To what extent does sustainability play a role in highlighting Nippon paint unique selling

preposition in relation to profitability?

Key concept: Sustainability

Business Management SL - IA

Session: May 2025

Word Count: 1,800

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Table of Contents

Introduction: ................................................................................................................................. 3

Analysis: ......................................................................................................................................... 4

Triple bottom line: .................................................................................................................... 4

Circle business model: .............................................................................................................. 4

Corporate social responsibility: ............................................................................................... 6

Financial analysis: ..................................................................................................................... 8

Conclusion: .................................................................................................................................. 11

Reference list: .............................................................................................................................. 12

Supporting documents: ........................................................................................................... 12

Extra links:............................................................................................................................... 12

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Introduction:

Nippon paint is a corporation of Japanese origins in the paint manufacturing industry it has

expanded into lots of countries in the past 140 and their main office is in Tokyo. (Supporting

Document 1 and 2)

Nippon paint is the 4th biggest paint manufacturer in the world with 1.3 trillion $ in revenue and

it is often chosen by customers due to their unique selling point that relies of personalization of

products and variety targeting a large customer base, to add on their product are eco-friendly

which helps in accomplishing their sustainable development goals. (Supporting Document 1)

This investigation aims to explore the relation between Nippon’s unique selling proposition and

their financial growth linking them to their sustainability goals.

The data of this investigation will be collected from secondary sources such as:

Nippon’s integrated report 2024: it contains Nippon’s wastes and recycles over the years from

2019 till 2022 which helps create a link between financial position and sustainability which is a

part of their unique selling proposition. To add on it contains Nippon’s global policy set in 2023

which further highlights their unique selling proposition. It also contains financial data.

Amazon customer reviews: an indicator to customer satisfaction and dissatisfaction contributing

to long-term profitability and Ditch carbon report: shows Nippon’s environmental effects as a

part of their sustainable development goals.

Using the above data the following research question will be investigated “To what extent does

sustainability play a role in highlighting Nippon paint Egypt unique selling preposition in

relation to profitability?”

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Analysis:

Triple bottom line:

of Nippon’s sustainability plan. It discusses environmental factors that will be analyzed through

circular business model analysis, social factors shown through corporate social responsibility

analysis and economic factor highlighted through financial analysis.

Circle business model:

This analysis tool will be implemented to analyze Nippon’s impact on the environment and shine

the light on how they held up to their sustainability goals. It also covers the environmental

aspect of the main analysis tool the triple bottom line.

Nippon is claiming to have droped green house gases emission by 14kg/tons of production. To

add on their ratio of hazourdous waste dropped from 45% in 2019 to 37%. Which is part of

achieving a circular business model as of the interest of stakeholders in enviromental wellfare.

(Supporting Document 1)

Due to this nippons net profit margin increased from 8.5% to 11.7% and this increase in

profitability is a huge leap and will be disscussed in the financial analysis. (Supporting

Document 1)

To add Nippon’s sustainability plan involved making eco-friendly products that suit Nippons

biggist customer base in singapore which is aquired by their NIPSEA group, and seeing that

singapore rose to become the 17th most sustainable country in the world their needs were clear

they needed a product that will help them maintain that position, thus the decrease in nippon’s

waste helped them expand even furthur in singapore and will help them expand in other

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countries in the long term as more and more customers are becoming enviromentaly

concious.(Supporting Document 1 and Extra link 2)

However, the decrease in Nippon’s waste was expensive as the only way to decrease hazardouse

waste is through clarification plants and recycling plants and both can be expensive and

decrease profits in the short-run as disscussed later in the financial analysis. (Supporting

Document 1)

Another strategy utilized by Nippon in their sustainability plan is pioratizing water plants to

treat water and increase water recoverd by 8% as it is decreasing among some of their operating

groups but has seen a 15% increase in their delux group which is known for using sustainable

materials. (Supporting Document 1)

Implemetion of such strategy suggests that nippon is doing harm to the enviroment to increase

production hence profitability,this is indicated by having a 33 ditch carbon score, as water

consumbtion which increased in one year by 0.8kl/tons consumed due to the paint industry being

relient on water. (Supporting Document 2)

However, the increase in water consumption is close to the persentage of water recovered in

most of Nippon’s operating groups and according to their sustainability plan the other groups

will eventually catch up in water recovered which would enhance brand image in the long run as

seen later in the CSR analysis. (Supporting Document 1)

To sum up BMT analysis, nippon managed to increase profitability but harmed the enviroment in

the process however they did manage to boost all most of their numbers in other areas of the

enviroment which minimised damage as water recovered increased which could be linked to the

increase in water usage and decrease in water waste as the recovered water is reused.

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Corporate social responsibility:

This tool will be used to analyze Nippon’s interconnectedness with the world and the

community, this will be carried out via examining strategies used to support the community via

Charities, CSR events and supporting employees all as a part of their sustainable development

goals.

Even though Nippon’s sustainability plans focused on releasing different eco-friendly products

to highlight their unique selling point, they didn’t miss out on CSR events” by implementing the

three priority areas known as the “Three Es””.Education: involves events for children and

students, Empowerment: social events to help introverted employees, Engagement: helping

NGOs. (Supporting Document 1)

All of Nippon’s efforts to achieve sustainability has paied off as their employees satisfaction

rate is 79% and since Nippon involved employees in their sustainable development goals this

could be the reason for a high satisfaction rate, in theory if employees are satisfied they could

satisfy customers hence enchanse Nippon’s image and thus improve profitability which improve

by 3.5% as seen later in the financial analysis. (Supporting Document 1)

However, even though empowerement resulted in a high satisfaction rate, it led to

miscommunication causing employees to feel discridited for their social skill hence feel

unconfident and unsatisfied as the satisfaction rate was even higher than 79% at 83% but

dropped in the years of the implementation of Nippon’s sustainability goals . (Supporting

Document 1)

On the other hand, education is a waste of time in the shortrun as Nippon is just funding the

project with no realtime benefit, however this strategy opens up the door for potential customers

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and employees for the business in the longrun these employees and customer would have brand

loyalty due to what they learnt from Nippon’s Education strategy. (Supporting Document 1)

These cutomers satisfaction can be captured through customer reviews which state that the

products quality is high indicating that nippons attempt towards sustainability didn’t affect the

quality, it even made it better as a minimum amount of water is added by customers about one

cup of water which prevents water waste, but the low amount of added water caused low

coverage of the paint often taking more than one coat to fully cover a wal which caed slight

customer desatisfaction. (Supporting Document 3)

Moreover, Nippon funds NGOs while this has no financial benefit, it could enhance brand image

in the long run as with the excessive use of social media and the world being interconnected

nippons efforts will be known and customers with ethical consideration would choose to buy

from a business helping improve the community by supporting NGOs. (Supporting Document 1)

To sum Up, nippon paint managed to improve some asbects regarding to sustainablility which is

why their business image is good to both customers and employees, as they managed to support

NGOs, create educational programs for potential customers and employees, and help current

employees learn new skill and improve on their communication skills.

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Financial analysis:

This analysis tool will be used to determine Nippon’s profitability and create a link to

sustainability which is part of Nippon’s unique selling point, and it will explain the economical

aspect of the triple bottom line.

Figure 1- revenue and cost for years 2021, 2022, and 2023

Figure 2- profitability ratios for years 2021, 2022, and 2023

profitablity ratios
45.0
40.0
35.0
30.0
25.0
20.0 37.9 39.9
37.2
15.0
10.0
5.0 8.8 11.7
8.5
0.0
2021 2022 2023
Net profit magin 8.8 8.5 11.7
Gross profit magin 37.9 37.2 39.9
from the year 2021 till the year 2022 nippon’s revenue increased by around 30% as many new

customers were buying from the company from all around the world which shows diversity in

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targeted customers and since every customer base have different need, changes have been made

for different countries which is a part of nippon’s unique selling proposition to customise

products. (Supporting Document 1 and 2)

However the increase in reveneu was acompanied by a 30% increase in cost due to the initiation

of a new sustainability plan in 2022 which was cost dependent as Nippon started using more

sustainable materials and drifted away from mercury. (Supporting Document 1)

Nippon's gross profit margin has decreased in 2022 by 0.7% due to jump in cost in that year

lined to sustainability goals. If not for Nippon's sustainable development goals their gross

profit margin would have increased in the short term. However, as of the increased demand in

the eco-friendly market Nippon gross profit margin will increase even more in the long run.

(Supporting Document 1 and 2)

The long term effects of this can be noticed in the graph in year 2023 as Nippon has managed to

obtain a 2.7% increase in their gross profit margin almost 3 years after the increased investment

in sustainability and 5 years after the setting of sustainable development goals which further

prove the long-term benefits of Nippon setting sustainable development goals. (Supporting

Document 1)

Moreover, net profit margin increased by 3.5% from 2022 to 2023, due to Nippon learning from

their experience with setting sustainably goals and hence cutting down on unnecessary

expenses. (Supporting Document 1)

Even though Nippon stumbled at first, they managed to adapt to their sustainable development

goals while at the same time maintaining cost, this was achieved after 4 years of improving upon

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their waste generation and recycling scheme to help use the materials to the fullest and make

more quantity for same price without affecting quality. (Supporting Document 1 and 2)

Due to sustainability practices more environmental conscious customers prefer to consume

Nippon’s products this is seen in the increase in sales revenue by however we can also see that

cogs increase by 30% reflecting the use of eco-friendly materials other than mercury. In other

words sustainability and Nippon's unique selling point affected their profitability negatively in

the short-term. However their profitability ratios increased more than the value it decreased by in

the following year showing that their unique selling point and sustainability goals helped

improve profitability in the long-term.

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Conclusion:

Through financial analysis it’s found that Nippon’s sustainability plan increased their revenue by

30% however the cost of goods sold also increased by 30% due to use of more expensive

sustainable materials. Due to the increase in cost Nippon’s profitability decreased in the earlier

years of integration but increased in subsequent years. This highlights that Nippon’s

sustainability goals had negative effects on the short-run but improved their profitability in the

long run.

Nippon’s customers’ and employees’ satisfaction is high due to the implementation of

sustainability in their plans leading to increased profitability on Nippon’s end. While employee

satisfaction is high it isn’t at an all-time high as the sustainability plan belittled them and their

confidence as of the empowerment plan.

The study finds that Nippon’s profitability is directly linked to their sustainability decisions in

the last few years and since sustainable products is a part of Nippon’s unique selling point their

plan helped highlight it. However, the resources on this topic were limited and showed 3 to 5

years of the development depending on the area involved, which could limit the long-term

analysis.

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Reference list:
Supporting documents:
Supporting document 1: Integrated Report 2024 | NIPPON PAINT HOLDINGS CO.,LTD.
(n.d.). NIPPON PAINT HOLDINGS CO.,LTD. From:https://www.nipponpaint-
holdings.com/en/ir/library/annual_report/

Supporting document 2: Nippon Paint Sustainability Report Insights. (n.d.). DitchCarbon.

Supporting document3: amazon.eg:Customer reviews: Nippon Paint Durafresh Solo Exterior

Extra links:
Extra link 1: Surridge, M., Gillespie, A., & Mills, I. (2023). Business management for the IB
diploma programme. Hodder Education.

Extra link 2: Singapore Business Review. (2023). Singapore ranks 17th in world’s top
sustainable destinations list. Singapore Business Review. From: https://sbr.com.sg/hotels-
tourism/news/singapore-ranks-17th-in-worlds-top-sustainable-destinations-list

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