicious cycle in which manufacturers, including automobile companies, have been drawn. A strong focus on lean production has created a cost decrease leading to price reduction, and thereby market saturation and predatory price competition with low profit margins.

Within a broader approach, [11] summarise the context of the environmental, economic, and operational challenges for the automotive industry. They explain that because carmakers are locked into three technological paradigms (all-steel car bodies, internal combustion engines, and multi-purpose vehicles) these companies tend to favour incremental

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improvements. In addition, the existing economic and political interdependency between this industry and other sectors (e.g. the oil industry) makes radical changes towards higher levels of environmental performance more difficult due to its complexity and extension. These issues concerning infrastructure, economical relevance and interdependence affect strongly the sustainability of the sector. [18] seeks a deeper understanding of sustainable mobility through a systemic view of not only operational issues; but at the level of business model (car ownership and product-service systems). Alongside their efforts, car manufacturers must confront a difficult reality; customers seem to be willing to drive greener cars, but green features play a minimal role in their purchasing decisions [19].

In fact, one of the major problems for the automotive industry is the way it sees itself ([20]; [11]; [21]). According to these authors, the industry has defined its core competences around the internal combustion engine (power, efficiency, etc). Rather than recognising its role as a ‘personal mobility provider’ the automobile companies sell cars as though they are detached from the circumstances of where and how they are used (e.g. drivers’ behaviour, design of urban centre, other transportation modes, etc).

This critical problem relates to the perceptions concerning the purpose of car manufacturers within the context of sustainable mobility systems, which was the main motivation for the analysis in this paper. The next section will shed light on the methodology used in this study.

IV. METHODOLOGY

This paper used both secondary and primary data for its

empirical evidence. Secondary data were collected from environmental reports of the largest car manufacturers in the world. To avoid geographical bias the largest company in America, Europe and Asia (General Motors, Volkswagen, and Toyota) were selected.

These environmental reports of automotive companies ([22]; [23]; [24]) were used to compare company practices with the latest theory. Five main practices emerged from these literatures: green buildings, eco-design, green supply

chains, green manufacturing, and reverse logistics, but also prevalent was the importance of innovation to achieve higher levels of sustainability and improved environmental performance. From a decision making perspective, this phase shows the levels of strategic decisions. The sample of environmental reports is shown in Table 1.

Primary data were collected through case study research. Personal interviews and focus groups were conducted using semi-structured questionnaires. The sample was intended to cover all areas of the operations function, namely: facilities, product design, manufacturing, supplier relationship, logistics, and after sales.

The list of the companies (using fictitious names) is presented in Table 2.

Primary data in the project were aimed at answering the question “why and how do automotive companies take environmental decisions?” The research investigation included a careful examination of drivers, origin of ideas, and performance measurement. It was also investigated the role of business context in the environmental decisions.

After data collection and analysis, five important strategic environmental decisions were chosen to be assessed in a systems analysis. These environmental decisions were selected because they were based on evidence obtained and the discussions allowed a better understanding on how top and middle managers see sustainability of their companies and departments. The five strategic environmental decisions are: a) Use of landfill gas projects to cope with high oil prices b) Process Efficiency as key aspect of environmental

management c) Fuel efficiency as key aspect of green product

development d) Delay in launching the electric car due to lack of

infrastructure e) Outsourcing of reverse logistics through industrial

symbiosis

The following sections will assess these environmental decisions from a systems point of view.

TABLE 1 – ENVIRONMENTAL REPORTS ANALYSIS: COMPANIES, BRAND NATIONALITY, INDUSTRIAL SECTOR, AREA OF RESEARCH, RESEARCH METHOD, MAIN SOURCE OF DATA AND DECISION LEVEL IN EACH COMPANY

Companies (Brand nationality)

Industrial sector (Plant location)

Area of research

Research method Main source of data and decision level

General Motors (USA)

Auto (Worldwide)

Operations Function

Secondary data analysis

Environmental Report (All corporate levels in

operations)

Volkswagen Group (German)

Toyota Motor Corporation (Japan)

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TABLE 2 –AUTOMOTIVE COMPANIES, BRAND NATIONALITY, INDUSTRIAL SECTOR, AREA OF RESEARCH, RESEARCH METHOD, NUMBER OF PARTICIPANTS, DURATION OF DATA COLLECTION IN EACH CASE

Companies (Brand nationality)

Industrial sector (Plant location)

Area of research Research methods Number of participants (job position)

Hours of data collection

(total) Auto Group of Deutschland

(AGD, Germany) Car Manufacturer

(USA) Operations function Interviews &

Environmental reports 3 managers (environmental, communications and

energy) 4 hours

German Premium Cars (GPC, Germany)

Car manufacturer (Germany)

Product development Focus group 6 (Engineers / Product development team) 3hours

Waltham Luxury Cars (Waltham, UK)

Car manufacturer (UK)

Manufacturing Personal interviews & Environmental reports

1 (Environmental Manager) 3 hours

Birmingham Premium Cars (BLC, UK)

Car manufacturer (UK)

Manufacturing Personal interviews 1 (Environmental management team member) 2 hours

Birmingham Premium Cars (BLC, UK)

Car manufacturer (UK)

Product Development Personal interviews & Environmental reports

1 (Sustainable mobility team member) 2 hours

Japan Motor Corporation (JMC, Japanese)

Car manufacturer (Thailand)

Manufacturing / Supply chain Personal interviews & Environmental reports

2 Environmental Manager and Assistant 4 hours

Waste Management (France & UK)

Automotive (UK)

Warehousing and reverse logistics

Personal interviews 1 Warehouse manager; 1 waste manager 4 hours

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V. SYSTEMS ANALYSIS OF ENVIRONMENTAL DECISIONS

The systems analysis in this section will evaluate the

fitness of each environmental decision against all five fundamental principles of systems thinking identified in the visual pattern analysis. The evaluation will look at how the automakers’ decisions are supported by each systems principle in three basic levels (high, medium, low).

The concept of systemic fitness is introduced here as “the long term effectiveness of policies, decisions and actions in being successfully implemented and producing sustainable results”. (a) Use of landfill gas projects to cope with high oil prices

The use of landfill gas projects by car manufacturers as an alternative to oil and natural gas has a high systemic fitness according to our analysis. First, companies were able to visualise resources from a wider perspective than their operational boundaries. By accepting the capture, purchase, and management of biogas from a city’s landfill in long term contracts, some car manufacturers will be better prepared against the inevitable increase in fossil fuel prices. There is also a high fitness for the principle of interaction with other elements of the system because car companies had to construct trustful relationships and integrate other players within the energy system as they did not have expertise with gas pipelines, supply management, amongst of operational activities. The fitness of their decisions is also indicated by the understanding of a choice and the results of the choice are separated in time. The primary data from the case Auto Group of Deutschland shows that managers were aware of the fluctuation in oil prices, scarcity of a non-renewable resource, and the urgency in tackling the problem as excellence takes time to be built. Today two thirds of the energy in the production plant is supplied by the landfill gas project. The systemic fitness is also evident by assessing the substitution of natural gas for landfill biogas in a long term contract. Natural gas provides a more stable combustion and is less complex to operate than landfill biogas. However, by making the ‘subsystem’ of energy supply in the factory more complex and difficult to operate, Auto Group of Deutschland was able to reduce costs and greenhouse gas emissions while avoid increased energy vulnerability. Last but not least, the

high fitness of the decision is also explained by identifying ‘energy security’ or ‘oil scarcity’ as the main long term problem. Companies that have successfully implemented power supply from landfill gas have positioned themselves better against those that only understood the problem as high oil prices resulting from oil scarcity. Their achievement is far more robust than incremental programmes on energy conservation. (b) Process Efficiency as the key aspect of environmental management

The choice of process efficiency as the chief programme in environmental management systems is a matter of concern in terms of its systemic fitness. The definition of the boundaries of the system and the idea that the whole is great than its parts is usually incomplete as efficiency gains are more concerned with in-factory systems instead of a more holistic approach of supply networks. Indeed, some car companies have adopted modular consortia production systems which is advanced in its thinking compared to large manufacturing plants predominantly aimed at achieving economies of scale. However, the lack of interactions with other fundamental elements within the production systems reveals that this decision is unfit from a systemic perspective. For instance increasing gains in efficiency can lead to greater consumption which can ultimately have a higher environmental impact (see figure 3). Also, the efficiency gains in the automotive industry are happening at the expense of production flexibility in most production sites. This implies that companies become highly dependent on a narrow range of materials. For example, despite the abundance of other materials (e.g. magnesium, plastics, etc) the body of most cars has little material diversity, most using steel and a few using aluminium. Efficiency gains may also be retarding major forms of necessary re-structuring in the production system under the guise that the system is carrying incremental improvement when it may actually need a radical transformation. Despite 100 years of historical development and continuous efficiency improvements, the automotive industry is perceived as an expensive provider of urban personal mobility. The focus is on efficient production of cars rather than a broader means of personal mobility, an example of little fitness in defining the roots of the problem they should be solving.

TABLE 3 – SYSTEMIC FITNESS OF ENVIRONMENTAL DECISIONS IN THE AUTOMOTIVE INDUSTRY

Environmental Decisions Systems Principles a b c d e Systems Boundaries High Medium Low Low High The interactions between the elements of the systems High Low Low Low Medium Delays in the systems processes High Low Low Low Medium The whole is greater than the sum of its parts High Low Low Low Medium Roots definitions for sustainable behavioural change in systems

High Low Low Low High

Strategic Environmental Decisions: (a) Use of landfill gas projects to cope with high oil prices, (b) Process Efficiency as the key aspect of environmental management, (c) Fuel efficiency as the key aspect of green product development, (d) Delay in launching the electric car due to lack of infrastructure, (e) Outsourcing of reverse logistics through industrial symbiosis

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Figure 3 – The increase in overall environmental impact due to efficiency gains (Nunes and Bennett, 2010)

(c) Fuel efficiency as the key aspect of green product development

Despite the environmental reports to show fuel diversification as part of green product development strategy, the primary data analysis has found that fuel diversification is yet seen as a peripheral R&D activity, i.e, still in its early conceptual stages rather than market development phase. Indeed, companies such as GM and Nissan have launched recently the cars Volt and Leaf, respectively. However, these are exceptions and the rule at product development level is that the main environmental decisions are related to fuel efficiency. There are several limitations of this decision towards higher levels systemic fitness. First, the systems boundary is located in the efficiency of the internal combustion engine, which is a subsystem of a wider system (eg. ‘fuel consumption in urban centres by private vehicles’). The lack of interaction with important elements of the system such as drivers’ behaviour gives low fitness for the second principle shown in the table 3. By making cars more fuel efficient, there is an incentive to use more cars which will eventually consume more fuel and produce more traffic congestions. Traffic congestion in particular will increase engine emissions per kilometre as the engine will be consuming fuel while stopped in traffic. Being aware of this, companies have responded with ‘start and stop’ systems, which shut down the engine if the car is not moving. However, very little gains will be made if the car is running at very low speed as tends to happen in long traffic jams. Making private transportation more efficient does not necessarily means that personal mobility is improved. For that reason, this decision was classified with low fitness for the systemic principle that the whole is greater than its parts and roots definition for sustainable change in the system. As mentioned earlier, little attention is paid to a car companies as personal mobility providers, which contributes to low scores in the systemic fitness of this decision. Primary data in this investigation revealed that companies understand that lighter and smaller mean green in product development. However, the complexity of car design may not favour this approach as lighter material might have a higher environmental impact while a lighter component that will have little contribution for fuel efficiency. (d) Delay in launching the electric car due to lack of infrastructure

The delay in the introduction of electric car is usually described by car companies as a cyclical systemic problem of no infrastructure leading to no cars which leads to no infrastructure. The unchangeable status quo of urban centre infrastructure and use of electric cars is shown in Figure 4.

Figure 4 – systemic cyclical problem for the introduction of electric cars

Notwithstanding with the legitimate systemic problem, the

justification carries a lack of understanding of how systems work. In fact, the introduction of electric cars can be solved by considering the systems principles enumerated in this paper. First, the customer base is seen as homogenous which leads to a low fitness of the decision for systems boundaries. Cars have a heterogeneous customer base which is primarily comprised by commercial fleet (rent-a-car companies, taxis, etc), corporate fleets, and private users. Further segregation can also give more details about subsystems within the car use system. Thus, one important customer such as taxis due to the characteristics of car usage can be the trigger of infrastructure. According to our investigation, taxis tend to be driven about 100 kilometres per day and only in urban centres. They are responsible for a significant number of journeys in London, for instance, according to the data of Department of Transport shown by taxibus.org.br [25]:

“During each 24 hour period in central and outer London, around 25 million passenger journeys take place. These divide modally as follows:

9 million Private Car (as Drivers) 6 million Private Car (as Passengers in above) 4 million Bus 2 million London Underground (Metro) 2 million Walking 1 million Train (Surface Rail)” [25]

Converting taxis to electric vehicles could trigger the

infrastructure and maturate technologies at lower commercial risk, for instance. The Point of recharge could be concentrated in taxis companies’ garages or key stations where taxis await for customers. For this lack of awareness of customer base, consumer behaviour and urban infrastructure also contributes to low score in systemic fitness for the interaction between the

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elements of the system. More critical perhaps is the fact that few companies are engaging in the leadership for electric vehicles. From a systems view, when a radical transformation is in course, companies that delay decisions may become laggards because of the delay in systems processes and the time require for learning and adaptation. A new understanding of the ‘whole’ car becomes necessary because the core competence in internal combustion engines and the current production systems may not be sufficient to compete in the new era. For example, Toyota has partnered with Panasonic to produce hybrid vehicles because it did not have the competence in long-life batteries in its possession. In addition, low systemic fitness of the decision in delaying the introduction of electric cars is also explained by not analysing the problem roots of the impediments to commercialise the car. Rather than infrastructure alone, the relationship between consumers, cars and infrastructure was neglected as the main root or key catalyser for the introduction of electric vehicles. (e) Outsourcing of reverse logistics through industrial symbiosis

Both environmental reports and primary data show an increasing concern about end-of-life vehicles. In contrast to tailpipe emissions, end-of-life vehicles are not yet considered a problem in several emerging markets (e.g. Thailand, Brazil, etc). However, car companies have started visualising benefits on dealing with it before it becomes a real problem. The decision of reverse logistics through industrial symbiosis is particularly interesting from a systems perspective. First, the boundaries of the system are extended to final disposal of useless parts and end-of-life cars. By taking responsibility, companies can extract value from scrap instead of only paying for land filling costs. The activities have a certain level of integration with product design as new components such as air bags have already been targeted by environmental legislation against their final disposal. Companies report that they are using experiences in more developed countries in the emerging markets – this is another factor that contributes to giving medium fitness scores for the decision in three of the systems principles. The use of waste management expert companies on the field provides a push to understand the end-of-life issues at the roots of its problems rather than merely minimising the recycling and final disposal costs.

VI. THE CONTEXT OF ENVIRONMENTAL DECISION MAKING

Figure 5 shows the context for environmental decision

making. It reinforces the link between drivers, decisions, environmental initiatives and the results from the implementation of these initiatives. Equally, it strengthens the role of internal policy in being a mechanism to identify and analyse the drivers, provide support to decisions, and guarantee an effective implementation and evaluation of the environmental initiatives.

This figure was constructed based on the conclusions from both the environmental reports and the primary data analysis.

The figure “context for environmental decision making” shows that from the early stages of an environmental decision (the identification of drivers) the wider environment (global and local ecosystems, society and economy) play a role in stimulating or limiting the reasons why companies should go green. These stimuli or limitations can be understood as moderators of the process of transforming drivers into decisions. Nevertheless, it is the role of internal policy to understand these from a strategic perspective, select the appropriate drivers, and provide support for the decisions that will have an impact on local and/or global environments. Internal support could work then as a mediator of the transformation of drivers into decisions. Without appropriate internal policies companies in an abundant and stimulating environment may not seize upon more sustainable options. On the contrary, strong internal policies may visualise unsustainable paths, and although the existence of limitations and/or lack of stimuli, they may enforce environmental improvements in order to prepare themselves to better compete in the future. This was the case of company JMC in choosing the implementation of sustainable plant concept for Thailand. The opposite was also shown true with clear evidence from the cases analyses. Companies operating in developed countries where there was a clear intention of having stricter environmental legislation, discussion about the global and local pressures for more environmentally-friendly processes and products, were taken into a more reactive behaviour. The lack of internal policy and support can push companies to less profitable environmental solutions as demonstrated by company BLC. Missed opportunities by not scanning and anticipating the future benefits of going green such as government incentives, cost reduction, amongst others were also the consequence of the lack of systemic fitness.

Again, once decisions are taken the global and local wider environments will contribute positively or negatively to the decisions implementations. These enablers or barriers may impact on important operations performance measures for project implementation such as investment, cost, speed, and quality of implementation. Internal support acts again as a mediator identify and weighting the enablers, minimising the barriers, and mostly, dealing with the positive and negative conditions that appear during the implementation process.

Last but not least, the figure shows that the local and wider environments will also have an impact on how the performance implemented initiatives are measured. Their value for strategy, and even the actual environmental performance, will suffer the interference of local and global ecosystems, judgments of the various segments of society, and finally, the economic circumstances where the company operates.

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Figure 5 – Context for Environmental Decision Making

VII. CONCLUSIONS

This paper has used the concept of systemic fitness to

analyse the long term effectiveness of environmental decisions in the automotive industry. Five major principles of systems theories were identified to compose a framework of analysis that was applied to five strategic environmental decisions used in the industry. These decisions were selected from both secondary and primary data (collected from personal interviews and focus groups activities).

It was possible to note that for most process-driven initiatives the automotive industry has a good systemic fitness, except from their focus on process efficiency. However, for product-driven initiatives, the automotive industry lacks systemic fitness. Their decisions are neglecting important relationships in the context where cars are used. Indeed, the environmental initiatives of the automotive industry were analysed under the lens of the systemic fitness framework and sustainable mobility. The results show that assuming the role of sustainable personal mobility providers may be too onerous for car manufacturers, therefore, the negative assessment to product-oriented decisions.

Companies as well as policy makers will find this paper useful particularly to reflect on strategic decisions taken towards creating a more sustainable world. The insights provided here for sustainable mobility systems also constitute a practical contribution. From a theoretical perspective, this paper is original and contributes to knowledge by the adoption of systems principles and systemic fitness concept for evaluation rather than developing another systems model. The limitations of this study relate mainly to the selection of the automotive industry as the main sector. Other manufacturing companies such as electronics have developed a better systemic fitness and would need to be analysed to test the systems fitness framework. Also, the patterns identified in

the selection of systems principles was considered with respect to the characteristics of automotive industry and may need to be expanded to a broader set of criteria for a more robust analysis to different sectors. Similarly, other important strategic environmental decisions were left out of this study (e.g. use of biofuels). Future research investigations will look at possible conflicts between systemic fitness of global and local environments for manufacturing organisations.

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