Essay on Circular Economy

The Bavarian Motor Works (BMW) epitomizes companies which have embraced the model of the circular economy (Hart 1995). The car manufacturing firm is a Germany multinational that engages in the production and sale of automobiles and motorcycles. BMW operates three major business segments which include Motorcycles, Automotive and Financial Services segments. Accord to Aaker (2006), the main customer target of BMW is the upper and middle-class social group aged 30-50 and in the midst of their careers. This report intends to examine the BMW's business model based on the circular economy aspects and evaluates the associated economic, social and environmental benefits. The transition involves technical cycles aimed at recovering and restoring products, materials, and components through the use of strategies such as remanufacturing, reuse, and repair as well as recycling.

In an attempt to trace back the notion of circularity, Lovins, Lovins, and Hawken (1999) argued that the concept has a deep philosophical and historical origins dating back to the industrialization era. Various schools of thought also claim that the idea of cycles is real-world systems and feedback is an ancient one. The concept first began to enjoy a significant revival in the industrialized nations in the aftermath of the Second World War. This period was characterized by the advent of the computer-based studies of non-linear systems, revealing the nature of complexity, unpredictability, and interrelation of the universe (Butterworth et al. The Main Drivers of the Circular Economy A circular economy, in its broadest context, is influenced by internal and external drivers.

Collectively, these drivers determine the number of benefits and opportunities accrued to the businesses that adopt the circular economy model. Externally, the circular economy is driven by market pressure and legislative policies while new profit opportunities make up the internal drivers. External Drivers There is a wide array of regulations which influence the circular economy of which strong environmental and tax policies are the most critical. A wide range of product groups is subject to complying with the extended producer responsibility regulations. This move is becoming a core driver for embracing the circular economy (De Winter 2014). Embracing the circular economic model implies the ability to create market differentiation by making services close to their customers. The novice model provides not only new possibilities for innovation and growth but also strengthens other models that offer access to natural products.

According to Moreno et al. (2016), there is a cost recovery which is realized through the sale of valuable second hand remanufactured, refurbished, repaired and recycled products and materials. Circular supply chains optimize efficiencies through the use of economic and environmental perspectives in the conversion of costs. Teece (2010) emphasizes that business enterprises can only cut down costs and maximize shipment weights if they partner with a team with global logistical experience. Packaging plays a critical role as a catalyst for the circular economy even though businesses tend to discard it. Packaging provides end-of-life opportunities if well harnessed well by business enterprises. According to Allwood et al. Application of Circular Economy Concepts on BMW 3. BMW’s Sustainability Strategy BMW established a sustainability strategy in 2009 across its value chain in all its basic process for the entire corporate divisions globally.

The company’s primary goal was to add environmental and societal value as well as improve its operations. Since 2009, the automobile firm has made sustainability it's strategic corporate objective (Wortmann 2015) and thus making its major projects measurable based on sustainability. The strategic move ensures that the decision-making process takes into consideration other aspects such as social and environmental other than considering the economic factors only. Unlike the pure fiber materials from the manufacturing waste which can directly be reused, the plastic-reinforced carbon fibers which BMW uses requires an additional separation process before it is reused. Group-Wide Environmental Protection BMW’s endeavors aim at making it the most resource-efficient premium provider in the automobile industry. The company plans to achieve this goal through the use of a comprehensive group-wide environmental management (United Nations 2011).

Accordingly, the BMW is tracking and monitoring the relevant environmental indicators before making its major investment decisions (BMW 2014). BMW derives its environmental protection guidelines from Agenda 21 and the ICC Charta for Sustainable Development (BMW 2014). The management of the sourcing of raw materials is the most challenging aspect of the supply chain management in today’s corporate world. This is partly due to the multi-layered global and dynamic nature of the supply chains. It has become highly difficult to trace materials from the source to the finished end product (Velte & Steinhilper 2016; European Commission 2014), and as a result, it is a challenge to achieve sustainability standards in raw material production. Despite the challenges, BMW has managed to approach the issue by focusing on selecting relevant and critical supply chain as well as raw materials.

Before embarking on using such supply chains, they are analyzed and assessed to ensure measures are taken for areas which need action (Govindan, Soleimani & Kannan 2015). • Setting comprehensive and reliable emission-reduction as well as fuel-saving targets which can enable firms to work towards achieving the targets and improve Research and Development. • The company need to be in a stable and sustainable economic condition to effectively transition to circular economy. To achieve this status, the company should have support customers who demonstrate consistent demand for its sustainable and innovative products. References Aaker, D. A.  Resources, Conservation and Recycling, 55(3), pp. Bautista Lazo, S.  Sustainable manufacturing: turning waste into profitable co-products (Doctoral dissertation, University of Liverpool). Blunck, E. Germany BMW's Sustainability Strategy of Evolution and Revolution towards a Circular Economy.

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