Case Study: Strategy and the Environment

A Sheffield Forgemasters International case study

Page 1: Introduction

Sheffield Forgemasters International Ltd (SFIL) is the world's largest independently Owned Forgemaster. The Company's origins date back to the 1750âs, but it was Edward Vickers, a traditional miller, who set the foundations for the business in 1805. SFILâs rich history is evident in that it is the successor to such famous Sheffield names as Vickers, English Steel, Firth Brown and British Steel. SFIL is now a world leader in supplying total engineering packages to solve industry's needs, specialising in a broad range of heavy steel forgings and castings as well as stocking steel ingots and bar. The company continue to supply an increasing global demand for high quality engineered products to key industries such as defence, nuclear, oil and gas exploration, power generation and steel processing.

As a market leader, SFIL recognises that whilst it continues to manufacture high quality products, it has an obligation to operate in a responsible manner by controlling and minimising its impact on the environment.

Over the past decade, SFIL has made significant investments and improvements to reduce its impact on the environment. Environmental legislation and other requirements on the manufacturing industry are still prevalent and it is an on-going challenge to continually improve performance. In order to do this effectively, SFIL has devised a strategy and organised its company structures and systems to ensure that this challenge is being addressed. This case study looks in detail at SFILâs Environmental Strategy which is currently being implemented throughout the business.

Page 2: Vision

Senior management must provide a clear focus that is communicated down through all levels of the business. In such a highly competitive industry as steel manufacturing, developing a clear strategy is vital to establish a planned way forward in order to maintain and continually improve performance over time.

Strategies are pre-empted by a clear understanding of the reasons for a business existing and the setting of long-term goals. The starting point for this is the company's vision statement (sometimes referred to as its mission statement). A good vision should strike a balance between what is achievable and what is challenging. It is widely believed that a business that has a clear vision will out-perform those that do not have one.

Contemporary heavy engineering is governed by tight legislative requirements. SFIL not only strives to meet these, but aims to go above and beyond them where there is a distinct business or environmental benefit in order to fulfil its vision. The acronym MOST gives a good guideline for the hierarchy and basis of a strategy.

Once the company vision/mission is established, SMART objectives should then be set as the basis for management to work towards fulfilling that vision. A programme of prioritied long term and short term actions to meet each objective is then formulated to implement the overall strategy.

Page 3: Business Strategy

Steelmaking has the potential to impact significantly on the environment, as indeed it did before the negative effects were fully identified and tighter controls and government regulation were put into place throughout the 1980s and 90s. The bar is now set very high and SFIL is committed to operations that are both environmentally acceptable and sustainable. SFILâs management has ensured operational control and procedural systems are in place to manage emissions, including monitoring, measuring and auditing of air, water and sewer releases.

SFIL has a large apprenticeship programme and communicating this vision for environmental excellence is vital so that all new and existing employees are in compliance. Use of manuals that detail every aspect of operations makes sure all employees work to the procedures for ensuring environmental governance is sustained. Strategy is derived from the

Greek word for Generalship.

A simple definition is that strategies: are general programmes of action involving the deployment of resources to achieve organisational objectives. In essence, strategies are longterm plans designed to achieve a businessâs vision and objectives and can be summed up in three ways. They are:

a means to an end

a long-term plan and

an organisationâs planned response to the environment.

Strategies not only provide plans for management to act upon, but bring many other benefits. These can be clearly understood by reference to different stakeholders. Stakeholders are any individual or group with an influence upon a business or who are affected by the companys actions. Businesses can choose to take a shareholder approach to management and set strategies solely to meet owners and investors objectives. However, SFIL have taken the alternative stakeholder approach which places emphasis on the need to consult with and meet the objectives of a wider group. All of the following stakeholders were considered when setting its long-term plans for 2011-2016.

Given the large scale of SFILs operations, the strategic aims and objectives for 2011-2016 were segmented under the following headings:

Legislative compliance

Environmental emissions

Waste management

Resource management and consumption

Flood protection

Environmental awareness, training and communication

Site landscaping and wildlife

Supply chain management

Commuting and transport

These strategic headings focus the management team on w

The following diagram illustrates the main stages the Company follows in order to successfully implement its environmental strategy and policy.hat areas specifically need to be addressed throughout all areas of the business in order to fulfil its vision and remain competitive. For instance, SFIL aims to meet 100% compliance with all legal and other requirements in respect of such aspects as waste management, operational activities, reporting, and procedures to control, minimise and where possible eliminate emissions to air, land and water. Such a focus also means that it minimises its impact on the local community and neighbouring businesses and builds a better relationship with these key stakeholders. SFIL developed sustainable objectives to reduce its energy use including installing energy efficient equipment and technology, even down to introducing energy-saving lighting across the site. Each year, SFIL generates approximately 14,400 tonnes of waste ranging from plastic and paper, to metallic dusts and steel slag from its processes. In 2010, 10% of this waste was disposed of in landfill sites. SFIL's waste aim within the strategy is for zero process wastes to be sent to landfill by 2016 through using alternative recovery, reuse and recycling methods; the Company is on target to meet this aim.

The following diagram illustrates the main stages the Company follows in order to successfully implement its environmental strategy and policy.

Having established the overarching strategy and policy and strategic long term aims to be achieved over the 5 year strategy period, the next part of the process is to set short term annual objectives and targets. These must be clear and measureable so that progress can be monitored, reviewed and reported on.

Page 4: Objectives

Over the past decade, SFIL has made significant investments and improvements to reduce its environmental impact. The clear objectives, set within its Environmental Strategy for 2011 to 2016, have helped formalise that commitment and communicate to all its employees and stakeholders the planned approach to be implemented over the 5 year period to achieve the Company's environmental vision.

The company is able to progress towards delivering its strategy and achieving its vision in a clear and measurable way by implementing SMART objectives.

SMART objectives mean:

Sheffield Forgemasters International | Strategy and the Environment

Page 5: Evaluating a Business Strategy

The benefit of setting a clear strategy and outlining objectives and plans is that management has a clear basis for monitoring and reviewing its progress towards achieving its vision and aims. There are four main ways that SFIL monitors its environmental strategy. These are:

Physical monitoring and measuring

Key performance indicators (KPIs)

Internal and external auditing

Environmental benchmarking

SFIL continuously monitors emissions to air, water and sewer to ensure they are below permitted levels. The KPIs, set by management at the start of the process are discussed and reviewed on a monthly basis. These are used to illustrate, assess and review trends in order to track whether strategic objectives are being met. Internal and external auditing is an essential aspect of the strategic process. The British Standards Institute (BSi) audits SFILs performance against the ISO 14001 Environmental Management System (EMS) standard every six months to ensure the Company is fulfilling its obligations in order to retain this certification. Having an ISO 14001 EMS gives the Company a competitive edge as it guarantees to customers that as part of their supply chain, SFIL is performing to a high environment standard.

The audits give SFIL invaluable, impartial, qualitative feedback on performance and on employees awareness of the environmental regulations, reinforcing SFILs commitment to achieving the highest degree of environmental management. The whole strategy is then formally reviewed at an Environmental Review meeting held on an annual basis with the Directors and Senior Management of the Company.

Page 6: Conclusion

SFIL has shown that through its commitment to sustainability with respect to the environment and resources, it can not only achieve its vision, but also derive and deliver benefits for both the business and for its many stakeholders. Such a commitment is required in order to s et clear objectives and strategies and then to communicate them to all employees in order for the whole business to be involved in the pursuit of the same objectives.

Monitoring and reviewing progress towards objectives ensures that the SFIL management team can achieve its aims consistently year-on-year and revise targets set accordingly. SFIL has shown that with its environmental strategy, robust planning, provision of resources to support its operations and clear communication, it is moving forward towards fulfilling its vision.

Required:

Read the case carefully and write a report regarding the adopted way in understanding the business environment.

Specify the company's business environment.

Comment on the learned lessons from that case and what attracts yourself in that particular case.