Role Of International Strategic Management Within An Organization

Question

Task: There has been a lot of discussion over the last few years about how industries and businesses need to adapt their strategies to take into account the Circular Economy (CE). CE is about changing from our dead-end, wasteful ‘take, make, dispose’ linear production strategic approach to one in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life (http://www.wrap.org.uk/about-us/about/wrap-and-circular-economy Accessed 01/10/19).
Please see https://www.youtube.com/watch?v=zCRKvDyyHmI&t=60s and https://www.youtube.com/watch?v=A5wn_iinbxw for an understanding of the Circular Economy.

What you are required to do in this assignment
Explain the key concepts behind the Circular Economy. Giving examples, discuss the barriers for businesses who want to transition to the CE? Give examples of businesses that have managed to successfully embrace the CE analysing why?

Answer

1. Introduction
International Strategic management is a planning process which has aimed the developing strategies so that the organisation can expand and then compete internationally. In the process of development, there is always a need for strategic planning (Rothaermel 2017). There are four different types of strategies that can be used internationally. This will be helpful in operating businesses. It includes transnational, global, multi-domestic and international strategies. Management of these strategies is quite important for achieving the objective. It includes decisions related to products and services. It will be useful for companies at a time when they are entering and handling the competition. Market size can be increased through International Strategic management. There are economies of learning and scale. The companies are always in search of some techniques between the competence and resources of the organization and global environment where it is operating. Further, there will be a discussion on the circular economy. Some companies have already taken a circular economy. The barriers for the business in this topic of International Strategic management will be seen.

2. Key Concept of Circular Economy
The alternative approach to the traditional linear economy is known as the circular economy (Geissdoerfer et al. 2017). Here all the resources can be in use for a long time period so that maximum value can be extracted. Further, the products and services can be recovered and regenerated at the end of their service life. There is a 3-R approach in case of a circular economy. It is having to reduce (using the minimum amount of raw materials), reuse (maximum reuse of components) and recycle (raw materials are reused at high quality). It is mainly promoting the use of bio-degradable products. The manufacturing of materials is not going to be damaging the environment. The main aim of the circular economy is to uncouple the product and get into a new life (Lacy and Rutqvist 2016). This is possible by using eco-friendly materials into the production cycle.

Figure 1: Circular Economy
(Source: Wrap.org.uk 2019)

2.1 Circular Economy Principles
There are 10 principles which show how the circular economy should work within an organisation to support International Strategic management.

• Wastes are becoming resources and this is the main feature. The biodegradable materials are returning to nature. The materials that are non-biodegradable are being reused.
• The second use is the reintroduction of products in the economic circuits that are not corresponding to the needs of the customers.
• There are some products that can be reused. Sometimes there are some parts of the products which can be used to elaborate the new artefacts.
• Reparation is generally to figure out the damage products.
• In this principle, recycling is done. Here the waste materials are being used for making something new.
• Valorisation is done where the energy is being harnessed from the waste that cannot be recycled (Lewandowski 2016).
• In functionality economy, the main aim of the circular economy is to reduce product sales in many cases. It is there to establish a system of rental property. When the main function of the company is completed then it is dismantled for using the parts that are valid.
• Energy is generated from renewable sources so that the elimination of fossil fuels can be handled. The product will be recycled and reused.
• Eco-design is another principle in the circular economy. Eco-design concepts are integrated by their environmental impact concern for the complete life-cycle of the product (Kalmykova, Sadagopan and Rosado 2018).
• Territorial and Industrial ecology is where an industrial organization is established where the optimal management of stocks, flow, energy and services are managed.

2.2 What is the importance of circular economy on initiating International Strategic management in an organization?
Circular Economy and International Strategic management are the two important aspects for organisations in many ways. It provides a new set of opportunities for the growth of the companies. Overall waste is getting reduced. There are helpful in driving the productivity of the resources. There is more competition in the economy due to the circular economy. The companies will be in a better positive for addressing the resources that are emerging. Circular Economy will be useful in handling the issues or scarcity of resources in the near future (Korhonen, Honkasalo and Seppälä 2018). The impact of the environment can be managed through the production and consumption of products in the countries. The population in the world is growing each day and so is the demand for raw materials. However, there is a limited supply of resources. The countries are dependent on each other for the supply of raw materials. This is creating a major impact on the environment. The energy consumption is increasing and there is a huge amount of CO₂ emission. But there are some smart ways through which CO₂ emission can be lowered.

2.3 Benefits of Circular Economy
There are some benefits through this method to the environment and also the organisation. The details of it are given below.

• Circular Economy helps to measure waste prevention and eco-designs (Ghisellini, Cialani and Ulgiati 2016). The materials can be re-used so that the companies won’t have to face some losses. The annual rate of greenhouse gas emission will also be reduced through this method.
• The companies should move towards circular economy because it provides some benefits like environmental pressure is getting reduced, the security of raw materials are increasing, growth in the economy, increasing competitiveness and creating jobs.
• It is the duty of the customers to provide the products with more durability. There are many innovative products which will be increasing the quality of life. It will be helpful for the organisation to save some money in long-terms.
• A business can be built through waste in case of the circular economy. There is huge growth in the economy and hence the living standards have increased. Companies are trying to manage their chains of waste supply.

2.4 Impact of Circular Economy in the International Strategic management
The circular economy is using the model of taking, make and dispose of. Here resources are playing a crucial role in the organisation and the environment. There are some reports which show that circular economy can save around $711 billion annually. Many new technologies are emerging and hence companies are transforming their ways of doing business. This value is being created from a circular economy. Most of the companies are using materials as a service. This is happening because of subscriptions. Through this technology, companies can access their products without increasing the product manufacturing. Researchers are trying to build layer by layer. The waste plastic materials are being used for the products (Rizos et al. 2017). Then there is 3-D printing technology. The runways in fashion shows are getting recycled. China’s waste is being banned. The issue of marine plastic is getting reduced. There are some initiatives where the companies are being encouraged to replace polystyrene.

3. Barriers for businesses moving towards the CE
It is not easy to implement a circular economy in business practices. There are many barriers which need to be handled while applying green and circular economy. Each of the barriers is described below in details.

Environmental Culture
There is heterogeneity among the various sectors of an organization. They are having some methods for responding to the green solutions in terms of management and organizational regime. Managers are having the maximum amount of power for making some strategic decisions. There are some employees who are having a positive outlook towards a green business. However, some of the employees are not interested to contribute to the green business. The companies are willing to adopt some green measures and attitudes for green policies but it is depending on the sector which they are operating.

Financial Barriers
The cost of green innovation and revising the business model according to it is a huge barrier for the company. This requires a lot of finance from the organization. There are upfront costs for such type of investment. A certain pay-back period is quite important for organisations. Most of the companies are sensitive to such additional cost in their business from the green activities. There are some studies which show that companies are not having resources and capability for establishing and managing any kind of recycling scheme. There is a lack of finance and hence they don't feel like moving towards a circular economy. A survey was conducted in the United Kingdom which showed that small companies are not looking for different ways to recycle their waste (Ranta et al. 2018). They consider the circular economy as a less favourable option. Sustainable performances of the companies could improve if they use some innovative method of recycling. There are some staff and management restrictions and hence they are not supporting the government grants and actions.

Lack of Information
One of the biggest barriers in the organisation is the lack of information on the circular economy. Companies are unable to implement this method of International Strategic management because employees are less aware of it. There are some studies which indicate companies are neglecting the financial gains that can happen through efficient practices of the resources. However, they feel it is quite costly for the business. There are times when companies show their interest in sustainability issues. In a survey, it was interesting to know that many people had never heard about the circular economy and International Strategic management. They did not know the aspects like recovery and re-use of waste materials. Companies were putting efforts for repairing and recycling. Some information on circular economy provided the organisations to identify the waste management systems so that new business opportunities could be unlocked.

Lack of technical knowledge and skills
According to many studies, it is clear that employees are lacking some of the internal technical skills (Ritzén and Sandström 2017). This obstacle is preventing the companies to take up a circular economy. They are unable to take advantage of this economy and its opportunities. The companies are lacking some technical capacity for identifying the issues. They want to reduce the impact of the environment through some cost-saving methods. However, they are just concentrating on the technologies that are having or are familiar with. There are no new suggestions for technical solutions. 

Less support from the demand and supply network
The customers and suppliers are not having proper environmental awareness (Rizos et al. 2015). This is a huge discouraging factor for the companies. The decisions of the customers are usually influenced by sustainability criteria. However, this is not being the highest priority. External stakeholders must participate in green supply chain initiatives. This is having a low rate of absorption. The companies are of small size and hence, there are little bargaining power and influence on the suppliers to engage in sustainable activities. The suppliers are generally fostering the greener supply chain because of its cost which would be harmful to competitiveness.

Burden of Administration
There is some administrative burden when the companies are transiting towards a green business. This is coming from the environmental legislations. There is a frequent demand for finance that is unaffordable. Companies are aware of environmental national legislations. But they are lacking some specific knowledge and capacity. They are completely relying on the external consultants for meeting the obligations. This is entailing some extra costs that are significant to the companies. Monitoring and reporting the data of the environment is a complex process and it needs to be submitted to different authorities.

Lack of support from the government and effective legislation
The government of different countries are not encouraging the companies to opt for a circular economy for International Strategic management (Kirchherr et al. 2018). There is no proper provision for training, funding opportunities, taxation policies and import duty. A strict framework is lacking and there is no integration of green solutions in the operations. There is no such effective enforcement mechanism for environmental improvements. There is considerable space for improvement in the companies for environmental policies.

4. Businesses that have successfully embraced the use of CE
By now industries roaming about the term corporate sustainability has generally heard about a circular economy where it has the potential to solve the mounting waste issue around the world by using the concept of doing away the waste altogether. There are certain industries that made their transition from a linear economy to a circular economy, making more environmental sense and initiating a long period business (Geissdoerfer et al. 2017). With the circular economy, big industries like DELL, timberland and even start-ups are experimenting new concepts for forge new business economic models and buttress already existing ones.

LanzaTech - Founded in the year 2005, LanzaTech located in Chicago, United states applies the principles of the circular economy to carbon by recycling and turning carbon waste from "liability to an opportunity". The industry has adopted International Strategic management approach and used the process of “Patented microbe technology” for converting rich carbon waste and its residues into valuable chemical fuel and products by formulating the process of gas fermentation. The industry mainly targets the carbons produced from different companies, such as Oil refining industries, steel companies and chemical industries as well as targets gases which are generated from agricultural waste, forestry and municipal waste. The company is turning “global carbon crisis” into feedstock opportunity by displacing about 30 per cent of the crude oil. In return, it is also reducing carbon dioxide emission by approximately 10 per cent (lanzatech.com, 2019). 

The industry is recycling carbon generated from off-gas industries. Syngas which is generated from biomass sources, organic waste, agricultural waste and recycled biogas through which LanzaTech can easily reduce the carbon emission and indulge in making new products for "circular Carbon Economy”. The process can be similar to that of a brewery, and according to the company- instead of using yeast and sugars; they make use of microbe technology and waste gases for producing chemicals and fuels. The process is a part of International Strategic management which easily recycles the waste before being emitted and also reduces the pollutants and emission of particulates by 85 per cent, which is the driving economy a lot.

DELL- In recognition for raising the concept of “E-waste epidemic”, rapid technology and shortening the lifespan of the products have been contributed to 42 million tons in the year 2014, which made Dell take first steps and be inclined towards “circular supply chain”. The company has been announcing their progress against the initiatives taken for the circular economy which included spread and expansion of “closed looped recycled plastic supply chain” and also introduced reclaiming of carbon fibre materials into different products. `Circular economy concept of Dell aims at reducing the waste concept so that the resources can continually circulate within the economy (delltechnologies.com, 2019). 

This is done for making materials easy to get prepared, recycled or remanufactured. The materials are returned in “end of life products” to start Dell's production process. Dell has been making environmental sense and it has been compelling a commercial logic where the circular economy has represented 4.5 trillion dollars opportunity which would be creating 400,000 jobs by 2025. Dell has been incorporating circular economy by reusing the resources over a long period for dedicating their concern towards environmental responsibility and also towards eco- friendly initiative (Tukker 2015). With the effective implementation of International Strategic management, Dell has been recycling old electronics, old computers to new products and has been touring “ocean-bound plastic to a recyclable packaging”. 

Since 2007, Dell has been collecting 2.1 billion pounds electronics, about 100 million pounds of recycled contents have been used since 2013 and it has been providing 23 years of easy, responsible and recycled service. With initiating circular economy, dell has pioneered technologies based on bio for packaging products to reduce environmental impacts. Continuous recycling is being done of products and resources instead of one-time use and discarding as well as Dell circular design has been reusing and recycling scrap products, turning them into innovative materials and uses. Dell has been initiating “2020 Legacy of Good plan” where two objectives have been established for cutting down the E-waste. It is making use of “50 million pounds of recycled” products and also recovering 2B pounds of the E-waste by the year 2020 (delltechnologies.com, 2019). 

Timberland-  Situated in the United States, the company has been the sole manufacturer of tires that have effectively participate into teaming up to produce tires which are meant to be reused and recycled into outsoles and footwear once their validity is over on roads (timberlandtires.com, 2019). 

The tires and the footwear’s used virgin rubbers and with this collaboration, it ensures that fewer tires are utilized for fuels and may end up polluting the land through new return chain tire custody process. The worn-out tires which can no longer be used in cars are set aside by the tire retailers for recycling it after customers have purchased the replacements. The company initiated International Strategic management successfully. The tires are shipped to northern America facility for recycling to be turned into crumb rubber and then processed into sheets. Thus after that these sheets are shipped to Timberland outsoles retailers and manufacturer who compounds these sheets into various outsoles which are incorporated into shoes and boots (Lieder and Rashid 2016). Thus these recycled products, not discarded after one use are again recycles and sold by Timberland to drive the circular economy in their management.

Levi Strauss- With 24 billion shoes, clothes, textile are been discarded into landfills each year including jeans and old pairs of clothes which are discarded after one-time use. Thus for this Levi has been working on interesting long and short term circular economy principles which are aimed at recycling chunks of clothes and shoes to reduce the volume of waste generated on the landfills and also to create an infrastructure that will support the circular economy for 2020. The information covered in this section signifies that Levi Strauss has also implemented International Strategic management approach to boost their business (Korhonen et al. 2018).

According to their vision, the raw materials which are designed and manufactured make the use of 100 per cent recyclable products and are being sent to Levi's stores and retail markets. The customers use the products and after getting torn and old, wither those products are been donated or given to recycling at Levi groups. According to their statistical calculation, possibilities are been imagines where if every person in the US are recycling textiles and clothes instead of discarding them - it would save 30.6 million metric tons of Co2 emissions which is again equivalent to " traffic-free golden gate bridge" for more than 60 years, carbon-free Washington DC from now until January 2019^6 (levistrauss.com, 2019). Even Levi Strauss has been incorporating the recycling by collecting and repurposing the clothes and is changing it into things lie insulation for building, new cloth fibre and cushioning materials.

5. Conclusion
This report is focusing on international strategic management. There was a discussion on the circular economy. A brief introduction on the study of International Strategic management was provided. Then the key concept of the circular economy was explained. They are changing the dead-end through a linear strategic approach. In this way, the resources can be used for a long period of time. Materials can be regenerated from the products and can be used in some other product. The importance of this economy was given. It also included 10 major principles and some benefits. Circular Economy is benefiting the world in many ways. Further, some barriers were identified for the companies who were trying to implement a circular economy. It had some technical knowledge issues, no support from the government, and burden from the administration and environmental culture. Lastly, some examples of companies adopting International Strategic management are provided and how they had taken up a circular economy in their business.

Reference List
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