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Circular economy business models represent a fundamental shift in how companies create, capture, and deliver value—and this shift is central to sustainable business innovation. You're being tested on your ability to distinguish between models that extend product life, models that recover materials, and models that change ownership structures entirely. Understanding these distinctions helps you analyze real-world business cases and recommend appropriate strategies for different industries and contexts.
These principles demonstrate core concepts like value retention, resource decoupling, systems thinking, and stakeholder collaboration. When you encounter exam questions about sustainable growth strategies, you need to know not just what each model does, but why a company would choose one approach over another. Don't just memorize definitions—know what problem each model solves and how it creates competitive advantage while reducing environmental impact.
These models fundamentally restructure the relationship between producers and consumers. By shifting from selling products to selling outcomes or access, companies retain control over materials and have built-in incentives to design for durability.
Compare: Product-as-a-Service vs. Sharing Platforms—both reduce individual ownership, but PaaS maintains a one-to-one company-customer relationship while sharing platforms enable peer-to-peer or multi-user access. If an exam question asks about asset-light strategies for startups, sharing platforms are your best example; for manufacturer control over product lifecycle, choose PaaS.
These models extract maximum value from products already in circulation. The underlying principle is that the energy and materials embedded in existing products represent sunk environmental costs—extending their useful life delays the need for new production.
Compare: Repair vs. Remanufacturing—both extend product life, but repair addresses specific failures while remanufacturing systematically restores entire products to certified standards. Remanufacturing typically occurs at centralized facilities with specialized equipment, while repair can happen locally or even by consumers. For FRQs about industrial symbiosis or B2B applications, remanufacturing is the stronger example.
These models focus on what happens when products reach end-of-life. The goal is to maintain materials at their highest possible value—and different approaches achieve different levels of value retention.
Compare: Recycling vs. Upcycling—recycling typically involves industrial processing to recover raw materials, while upcycling uses creative design to transform waste into higher-value finished products. Recycling scales more easily but often loses material value; upcycling preserves or increases value but requires design expertise. When discussing circular economy metrics, note that upcycling better achieves the goal of maintaining materials at highest value.
These models address what goes into production rather than what happens during or after use. By rethinking material inputs, companies can reduce environmental impact before products even exist.
Compare: Circular Supplies vs. Resource Recovery—both reduce virgin material extraction, but circular supplies focuses on input selection (what you start with) while resource recovery focuses on output capture (what you reclaim). A comprehensive circular strategy typically combines both: sourcing sustainable inputs AND recovering materials at end-of-life.
| Concept | Best Examples |
|---|---|
| Ownership transformation | Product-as-a-Service, Sharing Platforms, Take-Back Systems |
| Value retention through longevity | Product Life Extension, Repair and Maintenance, Remanufacturing |
| Material loop closure | Recycling, Resource Recovery |
| Value enhancement from waste | Upcycling, Remanufacturing |
| Supply chain sustainability | Circular Supplies, Take-Back Systems |
| Local economic development | Repair and Maintenance, Remanufacturing |
| Design-dependent effectiveness | Product Life Extension, Recycling, Take-Back Systems |
| Digital platform enablement | Sharing Platforms, Product-as-a-Service |
Which two models both reduce individual ownership but differ in whether the company or other consumers provide access? Explain how this difference affects manufacturer incentives.
A consumer electronics company wants to recover rare earth metals from old devices. Which model addresses this goal, and what complementary model would ensure devices actually return to the company?
Compare and contrast recycling and upcycling in terms of scale, value retention, and competitive advantage. When might a company choose one over the other?
An FRQ asks you to recommend a circular economy strategy for a furniture manufacturer concerned about volatile lumber prices. Which models would you combine, and why do they work together?
Rank these three models by how much embedded product value they preserve: recycling, repair, remanufacturing. Explain the principle behind your ranking.