Sustainable Business: Circular Economy Model for Australian Post

This report analyzes how Australian Post can transition to a circular economic business model to improve financial performance and reduce dependence on raw materials. It recommends adopting circular design, use, and recovery models, emphasizing regeneration, optimization, and looping. The report justifies this shift by highlighting the positive environmental impact, waste reduction, and value creation through collaborative consumption and service-based models. It suggests evaluating value creation through profitability curves and value proposition analysis, considering design, collaboration, and information as key enabling factors. The ultimate goal is to convince senior managers and the board to adopt the proposed circular business model for sustainable growth.

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Introduction
Osterwalder et al (2014) defines a business model as the tool that describes the rationale
of how a company or organization creates delivers and captures value creation. A circular
economic business model therefore refers to business strategy that allows enables the
regeneration of raw materials and other production components while at the same time
minimizing waste and enhancing value creation. This paper seeks to identify how Australian Post
business model can become circular and give a recommendation why the organization needs to
shift to a circular economic business model.
1. Determine how can the organisation become more circular? Create and justify a circular
economy business model for your selected organisation. Your justification should include the
key sources of internal and external value creation.
Australian post is an Australian government owned company that deals with providing
postal services to both local and international clients. The organization offer postal services
ranging from; Mail delivery, parcels and logistics, Digital services, Agency services and retail
merchandise among others. A quick look at the performance of Australian post in the financial
markets reveals a worrying trend in revenue outcomes. For instance in 2015 the company
recorded a loss of A$381 million on the mail delivery side alone. We therefore recommend the
circular economic business model as the best business strategy to bring Australian post back to
profit. This model will assist the organization to improve its financial performance by reducing
its dependence on raw materials. Examples of circular business models include;
 Circular design model – In this model products , systems and the entire operating
function is designed to last longer. A higher residual value will in turn cut cost on
repair , upgrade or refurbishment of this systems since they have been built to last

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 Circular use models – This model on the other hand tasks itself with keeping
control over an asset while at the same time retaining its value. It largely involves
extending the service life of products and sharing services
 Circular Recovery models – This model concerns itself with reuse of available
resources. It considers recycling as a powerful tool to reducing cost and more
time effective as compared to extracting virgin material
Justification for adopting Circular economic business models
The positive environmental impact for adopting Circular Economic business model by
Australian Post cannot be overlooked. Being one of the biggest companies in Australia,
Adopting this model will enable it to manage waste from its factories while at the same time
minimizing its heavy dependence on imports of raw materials (Van der Pijl et al, 2016).
 Regeneration
This model encourages value addition to products. Circular business models such as
collaborative consumption and service based business models have seen many industries adopt
waste prevention, reuse and repair. This in turn has led to cost savings while creating value for
products as industries shift to renewable sources of energy (Gassmann et al, 2015).
 Optimization and looping
This model promotes sharing of products through optimization. This means that the life
span of the products can be prolonged through design and maintenance while at the same time
improving product efficiency. Another way would be analyzing the cost implication of keeping
components and materials in check through remanufacturing and recycling(looping) (Van
Renswoude et al, 2015)

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2. How would you evaluate & measure the circular value creation.
 Profitability curve
Value creation can be evaluated and measured in a number of ways. For starter we look
at the profitability curve before and after the model has been adopted by the organization. Any
changes on the curve can be measured thus giving the outcome of value addition
 Value proposition
Another way of analyzing value creation would be to measure the value proposition of the
proposed business model. In order to maximize value from a circular business model the
business will need to check the availability of the following enabling factors. This includes
design, collaboration and information. Success of any plan to maximize value will be dependent
on the availability of these factors. Thus in order to evaluate value creation in any business
models, strategists need to pay close attention to this three vital factors

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References
Gassmann, O.; Frankenberger, K.; Csik, M.2014. The Business Model Navigator: 55 Models
That Will Revolutionise Your Business. Financial Times Publishing.
Osterwalder, A.; Pigneur, Y.; Bernarda, G.; Smith, A.2014. Value Proposition Design: How to
Create Products and Services Customers Want; JohnWiley and Sons: Hoboken, NJ,
USA.
Van der Pijl, P.; Lokitz, J.; Solomon, L.K.; Van Der Pluijm, E.2016. Design a Better Business:
New Tools,Skills, and Mindset for Strategy and Innovation.
Van Renswoude, K.; Wolde, A.T.; Joustra, D.J.2015. Circular Business Models Part 2:
Overview and examples.