BMT 8 - Circular Business Models

Question 1

Linear Business Models

Answer 1

Take, Make, Waste
Take resources
Make products
Consumer use them
Waste is created
Focus on profit

Question 2

Circular Business Models

Answer 2

Models where products are still created but environmental and social costs are minimized

Models where outputs can be fed back in as inputs

Question 3

Circular Supply Models

Answer 3

Instead of using scarce resources, aim for resources that are:

• Renewable
• Recyclable
• Biodegradable

As well as aiming to reduce the number of new inputs into the production process

E.g. use of solar power as a source of electricity
E.g. Starbucks reusable cup

Question 4

Resource Recovery Models

Answer 4

Instead of throwing away waste from production, aim to re-use this waste:

• Recycle the waste
• Reprocess the waste

E.g. reprocessing old cooking oil into biofuel
E.g. paying deposits on cans to encourage recycling

Question 5

Product Life Extension Models

Answer 5

Businesses aim to extend the product life cycle of current products rather than producing new ones

Instead of producing a whole new product, aim to upgrade parts of the existing product, through:

• Repair
• Remanufacture
• Resell

E.g. Apple selling restored versions of older phones
E.g. Patagonia will repair your clothes
E.g. IKEA will buy back your furniture in exchange for store credit

Question 6

Sharing Models

Answer 6

A system whereby consumers of a product share the same product reather than owning it individually

Someone has an aseet and shares it with another person (usually for a fee)

• E.g. vehicle sharing - Uber
• E.g. Property sharing - Airbnb

Question 7

Product Service System Models

Answer 7

• Consumers can choose to rent or lease an asset rather than buying it themselves
• The business is selling use of the asset rather than selling it outright

E.g. short-term vehicle rental - Lime bikes
E.g. Businesses that offer places to work

Question 8

Pros for Circular Business Models

Answer 8

• Aligns with society’s increased focus on Corporate Social Responsibility
• Improved brand image
• Can lead to lower costs or new revenue streams

E.g. IKEA store credit for second-hand furniture
E.g. Recycling waste from production

Question 9

Cons for Circular Business Models

Answer 9

May decrease profitability

• E.g. Encouraging consumers to repair their own clothes (PLE Method)

Consumers might not buy in

• E.g. They might not want the new product (PLE Method)