How Adopting Circular Economy Principles Can Improve Economic And Social Efficiency While Minimizing Environmental Impact: A Theoretical And Practical Perspective

Company background

The overarching concept circular economy implies how important the economy is in business purpose. From medium scale of business enterprise to the larger scale of business organization, economic strength is mandatory in every sphere. The transitioning process of a circular economy not only aims at reducing the negative impact on linear economy. However, this very specific study has focused to make detailed overview on how a business organization by using circular economic model in business can render immense business success. Both the theoretical and practical concept is presented in this very specific study. Unilever is the selected company for evaluating this study. Unilever is one of the most prestigious FMCG brands occupying a predominant place in the international market (unilever.com 2018). Headquartered in Netherlands this specific company aims to provide superior quality of product along with effective services.

Unilever is one of the most recognizable British FMCG brands already held a reputation in the international market (unilever.com 2018). In quest of expanding the entire business process in multinational countries the company has aimed to strengthen their economy. As a result, product variety can be rendered easily that can effectively draw the attention of international customers.

Lipton, Lux, Dove, Heart brand, Knorr, Dermalogica is the core products Unilever. While running the entire process of business in the international market Unilever aims to provide superior quality of products to the customers (Murray, Skene and Haynes 2017). In addition, this organization aims to provide variety of products so that customers from different geographical and psychological backgrounds and attitudes can easily focus on purchasing products and services. The entire operation process and service method associated with Unilever is very fast. The operation executives are well accustomed with the advancement of technology. In addition, the service providers have multi-lingual flexibility with the help of which the CRM managers intend to deal with the customers from any language backgrounds (Lieder and Rashid 2016). The service providers of Unilever intend to provide equal respect and dignity to the people of different cultural backgrounds and attitudes. People having language barrier can easily use non-verbal communication method as well. 

Before designing the products and services business experts of Unilever has segregated the number of target audience as per geographic, demographic and psychographic backgrounds (Jawahir and Bradley 2016). As per the geographic market segmentation the business experts have targeted most of the popular cities of UK such as London, Manchester, Bristol and Liverpool Cambridge and so on. As per demographic market segmentation people from 25 to 45 age group of people are the primary target audience. In addition, as per pricing strategy the business experts have followed low cost pricing strategy method (Wen and Meng 2015). As a result, both the average cost customers and premium cost customers can afford the products and the number of target customers will be high. As per psychographic market segmentation, customers from various psychological beliefs and values can easily use the products only when the business experts focus on product diversification (Heshmati 2017). This very specific study has pointed out that Unilever has targeted those people who are from different psychological and cultural beliefs.

Product and services

Based on the target audience the organization intends to follow product distribution methods and its positioning strategy. In order to position the brand in the international market the organization has focused to follow social media marketing strategy as well as traditional media strategy for grabbing the attention of target audience. Social media promotion and new media effect can grab the attention of large number of customers belonging to various geographical boundaries. On the other hand, traditional media can multiply the messages different regional markets. Therefore, Unilever has decided to follow both the two Medias for drawing the attention of customers and increasing the number of target market.

Circular economy is otherwise named as regenerative economy which aims to keep materials and products at its highest use. In other words, circular economy is a waste free process which primarily aims to reduce waste and population (Sauvé, Bernard and Sloan 2016). The primary purpose of waste free production is to keep the environment free from any kind of harm. However, after implementing this business model Unilever is successfully able to provide environmental friendly products. As a result, the customers from global market tend to show their interest in purchasing products and services from this organization. As a result, organization has already created brand awareness in the international market (Pomponi and Moncaster 2017). By using this model the business experts intend to analyze economic, social, financial and environmental factors so that the product managers do not face any challenges in designing the products.

As per organizational purpose, Unilever has aimed to focus on waste control management. The products which are served in order to draw customers’ attention are eco friendly. Numerous circular economy businesses have faced environmental and social risks due to the lack of management efficiency (Mohan et al. 2016). Unilever while designing the products have preferred the components in such a way that customers do not get the reluctant attitude while purchasing products. By using circular economic model the business experts of Unilever have decided to design products as per the below:

• The business experts motivates the manufacturers in designing the products by maintaining asset recovery process in quest of getting true cost materials (Martins 2016).
• The business experts always motivates the employees in developing products without wasting assets
• The business experts encourages the employees to develop the revenue model as a part of value chain

• Ensuring the business experts in implementing effective green public procurement. Economy is invested for effective marketing campaign, promotional activities and customer services
• The business experts of Unilever have reduced the transition cost of shifting materials. The business experts have aimed in promoting technical and structural innovation
• The organization has focused on social investment in order to gain organizational image and goodwill.

While evaluating the drivers of circular economy some of the major barriers have been identified:

• The lack of proper skills and competency in circular product deign
• Lack of identifying the needs and demands of cross cultural people
• Lack of convincing people about the importance of waste management and environmental friendly products
• Drawbacks in organizing appropriate policy coherence

The primary objectives of implementing circular economy were regenerating economy by managing waste materials of the products (Genovese et al. 2017). Delivering environmental friendly products to the customers is one of the most significant objectives of Unilever. Unilever is very much concerned in utilizing waste materials while designing the products. Consequently, they can invest minimum amount of money and get sufficient products (Smol et al. 2015). The sales volume in selling environmental friendly product is high. As a result, the organization can get immense economic benefits and facilities which reflect in the overall organizational growth.

Target customers

On the other hand, by implementing circular economy Unilever is successfully able to make their pricing strategy in average cost. As a result, medium cost customers are able to purchase the products and services from Unilever. In this kind of situation, the number of target customers becomes automatically high (Despeisse et al. 2017). Large number of target market increases the sales volume of the organization. As a result, both the customers and the service providers get equally benefited economically. 

Society is getting benefits from circular economy concept in two major ways. In order to gain organisational goodwill Unilever intends to commit numerous corporate social responsibilities which directly influence the society towards growth (Blomsma and Brennan 2017). By reducing transportation cost the customers having average income status can easily afford Unilever services. In addition, environmental friendly products have left major positive impact on the society (Elia, Gnoni and Tornese 2017). 

As already stated Unilever is working on waste management and natural products to make a different impression on FMCG market. In this kind of situation, the business experts have to face immense challenges in convincing the employees in managing wastes. However, this very specific study has focused to give in-depth overview on how the products manufactured in Unilever can maintain ecological balance of the society (Hagelüken et al. 2016). In addition, while maintaining promotional campaign the business experts try to create awareness in reducing environmental population. As a result, people would get to know the importance of purchasing eco-friendly products (Zink and Geyer 2017). On one hand, it can enhance environmental growth and on the other hand Unilever can maintain their profit margin scale.

The key notion of circular supply chain in business operation is “input equals output”. Circular supply chain followed by Unilever is constituted with five major steps. The employees primarily collect the waste materials in order to recycle or reuse the products. After collecting the waste materials, the concerned business executives store the wasted goods in order to start the de-contamination process (Bocken et al. 2016). Final stage is melting and re-packaging the materials. The entire recycling process is little bit time consuming. However, after manufacturing the waste material the business experts deliver the product in distribution centre for maintaining inbound logistics process (Scheepens et al. 2016). With the help of low cost transportation policy the entire product is delivered to the final destination.

The primary objective of circular economy supply chain is to deliver the product to the appropriate destination in the stipulated time. While maintaining global transportation Unilever prefers water transportation system so that they can avoid environmental pollution (Bocken et al. 2017). While maintaining regional transportation the organization prefers in using fuel efficient vehicles so that environmental pollutions can be controlled.

Theoretical part: circular economy: Concepts and operations

In this very specific part the practical implementation of supply chain operations and its economic and environmental benefit is systematically illustrated.

Figure: The supply Chain process followed by Unilever

(Source: As created by the author)

The circular supply chain operation that Unilever follows is already illustrated on the above mentioned diagram. After collecting waste materials the business executives intend to store, melt and manufacture the customer goods. After refurbishing the manufactured materials the executives deliver the product to distribution centre. By maintaining an effective inbound process with the help of advanced technology the entire operation process is very much systematic. The inbound materials are shipped and transported to the proper destination with the help of fuel efficient vehicles. As a result, the logistics executives have decided to transport the goods to proper destination within stipulated time. Fuel efficient vehicle protects the environment from being contaminated. 

While evaluating the supply chain process of Unilever it is quite evident that the organization primarily focuses on utilizing the wasted materials so that the number of product volume can be increased. As a result, the organization by investing equal amount of money can gain sufficient profit margin. At the same time, using recycling product helps in increasing green energy. While delivering the products the transportation process followed by Unilever is very much systematic. At the time of following the transportation system Unilever always focus on following fuel efficient vehicle with the help of which Carbon emission rate can be controlled. On the other hand, at the time of maintaining global transportation Unilever prefers water transportation system so that they can avoid environmental pollution. While maintaining regional transportation the organization prefers in using fuel efficient vehicles so that environmental pollutions can be controlled.

Figure: Economic social and environmental benefit of Circular Economy

(Source: As created by the author)

Circular economy has major impact on overall economic social and environmental factors. By using waste management the business experts can gain immense products in equal investment. Environmental friendly products help in maintaining ecological balance that reflects a positive impact on society. On the other hand, high profit margin can gain sufficient revenue of organization which increases business profitability. As a result, the organization can maintain business image and reputation in the international market.

This specific business model signifies that circular economy enables the organizational experts in investing limited amount of money and gaining high product volume with the waste management implementation. Waste management practices and product recycling methods are inseparably related to each other. Therefore, while following recycling and reusing process the company can concentrate on the environmental factors as well. Recycling products increases green energy of the environment. As a result, customers tend to show their positive outlook in using the products delivered by Unilever.

Concepts

Conclusion:

The study has provided detailed overview about the importance of implementing circular economy in business. The transitioning process of a circular economy not only aims at reducing the negative impact on linear economy. Unilever is one of the most prestigious FMCG providers occupying a remarkable position in the international market. While running the entire process of business in the international market Unilever aims to provide superior quality of products to the customers. In addition, the service providers have multi-lingual flexibility with the help of which the CRM managers intend to deal with the customers from any language backgrounds. As per the geographic market segmentation the business experts have targeted most of the popular cities of UK such as London, Manchester, Bristol and Liverpool Cambridge and so on.

As per psychographic market segmentation, customers from various psychological beliefs and values can easily use the products only when the business experts focus on product diversification. Circular economy is a waste free process which primarily aims to reduce waste and population. The primary purpose of waste free production is to keep the environment free from any kind of harm. Unilever while designing the products have preferred the components in such a way that customers do not get the reluctant attitude while purchasing products. Waste management practices and product recycling methods are inseparably related to each other. Therefore, while following recycling and reusing process the company can concentrate on the environmental factors as well. Recycling products increases green energy of the environment. At the time of following the transportation system Unilever always focus on following fuel efficient vehicle with the help of which Carbon emission rate can be controlled. On the other hand, at the time of maintaining global transportation Unilever prefers water transportation system so that they can avoid environmental. The business experts always motivates the employees in developing products without wasting assets While evaluating the drivers of circular economy some of the major barriers have been identified. The supply chain process of circular economy is practically implemented in this study.

References:

Blomsma, F. and Brennan, G., 2017. The emergence of circular economy: A new framing around prolonging resource productivity. Journal of Industrial Ecology, 21(3), pp.603-614.

Bocken, N.M., de Pauw, I., Bakker, C. and van der Grinten, B., 2016. Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33(5), pp.308-320.

Bocken, N.M., Olivetti, E.A., Cullen, J.M., Potting, J. and Lifset, R., 2017. Taking the circularity to the next level: a special issue on the circular economy. Journal of Industrial Ecology, 21(3), pp.476-482.

Drivers of circular economy

Despeisse, M., Baumers, M., Brown, P., Charnley, F., Ford, S.J., Garmulewicz, A., Knowles, S., Minshall, T.H.W., Mortara, L., Reed-Tsochas, F.P. and Rowley, J., 2017. Unlocking value for a circular economy through 3D printing: A research agenda. Technological Forecasting and Social Change, 115, pp.75-84.

Elia, V., Gnoni, M.G. and Tornese, F., 2017. Measuring circular economy strategies through index methods: A critical analysis. Journal of cleaner production, 142, pp.2741-2751.

Genovese, A., Acquaye, A.A., Figueroa, A. and Koh, S.L., 2017. Sustainable supply chain management and the transition towards a circular economy: Evidence and some applications. Omega, 66, pp.344-357.

Hagelüken, C., Lee-Shin, J.U., Carpentier, A. and Heron, C., 2016. The EU circular economy and its relevance to metal recycling. Recycling, 1(2), pp.242-253.

Heshmati, A., 2017. A Review of the Circular Economy and its Implementation. International Journal of Green Economics, 11(3-4), pp.251-288.

Jawahir, I.S. and Bradley, R., 2016. Technological elements of circular economy and the principles of 6R-based closed-loop material flow in sustainable manufacturing. Procedia Cirp, 40, pp.103-108.

Lieder, M. and Rashid, A., 2016. Towards circular economy implementation: a comprehensive review in context of manufacturing industry. Journal of Cleaner Production, 115, pp.36-51.

Martins, N.O., 2016. Ecosystems, strong sustainability and the classical circular economy. Ecological economics, 129, pp.32-39.

Mohan, S.V., Nikhil, G.N., Chiranjeevi, P., Reddy, C.N., Rohit, M.V., Kumar, A.N. and Sarkar, O., 2016. Waste biorefinery models towards sustainable circular bioeconomy: critical review and future perspectives. Bioresource technology, 215, pp.2-12.

Murray, A., Skene, K. and Haynes, K., 2017. The circular economy: An interdisciplinary exploration of the concept and application in a global context. Journal of Business Ethics, 140(3), pp.369-380.

Pomponi, F. and Moncaster, A., 2017. Circular economy for the built environment: A research framework. Journal of cleaner production, 143, pp.710-718.

Sauvé, S., Bernard, S. and Sloan, P., 2016. Environmental sciences, sustainable development and circular economy: Alternative concepts for trans-disciplinary research. Environmental Development, 17, pp.48-56.

Scheepens, A.E., Vogtländer, J.G. and Brezet, J.C., 2016. Two life cycle assessment (LCA) based methods to analyse and design complex (regional) circular economy systems. Case: Making water tourism more sustainable. Journal of Cleaner Production, 114, pp.257-268.

Smol, M., Kulczycka, J., Henclik, A., Gorazda, K. and Wzorek, Z., 2015. The possible use of sewage sludge ash (SSA) in the construction industry as a way towards a circular economy. Journal of Cleaner Production, 95, pp.45-54.

Unilever.com, 2018. Together We Can Change How The World Does Business. Available from https://www.unilever.com/ Accessed on 2018.

Wen, Z. and Meng, X., 2015. Quantitative assessment of industrial symbiosis for the promotion of circular economy: a case study of the printed circuit boards industry in China’s Suzhou New District. Journal of Cleaner Production, 90, pp.211-219.

Zink, T. and Geyer, R., 2017. Circular economy rebound. Journal of Industrial Ecology, 21(3), pp.593-602.