Business Report as Happened With Many Service

Business Report

As happened with many service businesses during a recession, Jazz Event Productions experienced a drop in revenues in 2010. For a company that has grown steadily throughout its 15-year history, it was an unwelcome first. The decrease in sales occurred primarily because companies faced with tough economic choices because of the recession either cut back or eliminated entirely their budgets for special events. Whereas many of our loyal customers continued to trust us to produce their special events just as in past years, others were operating with reduced budgets. As a result, Jazz experienced a period wherein sales dropped by about five percent.

With the improved economy, sales have returned to pre-recession levels, however, because they are cautious and careful owners who want to perform their due diligence, Alex and Cindy are looking for ways to ensure that the company stays profitable. They believe that the best approach, given the current economy, is to find ways to both cut expenses and boost revenues. At the same time, they are looking for ways to make Jazz more environmentally responsible and decided that the timing was right to get serious about making some changes. Our team was assigned the task of coming up with specific ideas about going green, bringing corporate social responsibility (CSR) to Jazz. We were asked to investigate what the advantages would be and to also identify any significant cost or downside.

Our research found that going green is more than just a slogan; it is an essential part of businesses being able to compete in a highly competitive global environment. Almost every business asks the same question that Jazz is asking, whether going green is a cost effective strategy.

Our mission was to do two things: (1) Find ways for Jazz to cut back expenses and/or increase sales, and (2) determine how to change Jazz into a more environmentally responsible business.

Our research accomplished these goals. We found opportunities to save more than a half million dollars over the course of 20 years, while at the same time, conserving resources and being environmentally responsible.

Introduction

Because the economy continues to be weak, Alex and Cindy wanted us to evaluate ways to make Jazz Events more eco-friendly without investing a large amount of money. The timing was also important, because Alex and Cindy have had plans drawn up to remodel the office and warehouse during the off-season so as to have minimal impact on the business. The budget for remodeling was already approved and minor changes could be made without significant cost increases or added delay for completion. Also, while the two of them felt strongly about their company becoming a greener business, at the same time they were also concerned about the impact of changes on us, the 27 full-time employees. Alex and Cindy value our contributions to making Jazz successful, therefore they wanted to thoroughly investigate going green to make sure that there would be no negative consequences for us, the employees.

Another significant criterion for deciding whether to proceed with green projects is the cost. According to the U.S. Department of Commerce, even small changes in how buildings are constructed can have a noticeable effect on energy conservation. Businesses are finding that implementing green strategies to reduce energy usage and to use water efficiently is not only good for the environment, but good for business as well (2008).

Our initial research showed how companies can go green in ways that are both environmentally and economically beneficial. According to Miller, Spivey and Florance, their study on Energy star vs. non-Energy star rated office property showed "results are promising for the benefits of investment in energy savings and for the green movement now sweeping our society" (2008, p. 1). They argue that the payoff from wise green investment in sustainable real estate is easy to justify even if it is based purely on profit motives. Even for companies whose main interest in going green is making money or saving money, going green is recommended.

Even so, studies have shown that companies are motivated to be ecologically responsive for several reasons, such as regulatory compliance, competitive advantage, stakeholder pressures, ethical concerns, critical events, and top management initiatives (Bansal and Roth, 2000). Our research led us to similar conclusions, that going green makes sense from an overall strategy perspective.

After some initial research, we were able to show that greening the business would both save money and increase sales. In fact, we identified so many possibilities that we decided to categorize them to make it easier to plan for their implementation. We also quantified projected savings to provide a clear picture of the opportunities being considered.

In reviewing various studies on green companies and the way in which they marketed themselves, we found a significant amount of literature supporting the idea that customers want the companies they do business with to be socially responsible. In fact, it is not only customers who want eco-friendly companies, but other stakeholders as well. According to Maignan, Ferrell and Ferrell (2005), marketing is moving away from a narrow focus almost exclusively on customers to managing relationships and benefits for all a company's stakeholders. Companies who invest in CSR are likely to find that it yields "tangible benefits in terms of customer loyalty, employee commitment, supplier support/partnership, and corporate reputation" (p. 974).

As Alex and Cindy requested, this report discusses ways that Jazz Event Productions could become environmentally friendly. Because our initial findings were so promising, it was decided that our three person committee should put together this proposal. This report presents our findings. We reviewed the literature on sustainability efforts, then described and quantified the benefits. We also detailed the costs involved and found that they are within the budget that was approved for Jazz' green initiative.

In the following sections of this report, we present additional information about how we conducted our research, how we analyzed the information we found, as well as our conclusions and recommendations.

Methodology

To get a better understanding of what going green involves, as well as find out how much cost savings and additional income Jazz can expect by going green, we researched the following:

We tried to find out how much sales could be expected to increase if we market Jazz as a green business. Some companies produce green products. Others, like Jazz, find that the best way to adopt a green marketing strategy is by greening the company itself. Research shows that a "green strategy implemented by firms is a focus on environmental aspects within the firm itself" (Cronin, Smith, Gleim, Ramirez, & Martinez, 2011, p. 170). In another study, researchers studied the effect of green marketing strategies, to assess their effect on perceived brand positioning and brand attitude, that is, how customers viewed a company. Study results indicated "an overall positive influence of green brand positioning on brand attitude" (Hartmann, Ibanez, & Sainz, 2005, p.9). We found even more support for green marketing in a study by Miles and Covin (2000). Their study concluded that "The most significant implication for marketing managers is that reputation is important in creating a high performing marketing firm, and that environmental marketing performance is a significant component of a firm's reputation" (p. 308). All of us here at Jazz value the company's good reputation, which will be even further enhanced by the company going green.

We also wanted to uncover all the benefits of going green, in addition to cost savings and attracting more customers.

We researched the tax credits available for increasing energy efficiency in our office and warehouse, which remodeling project was just getting started. We found that businesses can take a tax deduction for new or renovated buildings by cutting energy costs associated with either the lighting system, the building envelope or the heating, cooling and water heating equipment. To be eligible for these tax credits we have to meet several requirements: We need to meet the ASHRAE 90.1-2001 standard, which lays out minimum requirements for energy efficient building design. Also, our building must be placed in service between January 1, 2006 and December 31, 2013 in order to be eligible. If our building is certified as saving a percentage of projected annual energy costs, we receive a tax deduction of $.60 per square foot based on the following: building envelope (10% energy savings), lighting (20%), and heating and cooling (20%). The building must be certified as energy efficient by a qualified individual, such as a licensed engineer or contractor.

We researched ways to conserve energy and compiled the following checklist. These are energy conservation and efficiency measures for use day-to-day operations at Jazz' office and warehouse. The following checklist is recommended by the U.S. Department of Energy Federal Energy Management Program (2010):

1. Replace incandescent lights with compact fluorescent lights (CFLs) for desk lamps and overhead lighting. CFLs instead of comparable incandescent bulbs can save about 50% on lighting costs by using only one-fourth the energy and lasting up to 10 times longer.

2. Switch off all unnecessary lights. Use motion or occupancy sensors to automatically turn off lighting when not in use to reduce energy and costs.

3. Turn off lights when we leave at night.

4. Use natural lighting or day lighting when feasible; turn off lights near windows.

5. Close or adjust window blinds to block direct sunlight to reduce cooling needs during warm months.

6. In the winter months, open blinds on south-facing windows during the day to allow sunlight to naturally heat the Jazz workspace. At night, close the blinds to reduce heat loss.

7. Turn off computer and monitors at the end of the work day. When Jazz personnel leave their desks for an extended time, turn off monitors.

8. Have a qualified professional perform an energy audit.

9. Insulate water heater, hot water piping and tanks to reduce heat loss.

10. Install low-flow toilets, urinal, faucets and shower heads.

11. Unplug equipment that drains energy when not in use, such as cell phone chargers, fans, coffeemakers, desktop printers, radios etc.

12. Turn off the photocopier at night.

13. Save paper; photocopy only what is needed. Always use the second side of paper, either by printing on both sides or by using the blank side as scrap paper.

14. Reduce business travel for meetings by increasing phone, video and Web conferencing use.

We researched the tax incentive for an electric vehicle that will be used for deliveries. The tax credit is available for the purchase of a new qualified plug-in electric motor vehicle that draws propulsion using a traction battery that has at least four kilowatt hours of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets emission standards. The credit applies to vehicles acquired through December 31, 2011. The credit is equal to $2,500 plus $417 for the first 5 kilowatt hours of battery capacity, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours, up to a maximum credit of $7,500 (IRS, 2011).

Once we finished our research, we analyzed the data we collected, determined the best alternative, and prepared a recommendation.

Data Analysis and Results

In this section we present the results of our findings. We discuss the benefits of going green, specific projects, the associated costs, and the details of how these activities form the basis of our green marketing strategy.

Calculating What It Is Worth To Be Green

In today's competitive world, the importance of having a sound marketing plan cannot be overestimated. Increasingly, for a company's marketing plan to be effective, it has to include efforts at being environmentally responsible. Why is this the case? Because more and more customers prefer to do business with companies who are doing their share to take care of the planet's resources. In our research we tried to quantify what this preference means so that we could put a number on potential lost sales if Jazz fails to move forward with a green initiative.

We were unable to find any studies that looked at exactly the same or even similar data as we were interested in. Nevertheless, our research left no doubt that the trend toward corporate social responsibility is growing, and so are customers' expectations that companies will have sustainability programs in place. In the interest of not disappointing our loyal customer base which has come to expect exceptional performance from us, and in the interest of not being at a competitive disadvantage when competing with other event planners, we are satisfied that going green will result in increased revenue for the company.

Additional intangible benefits come with being socially responsible. A better reputation, brand and market value result from being known as a green company. Likewise, employees also want to be associated with a company that is not just financially successful but sustainability conscious too. For many employees, there is satisfaction in working for a company that takes significant steps to conserve resources. This fact helps to make it easier for Jazz to attract and keep good employees. Moreover, some sustainable practices, such as offices with cleaner interior air and less use of volatile organic compounds in building materials, actually have a direct positive effect on employee health and physical well-being.

Calculating Energy Conservation Savings

Several proposed energy conservation practices produce savings for the company that can be verified. The math here is simple: less waste = lower costs. If Jazz wastes less, whether it is energy, water, paper or materials, then it is going to save the company money.

According to energy conservation experts, turning off computers and monitors when they are not in use produces savings of $20-$60 per device per year. Since Jazz has 31 office computers, the potential savings from just this one conservation practice runs from $620 to $1,860 per year.

Building Tax Credit

The remodeling project for Jazz office and warehouse, already in the planning stages, qualifies for a federal tax incentive for improving building energy efficiency. The project will result in 20% savings of projected annual energy costs for lighting and heating and cooling. These projected savings qualify Jazz for a one-time federal tax deduction of $.60 per square foot for our 8200 square foot building, which comes to $4,920. The cost for certification by a qualified engineer comes to $225, for a net savings of $4,695.

Electric Vehicle Tax Credit

Alex and Cindy have been considering replacing the delivery van, which has nearly 200,000 miles on it. The company qualifies for the electric vehicle tax credit if we purchase an electric vehicle to replace the van, which has lately needed repairs more and more often. For example, if we purchase a Ford Transit Connect van with a 105 kW electric motor with an estimated 55/54 kWh/100 mi and 62/62 MPGe fuel economy, the company would receive a tax credit equal to $7,087: (100 kW X $417/kW) + $2,500 + $417 = $7,087.