Is Sustainable Lumber a Myth? the Case of Latvian Timber Industry

Article excerpt

CASE DESCRIPTION

The primary subject matter for this case involves strategic management, sustainability, international law, and business ethics. Firm positioning as an environmental leader represents a growing strategic trend. Incorporating sustainable business policies is a practice that many stakeholders are demanding. With these concepts in mind, this case is most appropriate for discussion and analysis in undergraduate management, business law, or ethics courses where the topics of leadership, management, ethics, and sustainability are covered. This case is also appropriate for discussion in any courses where the instructor is ready to discuss ethics in international business and society. This case is designed to be taught in approximately one or two class sessions.

CASE SYNOPSIS

This case describes the hypothetical management decisions Matt Lelander, a fictional marketing and purchasing manager of a British home improvement store, must make. The principle dilemma revolves around the choice of whether to continue purchasing lumber from the Latvian state owned lumber company. It has come to the attention of the purchasing manager, Matt Lelander that the rate of consumption of Latvian forests appears to be unsustainable. However, Matt realizes that the Latvian state lumber company is certified as a sustainable provider of lumber by the internationally recognized Forest Stewardship Council (FSC). Mr. Lelander is acutely aware that his customers value purchasing lumber from sustainably harvested sources and that they rely on FSC certification when making their purchases. Further, Mr Lelander is presented some legally challenging issues with regards to contract performance and bribery. The case provides detailed background information on the Latvian state owned lumber company, FSC, the current situation of Latvian forests, applicable laws, ethical frameworks, and competitive market considerations. At the end of the narrative the reader is asked to formulate ethically and strategically sound recommendations.

INTRODUCTION

After a hectic day of orientation at the corporate headquarters of one of Britain's largest home improvement stores, Flat and Builder's Supply (FBS), Matt Lelander settles into his corner office and pours himself a cup of black coffee and adds two nondairy creamers. Matt, a recent graduate from one of Britain's most prestigious universities, has been hired by this family owned and operated store to evaluate the purchasing decisions of his employer. Recently, Mart's firm has noticed a significant upward trend in the number of consumers requesting timber that is sourced from sustainably managed forests. Matt is charged with reviewing his firm's purchases from the tiny country of Latvia. A recent film titled, 'Latvia's Pulp Fiction' has publically questioned the forest management practices of the Latvian state owned timber company1. Prior to formulating purchasing strategies, Matt must review information on Latvia, the Latvian timber industry, U.K purchases of Latvian timber, background information on the international sustainable forest certification body, forest stewardship council (FSC), and applicable ethical frameworks. Mr. Lelander has until the end of the week to formulate an ethically sound purchasing strategy to ensure his customers' demands for sustainably harvested timber are met as well as a strategy to ensure his firm is competitive.

LATVIA AND THE LATVIAN TIMBER INDUSTRIES

Latvia is a small country on the Baltic sea, with just over 2 million inhabitants. Figure one presents of a map of the country. Latvia shares a border with four nations: Estonia, Russia, Belarus, and Lithuania. According to the US Central Intelligence Service (CIA), Latvia has a small economy with exports contributing significantly to its GDP. As figure 1 illustrates Latvia has a key geographical location which has led to a highly developed transit services along with timber and wood-processing, agriculture and food products, and manufacturing of machinery and electronic devices. …