Ann Colson, president of Deerstone, Inc., a consumer products firm, has decided to follow an environmental improvement strategy. The goal is to increase profits by increasing revenues and decreasing environmental costs. Ann was convinced that revenues could be increased if she could improve the company's environmental image. Customers were demanding cleaner products, and her marketing manager had indicated that producing "greener" products would definitely lead to an increase in market share. Furthermore, Ann had recently returned from an environmental management seminar where she learned about ecoefficiency. She now believes that costs could be reduced while simultaneously improving environmental performance. She has two objectives in mind: reduce packaging and reduce production and release of contaminating residues. Ann has decided on the following actions to achieve the desired improvements:

1. Hire two environmental engineers to provide the capabilities needed to improve environmental performance. One engineer would be responsible for a new pack- aging design and reduction process. The other would be given responsibility to redesign products and processes with the objective of reducing the production of residues. Ann expects the actions to reduce packaging costs and pollution control costs.

2. All employees would be sent to several training seminars to learn about environ- mental management. They would then be empowered to make improvements in environmental performance (e.g., ways to reduce contaminants and packaging materials).

3. Once the processes and products were redesigned, she would participate in a third-party environmental certification program so that customers would be assured that the environmental improvements were valid.

Required

1. Explain why adding an environmental perspective to the Balanced Scorecard is considered to be legitimate.

2. Express the environmental improvement strategy as a series of cause-and-effect relationships in the form of if-then statements.

3. Illustrate the strategy using a flow diagram with one important modification: add an environmental perspective (the flow diagram should then illustrate five perspectives). Place the environmental perspective in between the customer and processes perspectives.