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Fairmount Minerals, a leading producer of industrial sand in the United States, embarked upon a journey of sustainable development in 2005. The mining industry had a reputation for environmental harm that threatened the sustainability of the company. Given the strong personal values of stewardship of the planet and community held by the CEO, and because of the reputation of the industry, Fairmount Minerals sought to integrate sustainable development in every step of its value chain — from mining to shipping the product to the customer. Starting in 2006, each year the organization generated a set of bold goals and monitored its progress toward them. These goals clearly spelled out the benefit for the environment and the planet. The question that remained was how this benefit translated into prosperity for stakeholders and the company. Under what conditions did this stewardship of planet and people lead to increased growth for the company?
This case is suitable for a capstone strategy course or an elective in sustainability at the MBA level. Astute students will note that:
- Stakeholders play an important role in the sustainability of a company, especially in industries like sand mining and manufacturing, which are inherently destructive to the environment.
- Concern for planet and community does not have to be a trade-off with a concern for profits — as seen in Fairmount Minerals’ case, sustainability can lead to business innovations that provide a competitive advantage to the company.
- By re-examining each point in the value chain through the lens of sustainability, Fairmount Minerals found new ways to collaborate with stakeholders. This not only helped it achieve operational excellence and cost savings, but also helped it build strong stakeholder relationships for long-term competitive advantage.
The case is an excellent vehicle with which to develop the notion of capabilities as the means for achieving competitive advantage in the realm of sustainability. Students should learn and understand how sustainability can be a competitive advantage for the company. By looking at each point in the value chain, companies can realize business model innovations. These innovations can be short-term, like immediate cost savings because of operational excellence, or strategic and long-term, like collaborating with not-for-profits for research and development that opens new markets for a company. Through sustainability initiatives, a company can build a valuable resource called stakeholder intimacy. Stakeholder intimacy as an inimitable resource can be employed to further achieve desired outcomes for all stakeholders as well as growth for the company.
Mining, Quarrying, and Oil and Gas Extraction
United States, Medium, 2010
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