Scandinavian Airlines: The Green Engine Decision

Scandinavian Airlines: The Green Engine Decision

Topic: Ethics & Corporate Social Responsibility

Assignment Questions

Please answer the following three questions in a single-spaced, two-page response.

1. Arguments for and against purchasing the green engines

a. From the perspective of the Director of Aircraft and Engine Analysis, two arguments for purchasing the green engines are (1) preserve SAS's reputation as a leader in dictating environment friendly services and (2) newer and greener engines would last longer and once bought, the company would not have to care about new regulations (about 25-35 years).

From the same perspective, two arguments against purchasing the green engines are (1) high initial costs of purchasing the engine, about $1.3Bn extra cost and (2) the green technology was yet to be implemented in the aircrafts, hence it was a risk.

b. From the perspective of the SAS Management Team, two arguments for purchasing the green engines are (1) improved goodwill with the Scandinavian people and (2) greener aircrafts would pollute the environment less, hence the standards adopted by the Stockholm airport will be fulfilled.

At the same time, it would allow SAS to operate more flights resulting in an increase in revenues. From the same perspective, two arguments against purchasing the green engines are (1) increased costs of an unknown technology, about $1.3Bn and (2) undertaking the risk of technical hurdles. Since such technology was not used on an aircraft before, SAS was undertaking the risk of implementing it.

2. Internal and external influences

a. Three internal forces at SAS that could have influenced the firm's decision to purchase the green engines were (1) Nas, the Director of Aircraft and Engine Analysis, (2) the drive to be the first airline company to offer least environment polluting services, and (3) fulfill environmental goals and ambitions of SAS which is defined in the environmental vision of the corporation.

Of these, the internal force that could have the strongest impact on whether or not SAS decides to purchase the green engines was the drive to be the first airline company to offer the least environmental polluting services because it will establish the corporate social responsibility of the company and would positively affect the goodwill of the company. In addition, by purchasing environment friendly engines, the company could fulfill upcoming regulatory requirements for 2-3 decades.

b. Three external environmental forces that could have influenced the SAS's decision to purchase the green engines are (1)