DIGITAL (ONLINE) EXAM INSTRUCTIONS

DEPARTMENT OF MANAGEMENT, MACQUARIE BUSINESS SCHOOL

FINAL EXAM: SESSION 1, 2020

UNIT CODE: MGMT2031

UNIT NAME: Sustainability in International Business

EXAM DURATION: 2 hours 40 minutes (2 hour exam + 10 minutes reading time + 30 minutes technical
time) (WITHIN A 6 HOUR WINDOW: A ‘WINDOW’ EXAM)

INSTRUCTIONS ON EXAM DURATION

• Breakdown of Total Exam Duration: 2 hour exam + 10 minutes reading time + 30 minutes technical
time (for downloading, uploading and submission issues).
• This exam is designed to be completed in 2 hours 40 mins. You are expected to take no more than this
time, in total, to complete the exam. There is no expectation, and there is no need, to take more than 2
hours 40 mins to complete the exam.

GENERAL INSTRUCTIONS ON EXAM RESPONSES AND EXAM SUBMISSION

• Students must type their exam responses into a single Word document. Please use ‘standard’ formatting
settings: 12-point font, Times New Roman, single or 1.5 spacing, standard margins.
• Students must strictly adhere to the word limits set for each exam question. Exam markers will only read
up to the word limit for each question and mark accordingly.
• Students must submit their exam response document by the due time of the scheduled exam window.
Please remember: to minimise potential technical issues with uploading to Turnitin, ideally aim to submit
your exam response document well before the due time.
• Late exam submissions will not be marked and will be treated as not submitted. If students are unable to
submit their exam responses by the due time, or experience significant issues hindering exam completion,
they must submit a Special Consideration application to sit a supplementary exam.

ENSURING ACADEMIC INTEGRITY

• This is an open book exam. That means students can consult, for example, the unit’s textbook, related
readings, and dictionaries, to support exam completion.
• However, it is expected that the exam responses that students submit are their own work. That is, in
line with the exam questions, aim to demonstrate your understanding of the unit content in your own
words.
• Macquarie University takes the upholding of academic integrity seriously. In taking and submitting this
exam, students are agreeing to the following statement:
"By taking this exam I affirm that I am the student whose MQ ID has been used to log into iLearn and that I
am submitting my own, independent work. I confirm that I am aware of the penalties for academic
dishonesty which may include failure in the unit or potentially even expulsion from the University."

Please ensure you follow any other guidance for the exam that your Unit Convenor has provided.
SPECIFIC EXAM INSTRUCTIONS

This exam has two parts: Part A & Part B.

• There is a total of nine (9) questions.

• You need to attempt ALL of the questions.
• Part A consists 20 marks and Part B consists 20 marks.
• Responses should be in essay format.
• Please answer your questions in ONE Word Document that you created for the final exam.
• This exam is worth 40% of your total mark for the unit.

Part A: Case Study

Palm Oil and its Problems

Palm oil is one of those ubiquitous but overlooked products that have a hundred different uses. It
comes from the oil palm tree (Elaeis guineensis), which originated in West Africa, but which by the
mid-1800s was discovered to grow well in Malaysia and other Asian countries. Back then the oil
was used for soap and to lubricate engines. By the mid-twentieth century, plantations dotted not
only Malaysia but also Indonesia, which together now account for 90 per cent of the world’s supply
of palm oil. Today the oil finds its way into many processed foods and into consumer products like
lipstick, shampoo and shaving cream. Many Asian households cook with it, and recently it has come
to be used as a biofuel.

Demand has pushed prices high and increased the number of palm-oil plantations. That in turn has
contributed to needed economic growth in the countries that produce it, which is good news for
them. But environmental groups are alarmed by the spread of palm-oil production, viewing it as
damaging to wildlife and hazardous to the planet. In past decades, the area under cultivation for
palm oil has mushroomed fifteen-fold, eliminating peat land and forests in wide swaths of Malaysia
and Indonesia. In fact, deforestation in Indonesia is so rapid that a recent UN report says that all of
the country’s forests could be gone by 2022. Destroying forests and peat land to slake the world’s
thirst for palm oil releases enormous quantities of carbon dioxide, thus contributing to climate
change. In Sumatra and Borneo, palm-oil expansion also threatens the habitat of elephants, tigers,
rhinos and orang-utans.

Awareness of the problem led to the establishment of the Roundtable on Sustainable Palm Oil
(RSPO), a consortium of growers, processors, food companies and nongovernmental organisations
that was set up in 2004 to prod the industry into producing sustainable palm oil: that is, oil that could
be certified as having been produced ‘without undue harm to the environment or society’, in
particular, without having involved the destruction of areas with ‘high conservation values’. These
areas include not just primary-growth forests, but also secondary and degraded forests that are
‘important for environmental conservation and community well-being’. But the Roundtable
proceeded slowly. The producers dragged their feet, and there wasn’t much demand for certified
oil.

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Frustrated at the slow progress, some environmentalists decided to take direct action. Greenpeace
targeted Unilever, although the company uses only 4 per cent of the world’s palm oil, because some
of its well-known brands (like Dove soap) include palm oil. In 2008, protestors stormed the
company’s London headquarters and demonstrated outside several of its facilities around the world
with banners displaying slogans like ‘Unilever: Don’t Destroy the Forests’. Greenpeace also went
after Nestlé, posting a video on YouTube that featured the bloody finger of an orang-utan inside
one of the company’s Kit Kat chocolate bars.

Unilever quickly committed itself to using only palm oil certified as sustainable, and 20 other big
companies, Procter & Gamble among them, rapidly followed suit. But Greenpeace wanted Unilever
to go further and make sure that its suppliers weren’t breaking the law. Unilever agreed, but doing
so turned out to be problematic. ‘We found that, in one way or another, all of our suppliers have
technically infringed either RSPO standards or Indonesian law,’ says Gavin Neath, a senior vice-
president. ‘It isn’t as easy as saying just pick the best. We are not in a position to do that. The
industry almost certainly has to go through fundamental change.’

Because it doesn’t buy all that much palm oil, Nestlé hadn’t anticipated being caught up in the
controversy. A member of RSPO, it had been purchasing some sustainable oil but hadn’t planned
to buy all its oil this way until 2015. After first trying to stop the Greenpeace video, the company
buckled because of the public response. It suspended all purchases from Sinar Mas, an Indonesian
conglomerate known to be involved in the illegal clearing of forests and peat land. And it went
further, hiring an independent auditor to review its supply chain and enable it to avoid ‘high-risk
plantations or farms linked to deforestation’.

Besides bad publicity and badgering from environmentalists, one factor in the change of policy at
Unilever and Nestlé may have been the attitudes of their employees, many of whom are concerned
about environmental issues. As the Economist magazine explains, ‘For years companies have been
saying that a commitment to corporate social responsibility can improve the quality of staff that they
can recruit. It follows that these recruits then care about the behaviour of the company that employs
them.’

Despite these victories for environmentalists, much of the palm-oil industry has paid little attention,
in part because environmentalists have focused on a few well-known Western companies while
ignoring Asian companies altogether. Verifying sustainability is not as easy as it sounds either,
because oil from different small plantations gets mixed together (and sustainable oil and
unsustainable oil are indistinguishable). An executive at one small cosmetics company, which has
switched to coconut oil, says that there is ‘no such thing as sustainable palm oil: it doesn’t exist’.
But for the world as a whole to get by with less palm oil is going to be expensive, and rival products
also have some environmental drawbacks. On the other hand, deforestation is high on the agenda
of the World Bank and the United Nations, and various governments and nongovernmental
organisations are getting involved. For example, a billion-dollar grant from Norway has induced
Indonesia to declare a moratorium on clearing forests and to set up its own certification body. Some
optimists argue that increased productivity can enable the palm-oil industry in Indonesia to continue
to expand without destroying more forests, but that remains to be seen. In the meantime, the world’s
thirst for palm oil remains unslaked.

Source: This case study is based on ‘Briefing: The Campaign Against Palm Oil’, Economist, 26 June 2010, 71–3;
see also ‘Nestlé Learns to See the Wood for the Trees’, Financial Times, 1 June 2010, 11; and the website of the
Roundtable for Sustainable Palm Oil (www.rspo.org).

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Case Study Questions (20 MARKS)
(NO MORE than 200 words per question in this section.
No minimum word requirements of your answers.)
Q1 The word ‘sustainable’ is tossed around a lot. What does it mean to you? (2 Marks)

Q2 Is it fair for environmentalists to single out companies like Unilever and Nestlé that are
relatively small consumers of palm oil, or is this justified simply as a matter of strategy? (2
Marks)

Q3 How far must corporations go to ensure that the various ingredients used in their products
are produced in an environmentally satisfactory way? (3 Marks) What if there aren’t any truly
sustainable options? (3 Marks)

Q4 Can monitoring and self-regulation by industry groups like the Roundtable effectively
address environmental issues, or will outside pressure always be needed? (2 Marks) Was
Greenpeace right to act as it did, or should it have tried to work with the companies in question?
(2 Marks)

Q5 Preventing deforestation is important, but once previously forested land has been cleared,
whether six months ago or 60 years ago, is there anything wrong about using it to produce palm
oil now? (2 Marks)

Q6 Used as a biofuel, palm oil reduces our dependence on petroleum. How do we balance that
against deforestation? (2 Marks)

Q7 Poorer countries like Indonesia are responding to increased demand for palm oil by Western
consumers. Is it fair to the producer nations to restrict the expansion of this industry? (2 Marks)

Part B: Short Essay Questions (20 MARKS)

Q8 Use maximum 400 words to express your opinions on the COVID-19 impacts and the future
of sustainability in international business. Use minimum two adequate theories you learnt this
semester from MGMT2031 to integrate into your discussion. (10 Marks)

Q9 Conduct an online search for a company whose sustainability report extensively covers
international supply chain topics. Check if the company complies with the five rules for
successfully managing the responsible supply chain. Theory integration and implementation
are essential in your analysis. (400 words) (10 Marks)

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