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Recognizing the threats accompanying the circular economy

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Where there are opportunities, there will always be threats. The circular economy isn’t unique in the sense that there aren’t things to be concerned about — there most certainly are. However, with proper planning, these potential threats can be addressed and eliminated.

One major threat is cost control. If a company were able to manage every step involved in the processing, manufacturing, distribution, and sale of a product or material, it would have total control over the pricing at every step. This isn’t good news for the consumer, especially if this item is a need and not a want. Even if it’s not just one company controlling every step of the lifecycle, a similar concern can be justified whenever multiple companies are involved — companies that could develop an anticompetitive business structure that would function as a cartel (a group of manufacturers and suppliers that collude with each other to dominate a specific market).

Another threat worth identifying is tied to the costs required to make the actual transition from linear to circular. It won’t be a cheap transition, by any means, and a major concern is that implementing policies that require businesses to adjust their operations to a circular format will be too much of a burden for small companies to accept. Requiring this transition would have a major negative impact on small businesses, which is certainly not a preferable outcome.

If you completed a business course in college, this emphasis on strengths, weaknesses, opportunities, and threats might ring a bell. Put them together and you have the pieces for a SWOT analysis, a common decision-making tool in the business world: strengths, weaknesses, opportunities, and threats. Figure 4-2 summarizes the SWOT analysis for moving to a circular economy.


FIGURE 4-2: Strengths, weaknesses, opportunities, and threats.

Circular Economy For Dummies

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