Broad Air Conditioning: Pressure on a Pro-Environment Strategy in China

Following rapid growth in the 1990s, domestic sales at Broad Air Conditioning have slowed dramatically since 1999. Government energy policy, aggressive marketing by electric power companies, and competition from lower-priced conventional (i.e., electric-powered) cooling products have all contributed to the company’s decline. Pressure has also been building internally, with employees advocating that Broad enter the conventional product market in addition to its original natural gas-powered and more environmentally friendly product range. Foreign clients, however, are more receptive to Broad’s gas-powered systems, and international sales have been increasing steadily. The case describes the stand-offs and trade-offs between the CEO who insists on pursuing a product strategy guided by an environmentally friendly principle and ideal of sustainable development, and employees who see a need to accept market realities.

This case provides the basis for discussing general issues of the real or perceived trade-offs between environmentalism and market competition. Details on the various stakeholders in this specific situation lend to role-playing negotiation scenarios between the CEO and salesmen, as well as between an external consultant and the top management of Broad. The case also provides a segue into a discussion of development issues relevant for China and many developing countries, as well as a broader review of the environmental problems associated with rapid economic development.