ASB-4413 International Strategic Management
Introduction
The aim of this essay is to discuss the circular economy and strategies to adapt to move towards circular economy. The reason behind to take up this study due to increasing environmental problems and society concern area towards changing frequent climate and high growing of air pollution etc. However, there are various benefits of circular economy exist such as it reduces the pressure on environment and improving the security of supply of raw materials which can be converted into finished goods easily and able to recycle it if it’s not fitted as per the customer expectations. That’s why; the current companies want to move towards the circular economy which will be discussed in this study that which strategies suited well to move on (Kirchherr et al., 2017). Besides that, barriers are also discussed in order to identify the areas within which company’s faces problem to move circular economy properly. So, this study would reveal various strategies to adapt Circular economy which could prove to be effective for the different industries to learn and implement it in their business operations.
Main body
Knowledge about concept of circular economy
Since the early 2000s, several efforts have been made to transit from traditional linear production to circular economy through use of promising strategy to deal with the current environmental issues and providing social-economic benefits. According to Geissdoerfer et al. (2017), circular economy is first adapted by the European commission in 2015 as to optimize the available resources and maintained in the economy for as long as possible with reducing of wastages. Basically, the purpose of circular economy is to build the sustainable environment which provides numerous benefits to social community and economy. Firstly need to understand the actual concept of circular economy through undertake different authors opinions and views over it.
MacArthur (2013) defined the circular economy as a economic system of closed loops in which raw materials, components and products lose their value as little as possible, renewable energy sources are used and systems thinking is at the core. It means that under circular economy the production manager close the cycles of all these raw materials extraction but it more involve in the recycling process instead of extracting the raw materials.
For example, when the lot of clothes production becomes too small in size then they are replaced by new sets of clothes one size bigger. After a quality inspection, the returned clothes are then washed professionally and then clothes are delivered to another baby resulting in circular process.
In the views of Winans et al. (2017), the circular economy can be understood as a traditional linear economy i.e. (make, use and dispose) in which resources in use for long as possible to extract the minimum value then recover or regenerate products and materials at the end of each service life. This method is largely in demand as compare to traditional ones due to exist of lot of limitations with the use of linear economy. the major one is the high level of air pollution and waste of resources which is not feasible for the future generation as it is important to preserve the resources for future generation otherwise resources fall short for them. That’s why, sustainable process become a critical task for the industries to adapt. The circular economy concept is anther sustainable strategy which supports the firms to operate business in favor of environment and society.
Diagrammatic presentation of Circular economy
(Sources: Bianchini et al., 2019)
This figure is adapted by Authors from EMA foundations CE diagram that illustrates the biological and technical material cycle (in upper part) and underlying circular patterns are more create value from resources. the inner circles indicates the closer system makes to direct reuse and larger cost should be in terms to material, body and energy etc. the second value creation is based on the circling longer which is necessary to guarantee by design a greater durability to extend the lifecycle of product and to allow more consecutive cycles. The sources called cascaded use across industries (Urbinati et al., 2017). Lastly, the sources to use of non-toxic components through use of separate inputs and designs to anticipate some end-of-life strategies from the material choice.
In addition to this diagram, Lewandowski (2016) stated that this model distinguishes between technical and biological cycles. Here technical aspects are those by uses by the firms to recycle or reuse of used products. On the other hand, consumption happens only in biological cycles where food and biologically-based materials like cotton and wood are designed to feedback into system through processes like composting and anaerobic digestion. Such cycles works in soil which provides renewable resources to economy.
Basically, the circular model technical nutrients indicates that after mining of materials, part are manufactured followed by product manufacturer. Along with this, service provider provide service to users and after that maintenance repair work happens to give professional look to product after service and again it give to provider to offer the users. This way through use of maintenances departments the used products are recycled (Geissdoerfer et al., 2018). However, under biological nutrients, after user uses of products it cascade in a way that used product can be converted into raw material so that new shape and size can be given without any wastage. This part includes some duration as every product has different components. Likewise, plastic bottles take time to reshape in its original form so this process take large time to convert into raw materials. Therefore, these process of circular economy definitely proven effective to converse resources and protect environment from the air and noise pollution.
Discussion of relevant barriers for businesses to transition to the CE
There are various challenges and barriers occur to transit towards Circular economy (CE). It happens in three aspects which will be discussed and it includes at consumer level, organization level and government level.
At consumer level:-
It includes lack of awareness among public about the recycled processed products. That’s why people never ask the producer or service provider about the product related ingredients and process to produce. However, the consumer attitude or poor behavior toward the green products is also less feasible due to which producers less encourages to move toward circular economy. the major reason behind this is that circular process such as recycled or reused method include heavy expenses in setting of machines and equipments and it makes the final product little expensive as compare to linear based products (Rizos et al., 2016). So consumer less preferences to buy the circular processed product as compare to linear ones makes the producer de-motivates them. That’s why; the implementation of circular economy concept always fails to adapt by the producers due to consumer improper behavior towards sustainable product line.
Organization level:-
According to Planing (2015), organization structure and culture is another major barrier within which implementation of CE largely affected. However, the rigid employee behavior toward acceptances of change tends to be another problem within which organization struggles to adapt the circular economy. Other than that, organization structure is another critical area within which management struggle to adapt this method. Likewise, small organization feel hesitate to bring changes as per the circular economy strategies due to this aspect demands lot of installation of new equipments and materials within which they have to bear heavy expenses. That’s why, small firms usually failed to undertake the circular economy.
Moreover, the resources and capabilities are another concern as it is must for organization to have enough human, financial and physical resources along with the capabilities to innovate for recycle or reuse properly. Agyemang et al. (2019) found that usually small or medium firms struggle a lot to undertake the circular economy in business due to lack of skilled or technical staff along with less capital to explore the innovations. Along with this, poor supply demand network also impact the adaptation of circular economy. This is because large extraction of raw materials takes so much time within which supply shortfall to fulfill the demands of customer and occurs excessive wastage if customer rejects the product. However, poor transportation and logistics channels also affect the supply chain network of business. This affects the implementation of circular economy at business level.
Government level:- Galvão et al. (2018) stated that lack of government support is another concern area within which firms unable to adapt the circular economy. However, the government poor policies regards to sustainable implementation such as no special subsidiary over the use of renewable resources does not encourage the small firms to undertake the CE practices into the business. Other than that, Enforceability of legislation and unavailability of standardized system are also considered as a barrier due to poor monitoring system does not support the proper implementation of CE. If government builds strong and reliable monitoring system could support the firm to achieve the CE practices into the business operations.
Appropriate examples that have successfully managed to move to circular economy 800
In the views of Jurgilevich et al. (2016), there are various strategies are followed to adapt the circular economy in the form of make enough investment on research & development areas through identify the best possible way to sources the raw material and it can be recycled after its usage. However, the practice of online strategies is another essential tool for the implementation of circular economy. this is because online channels support to save maximum resources and support less pollution as when physical stores are not established then firms needs only warehouse to stock up the products and deliver directly to the customers. This allows to reducing maximum wastages and controlling the environmental condition. This kind of practice is largely adapted by the current firms like Amazon and different retail industries as well such as Tesco, Mark & Spenser and H&M also moves their business operation towards online areas.
Other than that, Stahel (2016) explained that renewable resources strategies are also used to manage the circular economy. In this, firms usually use solar panels to produce electricity so that maximum resources are saved. This would help the firm to perform the operations on proper manner with minimum wastages. It is now uses by every organization in its production units to continue their product production within less wastage of energies. It resulted into low carbon emission.
At the same time, Masi et al. (2017) bring into notice that circular supply chain is another important strategy that is also used to manage the circular economy practice into the business. In this, the production manager is largely involved in the use of technology to place order accordingly. likewise, the manager use of MIS and CRM system to identify the customer taste and preferences and accordingly it generate demands and place order for the raw materials and check whether the final goods are liked by the audiences or not. If not then it is recycled or reused by giving different size or shape and again offer to customers. This kind of practice helps them to offer different products to customers at large. It leaves positive impression on the minds of customers.
This study can be justified with the example of Zara which is well adapted this circular supply chain strategy in the business through produce small batches of same products in order to check the review of customers and if its rejected then it will be recycled into new designs and then offer to customers. This kind of circular practices reduces the cost of production and support with less waste of resources within which it becomes easy to fulfill the demand of different customer needs and wants.
Another example can be justified the circular economy adaptation in most appropriate manner. Plastipak is a largest manufacturer firm in UK for Pet Bottles and containers. It uses reprocessing plant which is based in Wrexham. In this, it undertakes three 3R’s such as reduce, reuse and recycle (De los Rios and Charnley, 2017). Similarly, Splosh is another SMEs home and personal care products direct to consumer using refill. It committed to Zero waste by reducing plastic bottles wastes through refills and reuse same bottles by professionally clean it and serve to services provider for the offering to customers.
Critically analyze of strategies that helps to manage circular economy in business
Minor result of work idea has been attempted into the economy with the expanded number of work or employing work in the association powerful the creation of the business and effect the economy. This alludes to the relocation of work starting with one nation then onto the next for looking for wages and efficiency on the lookout. The relocation to country is higher when contrasted with some other nation as it has high pay rate strategy and compelling administration of abilities in the nation. The work from Europe is moved to USA due to recruiting of every single talented individual and have high occupation opportunities. Employing and movement of laborers in the nation made the country to have high creation which made the world’s biggest economy (Corbu, 2020). It is conceivable with the way that minimal result of work idea has been pertinent in the economy of country as higher migration of laborers lead to high creation in the nation. This influences the development in the country of the nation and made it to have high stake into the world with extraordinary creation and gifted labor force. The significant level of chances accessible in the nation made the work for Europe to move from home nation to country. The work structure Europe has been moved to country with the board of compensations with incorporation of culture in it.
The cycle of migration has been assembled and utilized in the country which draws in great many the candidates each year which prompts have successful creation and gracefully in the administrations. The movement has made the country to have high creation with the accessibility of work and skulled individuals which has prompted compelling utilization of innovation for the conveyance of items and administrations that are exceptionally serious in nature. It has affected the environment and adoption of right programs in the organizations would help in mitigating with such problems. It will also help labor ot have required jobs and maintain with environment needs and demands. The high compensation rate or pay rates pull in the work from Europe and make it to have application to high profitability. Elevated level of creation requiring little to no effort makes the association to meet with economy of scale. This likewise offer rise to fare to items to various countries and big-league salary indicates the incentive to have high imports of items and administrations in the nation. Subsequently, movement has influenced probability to the nation regarding creation and economy with extraordinary GDP (Corbu, 2020). The accessibility of chance in the nation has made the country to have high relocated representatives to have powerful utilization of economy with the executives of assets. Relocation has been driven from various nations in country because of its adaptability in compensation rate and high chances. The expert development and accomplishments in the nation signified the movement strategy of the nation to be compelling and approve for coming to and acquiring high chances. The high work, high compensation rate and high creation has affected the economy of country decidedly by serving the country and individuals.
Conclusion
The above study has given its focus over the changes that has been driven in the economy of the country and changes which are adopted by organization for meeting with the needs of environment. Different type of barriers which has been faced by the companies has also been demonstrated in the study which makes the circular economy impossible in the country.
References
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