SWOT of circularity for organisations
Strengths and opportunities of the circular economy for organizations. Weaknesses and threats are related to the remaining strengths and opportunities of the current linear economy.
New revenue opportunities
New needs in supply chains or for end-users can generate new sales & profit
Disruptive & radical change
Strategic increases in resource efficiency, decreases in cost prices, substitute products & service etc.
System optimization
Additional value is created in the supply chain through efficiency or new additional values
System redesign/innovation
New markets can be entered or created by new processes or collaborations by radical changes in the way value is created
Readiness for inevitable change
Initiating or being at the forefront of change is the best way of managing inevitable change
Build organizational & personnel competencies
Overcoming the challenges of circular innovation in an early stage creates competencies crucial in the nearby future
Engage in future-proof networks/supply chains
New supply chain and network partners are needed for maintaining competitive relevance
Engage in future-proof networks/supply chains
New supply chain and network partners are needed for maintaining competitive relevance
Increased Tender requirements
Governments, businesses and consumers will make circularity a boundary condition for suppliers
Damage to organizational image
Demonstrating no apparent progress in circularity could damage corporate & government image
Supply risk of resources
Resource depletion, absolute scarcity, geopolitics and political instability are the main driver for circularity
Price increase of resources
Linked to the supply risk and the interconnectedness of resources and scarcity price volatility & increases occur
Increased governmental intervention
Environmental regulations and legislation put on production & supply chain processes are expected to grow
Legitimacy for end-users & stakeholders
Concerns about production methods, mitigation of environmental and social harm and social responsibility of companies influence decisions on their purchases
Impact transparency by reviews, NGOs etc.
Availability of information by labels, quality marks, transparency of production processes, reporting and public activities of NGOs make for informed end-users
Circular procurement (government, b2b, consumers)
Front running companies, launching customers and progressive governments are regearing their procurement towards circularity
Multiple value creatie
Social, ecological, shared values are becoming more important as an addition to the purely material and economical values
Collaborative consumption
The growing trend of sharing products to reduce total cost of ownership, increase utility and reduce waste for all end-users
Open innovation & co-creation of value propositions
Customers, end-users and peer organizations become partners in a shared innovation approach leveraging impact and reducing time-to-market and costs
Post-consumerism funding & financing
Although investment money seems abundant, truly attractive funding will increasingly require demonstrable circularity (progress)
Complexity of organization and management
More stakeholders require more organizational activity, structures and routines and more information needs to be generated, exchanged and processed
Network/supply chain interdependency issues
Closer collaboration increases the dependency of partners on each other often thought to be diminished/controlled (trust, joined benefits, dependency, confidentiality etc.)
Internal & network information need
New & additional information is needed on materials, components, products and production, distribution & recycling processes
End-user emotional attachment & intangible values
When there are emotions or intangible/priceless values attached to a product renting, leasing or other collaborative use is difficult
Transaction costs (in non-standardized supply chains)
Controlling collaboration in contracts or via collectively developed coordination systems can increase transaction costs if there is no common ground to work with
Risk premium (in non-standardized supply chains)
If the interdepency is high and the perceived trust and performance transparency low partners might add risk premiums in their cost pricing
Competitive advantage of linear models
Sticking to an existing business model and keeping all focus on its profitability van create competitive advantage in the short term
Abundance of (some) cheap raw materials
| Although many materials will become scarce in the short term specific sources or political reasons could maintain a low cost abundance |
Substitutes for scarce materials
| The economical urgency for circularity might decrease if the concerned raw materials are replaced by (short term) abundant substitute resources |
Lacking awareness & urgency in society and business
Knowledge, motivation and incentives for multiple value consumption are still relatively low
Short term horizon of (some) shareholders
Shareholders with a short-term (financial) agenda still seem to dominate corporate governance
Required system transition
Financial, organizational, institutional, technological and societal aspects of our current sociotechnical system benefit a linear model
Up-front investment costs
Changing to a service model initially needs more investments than a model with one early transaction
Long(er) time horizon of revenue generation
Due to the spread of income larger capital reserves are necessary
Mis-interpretation of circular principles
Circularity is used in various definitions and mis-alignment of the process and benefits can cause problems and mistrust between stakeholders