iPad? 11:30 AM * 20%D Assignments Assignment 2: Balancing Act Read this scenario
ID: 430650 • Letter: I
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iPad? 11:30 AM * 20%D Assignments Assignment 2: Balancing Act Read this scenario, and then prepare a succinct, 5-page essay, using the writing template, and a minimum of 5 references. You are speaking for the executive board of a small oil company, Future Fuel, in Colorado. The CEO and founder, Alica Hardy, is very avid supporter of sustainability and innovation. He insists that money invested now will pay off in big dividends down the road. Everyone involved has a legitimate concern for the environment and share and support Hardy in her personal and business philosophy. Everyone is also very aware of the momentum of the growing "green" movement. The R&D; (research and development) budget for seeking new renewable and viable alternative sources of energy has traditionally been between 22-24% of your operations revenue. The board has decided to increase that budget line item to 35% for the next fiscal year on the strong recommendation of Hardy. Additionally, it has been decided to equip the headquarters and other 8 sites in the west with active solar energy systems and wind power generators. This is a publically held company and the stock has been less than stellar in its last 3 quarters' performance. The third quarter just ended, and the quarterly shareholders meeting is about to be held. The earnings after operating costs are modest. You, as the board representative, are announcing your numbers and the plans to increase the R&D; budget and installation of renewable energy systems. Discuss the above scenario as the executive board of Future Fuel and in 5-pages answer these questions. This is not a speech, nor a narrative, nor personal opinion. You are presenting the board's position to the shareholders. 1. What are you actually aiming to achieve? Why? 2. What is your organization's policy/position on corporate social responsibility and ethics-your corporate philosophy? 3. What does the company owe to its shareholders? Why? 4. What return on investment does your activitylenterprise require? Is this a strategic driver in itself, or simply the means by which you maintain your activities in support of your organization's goal(s) from question 1? 5. How do you balance the needs of the shareholders and the need to innovate? Expectations: Use a minimum of 5 references (there should be at least five in text citations to correspond to the references) to defend your position. Use 6th edition APA form and style and the provided writing template 15 points Due at the end of Module 4Explanation / Answer
1.
As a global energy company operating in a challenging world, we set high standards of performance and ethical behaviours. We are judged by how we act and how we live up to our core values of honesty, integrity and respect for people. Our Business Principles are based on these. They promote trust, openness, teamwork and professionalism, as well as pride in what we do and how we conduct business.
Sustainability and innovation is at the core of our business principles. As part of these principles, we commit to contribute to sustainable development, balancing short and long-term interests and integrating economic, environmental and social considerations into our decision-making.
All Future Fuel employees and contractors, and those at joint ventures we operate, are expected to understand and continually behave in line with our Business Principles. We expect suppliers, and joint ventures that we do not operate, to apply equivalent principles.It is in this light that the board has decided to increse the R&D budget for renewable energy sources to be 35% of our opertional revenue.
2.Future Fuel will create a positive influence in the communities and societies where we operate.Innovation, collaboration and impact define our social investments, which are embedded in our brand strategy and our stakeholder engagement plan. We commit resources of our company and employees to contribute to relevant social issues on education, road safety and ecosystem. Our aim is to help find solutions to these challenges in a sustainable manner.
Environmental Sustainability is our key focus. future fuel will initiate a programme for e-waste management and seek opportunities to deliver proof points around ‘reuse & recycle’. This programme would be implemented through NGOs and will aim to use the phased out hardware equipment after internal due diligence and donate them to underprivileged community with basic software.CSR Projects or Programmes would be implemented in the country through NGOs and agencies following the approval of CSR Committee. Selection of NGOs and agencies will be based on contracting and procurement guidelines including due diligence. The CSR Committee would decide on the budget for each Project/Programme and monitor the CSR policy from time to time.
3. We are committed to increasing the value for our shareholder's.
Our strategy is to strengthen our position as a leading energy company by providing oil, gas and low-carbon energy as the world’s energy system changes. Safety and social responsibility are fundamental to how we do business.
Our strategy is now centred on creating a simpler company, one that delivers higher, more predictable returns and growing free cash flow per share. By investing in compelling projects, driving down costs and selling non-core businesses, we are reshaping Future Fuel into a more resilient and focused company.
Our strategy is founded on our outlook for the energy sector as well as the chance to grasp the opportunities arising from the substantial changes in the world.
A growing global population and a rise in living standards are likely to continue to drive energy demand, including oil and gas, for years to come. At the same time, technological changes and the need to tackle climate change means there is a transition under way to a lower-carbon, multi-source energy system with increasing customer choice. We recognise that the pace and specific path forward is uncertain and so requires agile decision making.
Against this backdrop, we have three strategic ambitions guiding us in the pursuit of our purpose:
4. To better understand how oil companies make their decisions, we will look at a very oversimplified financial example for drilling a small oil prospect. An oil company is in the business of finding, producing, and selling oil and its refined products. Some companies do only one or two of these things, whereas the large integrated oil companies are involved from the initial discovery well to the sale of gasoline to a final customer. Indeed, a similar sort of financial model is used for almost every investment decision made by any corporation within a market economy. While this basic model is developed for shareholder-owned private oil companies, the economic factors are essentially the same for state-owned oil companies as well. An oil exploration company will always be on the lookout for good places to drill. Suggestions come from all sorts of places; historically a natural oil seep might suggest a good location; other oil wells certainly indicate an interesting area, although whether there is an available location for additional well(s) is another matter; property owners, ranging from single homeowners to national governments, may suggest that they have a good prospective area; other oil companies may offer to share the risks of exploring a specific location; and an oil company of any size will have employees whose job is simply to suggest locations. One of the most important features of the oil business is that large amounts of money need to be spent before we have anything to sell as a result. As the work goes along, the company will always be asking the question ‘‘is this going to make us money?’’ Many projects are abandoned at various points along the way. It is worth noting that the profits from the successful prospects need to be sufficient to cover the expenses of those that are not successful. It is in this respect that we look for ROI of over 50% to justofy in an invesntment.
5.
Our sustainability reporting focuses on the challenges that most affect our business performance and matter most to our key stakeholders.Future Fuel began reporting voluntarily on our environmental performance with the first “Future Fuel Report” that covered 1997. We do it to be open and honest, and to show how we are contributing to sustainable development. We have continued to develop this reporting and the Future Sustainability Report 2017, published April 9, 2018, is our 21st report.
We also publish performance data used within the Sustainability report online in tabular format together with sustainability rankings in our performance data section.
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