Circular Economy Principles as Strategy for a Sustainable Business Model - A Case Study in the Norwegian Maritime Industry
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This master thesis explores and investigates how a Norwegian maritime equipment supplier, Kongsberg Maritime Subsea, has adopted circular economy principles to their business. The case company have developed a strategy containing processes and activities concerning some products that utilize key circular economy principles, which could be defined as a circular business model. The objective and purpose has been to provide a comprehensive overview of this circular business model and how circular economy principles has been incorporated, and identify challenges and possibilities for further growth in the context of corporate sustainability. To do this, three research questions have been formulated and answered in this thesis. A comprehensive literature review was conducted to provide a foundation for the study to fulfill the problem statement and purpose of the thesis, and to present state-of-the-art knowledge and practices regarding the researched topics and concepts. The initial review of the relevant literature revealed that the concepts of corporate sustainability, shared value creation, circular economy and sustainable business models are often mentioned in the context of sustainability and sustainable development. However, they have received criticism regarding the practical applicability, fuzziness and mixing of the concepts and how they contribute to sustainable development. The first research question sought to provide clarity regarding this by investigating how these concepts are interrelated and related to sustainable development. It was shown that these concepts are highly interrelated and have different roles and contributions in the context of sustainable development for corporations. Sustainable development when incorporated by corporations, can be called corporate sustainability. Circular economy, with its main objective of sustainable development, is by many viewed as the best way for corporations to approach sustainable development, and hence achieve corporate sustainability. Further, sustainable and circular business models are very important in a transition to and as enabler of circular economy, and thus for corporations to be sustainable. In this context, innovating new sustainable business models and adjusting existing ones is highly topical. Business model frameworks are an efficient tool in this regard to describe, break down, assess and analyze business models. A framework for circular business models is presented and described in this thesis. To fulfill the problem statement, research question 2 inquired how the case company have adopted the core circular economy principles reduce, reuse and recycle, known as the 3 R s, to their business. A comprehensive case study of the company is given in the empirical findings. The circular business model was explored and analyzed by using the presented framework, to answer research question 2. It was revealed that this business model mainly fosters reuse of materials and products by utilizing the circular economy principles repairing, refurbishing and remanufacturing. A comprehensive presentation and analysis of this circular business model and how they utilize these principles is given in this thesis. As per the problem statement and research question 3, the challenges and possibilities for further growth in the context of corporate sustainability for the case company has also been considered and identified. The case company can achieve growth in the context of corporate sustainability by further adopting circular economy principles, develop their circular business model and transition towards a circular economy. It is important that they have a conscious approach to the sustainability elements of this business model and the application of key circular economy principles in general to do this. They should also prioritize the development of the circular business model and the endeavors in second-hand markets to a greater extent than they currently do. This entails that managers must allocate more resources and provide a strategic focus to it. A possibility is to scale up this business model in the company to include more products and further investigate how it can become more circular. A line of inquiry for the latter is to consider how value can be recovered multiple times. Some of the challenges for further growth in the context of sustainability are the low priority this business model has at the case company, and the consequent sustainability aspects it entails. Change and an increased focus on this is necessary. Cannibalization is often considered a challenge and hinder for development regarding sale of used and restored products. However, it has been argued and provided research supporting that this should not be a major concern in this case. The relative low volumes and high levels of customization which the case company operates with on their products can be another challenge for further developing this model and to become more sustainable. The findings from the literature review provides clarity regarding the researched concepts and their interrelations, which was a recurring issue mentioned in literature, and this thesis provides a contribution in this regard. Moreover, the utilization of the framework to explore and analyze a circular business model of a specific manufacturing company to assess how circular economy principles has been adopted, and to identify challenges and possibilities for further growth in the context of corporate sustainability, can provide valuable insight and learning for others. The thesis has with this sought to contribute with knowledge to the SISVI project and to the field of research on the addressed concepts.