STRATEGIC MANAGEMENT

CHAPTER DISCUSSION 2

1. Surf the Internet and perform the following:

a. Describe the physical or natural environment surrounding companies located in Luzon,

Visayas, and Mindanao.

Luzon is the Philippines' largest and most important island. It is home to Manila, the
country's capital and largest city, as well as Quezon City. Luzon is the country's leader in both
industry (which is concentrated in Manila) and agriculture (rice, corn [maize], coconuts,
sugarcane, mangoes, bananas). The main grain-producing region is a central plain reaching 100
miles (160 kilometers) north of Manila. The Ifugao mountaineers' beautiful rice terraces can be
found further north. The Bondoc and Bicol peninsulas have significant coconut plantations.
Mined metals include iron, gold, manganese, and copper. Hardwoods grow well in forest
regions.

Eastern Visayas is located in the Philippine archipelago's east central region. It is made up
of three main islands: Leyte, Biliran, and Samar, which comprise the archipelago's easternmost
shores. According to the Corona climate categorization system, the region has two types of
climate: Type II and Type IV. Type II climate has no dry season but a notable maximum rainfall
from November to January. This climate can be found on Samar Island and the eastern section
of Leyte Island. Type IV, on the other hand, has an even distribution of rainfall throughout the
year and a brief dry season that lasts from February to May.

Mindanao is the Philippines' second-largest island (after Luzon), located in the

archipelago's southernmost region, surrounded by the Bohol, Philippine, Celebes, and Sulu
seas. It measures 293 miles (471 kilometers) north to south and 324 miles (521 kilometers) east
to west and is irregularly shaped. In the largely Roman Catholic Philippines, Mindanao is a
Muslim outpost. Despite the fact that Muslims are no longer the majority, Islamic culture is
visible; there are numerous mosques and distinctive brassware, such as the kris, or dagger, is
produced. In 1990, the Muslim Mindanao autonomous zone was established, consisting of
territory in western and southern Mindanao as well as a number of adjacent islands, including
Tawi Tawi and Jolo. Because of its large expanses of undeveloped fertile land, Mindanao has
been considered the country’s “pioneer frontier.” It did not experience substantial population
increase until migration was promoted, particularly in the mid-20th century.

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b. Identify the programs and regulations adopted by the European Union, United States, and
ASEAN to reduce carbon dioxide and other greenhouse gases.

 EU policies: Climate change mitigation (GHG reduction) The EU climate and energy
package was adopted in 2009 to implement the 20-20-20 targets endorsed by EU leaders
in 2007 - by 2020 there should be a 20 % reduction of GHG emissions compared with
1990, a 20 % share of renewables in EU energy consumption, and energy improvement
by 20 %.
 The, United States Environmental Protection Agency (EPA) began regulating greenhouse
gases (GHGs) under the Clean Air Act ("CAA" or "Act") from mobile and stationary
sources of air pollution for the first time on January 2, 2011. Standards for mobile
sources have been established pursuant to Section 202 of the CAA, and GHGs from
stationary sources are currently controlled under the authority of Part C of Title I of the
Act. The basis for regulations was upheld in the United States Court of Appeals for the
District of Columbia in June 2012.
 During the period 2005-2030, South Asia would become more carbon intensive. The
primary energy mix of the five South Asian countries (excluding India) would shift toward
more aggressive use of cleaner resources, such as natural gas, hydropower, biomass,
municipal solid waste, wind, and nuclear energy, if a carbon tax regime is considered
necessary to stabilize GHG concentrations at 550 parts per million by volume (ppmv) of
carbon dioxide equivalent (CO2e). China wants to reach carbon neutrality by 2060 and
peak carbon dioxide emissions by 2030. By 2030, it will have reduced its carbon intensity
by more than 65 percent compared to 2005. By 2030, non-fossil fuels will account for
roughly 25% of primary energy demand.

c. Explain how different countries invest in sustainable energy, including wind, solar, and
water power, to support advocacies on environmental sustainability.

Solar, wind, hydroelectric, biomass, and geothermal energy can offer electricity without
contributing to global warming like fossil fuels. Renewable energy is frequently at the top of any
list of adjustments the world can make to mitigate the worst effects of rising temperatures in
any conversation about climate change. This is due to the fact that renewable energy sources
like sun and wind do not create carbon dioxide or other greenhouse gases, which contribute to
global warming.

Clean energy has a lot more going for it than just being "green": it creates jobs, strengthens
electric networks, improves energy access in underdeveloped nations, and lowers energy bills.
All of these elements have contributed to a recent renewable energy revolution, with wind and

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solar power establishing new electricity generating records. Average surface temperatures are
rising as greenhouse gases trap heat in the atmosphere that would otherwise escape into space.
Climate change is the term scientists now use to describe the complex shifts affecting our
planet's weather and climate systems. Global warming is one symptom of climate change.
Climate change includes not only rising average temperatures, but also extreme weather
events, shifting wildlife populations and habitats, rising sea levels, and a changing climate.
Climate change encompasses not only rising average temperatures but also extreme weather
events, shifting wildlife populations and habitats, rising seas, and a range of other impacts.

2. Mini-Case. Read the mini-case of Walmart de México and answer the discussion questions
comprehensively.

Discussion Questions:

1. How can the company leverage its sterling credit rating to get renewable energy projects off
the ground?

Despite the fact that the proposed wind farm was located in a region with substantial wind
resources, the project would not have been able to get finance without a creditworthy off-taker.
The developers were able to secure financial support, purchase and build the turbines, and
begin generating electricity by 2010 thanks to Walmart de México's 15-year PPA (Power
Purchase Agreement).

2. For the EVM wind farm, Walmart de México's equity investment was minimal and just
sufficient to meet the requirements for Mexico's self-supplied tariff. Should the company take
a larger equity position in furthering energy projects rather than simply serving as an
offtaker?

Rather than simply acting as an offtaker, the corporation should have a larger equity stake in
energy projects. Because the return on equity investments is the increase in the value of the
initial investment in the company. Because you don't have to accept loans or utilize debt
financing to obtain the necessary capital for a company's growth, employing equity investment
to finance your firm has fewer risks.

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3. What technologies should Walmart de México employ to achieve its renewable energy
goals?

I would suggest to them a technology like Photovoltaic and Biomass to achieve its renewable
energy goals.

Photovoltaic systems require just routine inspections and minor repairs, which are incredibly
inexpensive when compared to traditional fuel systems. Photovoltaic systems are also extremely
dependable even in adverse situations. Photovoltaic arrays ensure that important power supply
run continuously and without interruption. As a renewable energy source, biomass is always
and abundantly available. Because our society continually creates waste such as rubbish, wood,
and manure, the organic elements required to produce biomass are unlimited.

4. Should the company hold a portfolio of projects or just concentrate on one technology?

Because good portfolio management generates business value by aligning projects with an
organization's strategic goal, making the greatest use of limited resources, and creating
synergies between initiatives, the corporation must maintain a portfolio of projects.

5. How could Walmart de México expand the program to other Central American countries
where it operates?

There are numerous ways for Walmart de México extend their business abroad, each of
which necessitates unique background knowledge, expertise, and commitment. The first option
of global expansion is to use an in-house strategy, which means you create your own mobility
structure based on your preferences, needs, and constraints. This strategy requires you to
identify and decide on the particular path you wish to take. It's incredibly open-ended and
necessitates a great deal of research, planning, and dedication.

6. Is there a way to include suppliers into a renewable energy program?

There will be a way to engage the suppliers at some point because they, too, require the
capabilities of this project, which include long-term renewable energy variability and lower
electricity rates.

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CASE STUDY

SUMMARY

Walmart de Mexico is one of the EVM's (Electrica del Valle de Mexico) wind farm's offtaker. The
project enabled the company to meet some of its long-term objectives. Manuel Gomez Pena's
company had promised to accomplish ambitious goals, such as reducing waste in its and its
suppliers' operations and considering more renewable energy projects. Becoming the wind
farm's offtaker met a number of crucial goals for Walmart de México. EVM promised electricity
rates that were lower than those charged by Mexico's state-owned utility, saving the famously
frugal retailer money. Furthermore, the project enabled Walmart de México to move closer to
achieving some of its environmental objectives. The wind farm would provide electricity to 348
Walmart de México locations in Central Mexico, accounting for 18% of Walmart de México's
electricity consumption in 2010. It takes solar and hydropower projects into account. Mexico's
political leadership had pledged to use renewable energy sources to generate electricity, but
there were no special feed-in tariffs or tax breaks for the construction of renewable energy
projects. Gomez had to consider the company's capabilities and focus.

PROBLEM

Walmart de Mexico faces a problem in achieving sustainability targets without jeopardizing the
interests of its corporate authorities and stakeholders.

SOLUTIONS

 More working capital should be allocated to operations, and sufficient funding should be
allocated to renewable energy initiatives.
 Have a hydropower project but only use renewable energy as a byproduct.
 Instead of plastic bags, use reusable bags or paper bags.
 Encourage suppliers to contribute to renewable energy project funding.

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FINAL SOLUTION

 More working capital should be allocated to operations, and sufficient funding should be
allocated to renewable energy initiatives.

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