Business – 6.1 External influences – Environmental | e-Consult
6.1 External influences – Environmental (1 questions)
Login to see all questions.
Click on a question to view the answer
Advantages
- Resource efficiency: By reusing materials, firms reduce raw‑material costs. Example: Philips refurbishes lighting equipment, extending product life cycles.
- Brand reputation and customer loyalty: Demonstrating commitment to waste reduction can attract environmentally conscious consumers. Example: Adidas’ partnership with Parley to produce shoes from ocean‑plastic.
- Regulatory compliance and risk reduction: Anticipating stricter waste‑management laws helps avoid penalties. Example: European manufacturers redesigning packaging to meet the EU Circular Economy Action Plan.
Disadvantages
- High upfront investment: Setting up reverse‑logistics and recycling facilities requires capital. Example: Dell’s closed‑loop recycling program required significant initial spending.
- Complex supply‑chain coordination: Tracking product returns and material quality adds operational complexity.
- Market acceptance risk: Consumers may be skeptical of refurbished or up‑cycled products, potentially limiting sales.
Overall, while the circular model can deliver long‑term cost savings and competitive advantage, firms must weigh these against the initial financial and managerial challenges.