Circular Economy: Theoretical and Practical Perspectives for BAPCO

This report examines the circular economy, a regenerative and restorative design aimed at reducing waste and promoting resource reuse. It analyzes both theoretical and practical perspectives, including the concepts, characteristics, and drivers of a circular economy. The report explores the application of circular economy principles to the Bahrain Petroleum Company (BAPCO), discussing its business model, economic, social, and environmental benefits, and its role in job creation. It also covers circular supply chains and their importance. The report concludes that adopting a circular economy model offers significant advantages for businesses, the environment, and society, particularly in fostering sustainable practices and creating new employment opportunities. The report highlights how BAPCO can benefit from this shift.

Running Head: CIRCULAR ECONOMY 1
Managing Operations and Supply Chain

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Table of Contents
Introduction......................................................................................................................................3
Organization Background................................................................................................................3
Theoretical Perspective....................................................................................................................4
Concept and Characteristics of Circular Economy......................................................................4
Main Drivers of Circular Economy.............................................................................................6
Next-life Products and materials..............................................................................................6
Product Transformation............................................................................................................6
Risks associated with supply and prices...................................................................................6
Circular supply chains supporting circular economy......................................................................7
Role of Circular Economy in Promoting Job Creation....................................................................8
Practical Perspective........................................................................................................................9
Company’s Business Model.........................................................................................................9
Economic Benefits.....................................................................................................................11
Social Benefits...........................................................................................................................13
Environmental Benefits..............................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Introduction
In developed countries, the concept of circular economy has become an effective practice in oil
and gas sector. Circular economy is regenerative and restorative design that relies on process-
side innovation process. The concept of circular economy aims at redefining the products and
services of organization to develop waste out for reducing the negative effects (ACCA, 2016).
This model of circular economy is focused on manufacturing the products and services and part
for the remanufacturing, recycling and reuse. It offers several opportunities to the public and
private companies to adopt great innovation and have better growth in business processes. There
are so many organizations in Kingdom of Bahrain, which are moving to circular economy. This
report analyzes both theoretical and practical perspectives of circular economy. Theoretical
perspective includes the characteristics and concepts of circular economy and major drivers of
circular economy.
Second part of the report examines the practice perspective of the circular economy. It includes
the role and importance of circular economy in developing new job and employment
opportunities. It includes the discussion about an organization of Kingdom of Bahrain, i.e.
Bahrain Petroleum Company (BAPCO). Furthermore, the concepts of circular economy are
applied to the business model of above organization. At the end, the report includes economic,
social and environmental advantages from this type of economy. It also examines that how
implementation of circular economy business model is assisting in creating job and employment
opportunities.
Organization Background
Bahrain Petroleum Company (BAPCO) is well-established in oil and gas industry in Kingdom
of Bahrain. In Canada, the organization was founded in the year 1929 in by Standard Oil
Company of California for business activities in Bahrain. In the year 1999, current Bahrain
Petroleum Company was formed when Bahrain National Oil Company amalgamated with
BAPCO. It is headquartered in Awali, Bahrain. BAPCO is an oil company that is operating its
business in the area of oil exploration, production, drilling, refining and selling and marketing

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(Bapco, 2017). Currently, it operates 260000 barrel per day oil refinery in Bahrain. Now, the
company is owned by Government of Bahrain, as all the shares of the company are taken over by
the government. The organization also deals with the exports, vending, refined products and
unprocessed oil to different locations around the world. Thus, the organization has both domestic
and international customers for its petroleum and oil products. The organization is adopting
Avaya’s technology to change its infrastructure (BizBahrain, 2015). The implementation of this
technology has allowed the company to incorporate the operations and to make its tools safe for
operations.
Theoretical Perspective
For any concept, theoretical perspective is very important part of strategic framework that can be
adopted to manage any social and economic situation in organizational environment. A
theoretical perspective includes different assumptions about that particular aspect. These
assumptions may answer the related questions for getting final outcomes. It is very important to
have a better understanding about the research, as it will assist in managing the idea and opinions
and make the concepts obvious to all concerned people (Andrews, 2015). The following section
of this report states the theoretical perspective of circular economy and its characteristics along
with its major drivers and advantages.
Concept and Characteristics of Circular Economy
Circular economy is an important concept that has attained worldwide popularity among
businesses. Circular economy is the terms for business models, which do not generate waste
material, but under this model, the firms reuse the resources and materials again. It can be stated
that it is an approach of business that focuses on reusing and recycling all things, which the
company possesses. Circular economy is opposite to the linear business model that works on the
principles of producing, using and then disposing (Anastassacos, 2016). It shows that
manufacturing management processes effectively and treats the waste material as valuable
material for economic purpose. European Commission stated that using the resources more
appropriately will help in carrying new growth and employment opportunities with decreasing
the wastage and oil emissions. There are various leaders and managers, who are gaining different
business opportunities by the adopting the concept of circular economy. The organizations

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implement this concept with objective of maximization of resource productivity. Circular
economy is a restorative business model, in which firms are developing different approaches to
reestablish, regain and reuse the materials and assets, which were already utilized in is earlier
product life cycle (Babar and Gardner, 2016).
Circular economy consists of some specific characteristics, which are very much different from
linear model. These features are like a pillar of this business model. The major characteristics of
circular economy are stated below;
 The business model with circular economy aids and improves the bio-diversity by
utilization of human activities and processes. The main principle of using circular
economy is to safeguard the complexity. Material and energy losses are endured for
protecting the biodiversity (Clift & Allwood, 2011).
 Mainly, this concept is emphasized on production systems and utilization, in which each
activity is taken as that waste material is preserved for other usage by improving that
material at the end of product life.
 In circular economy, the major emphasis is made on improving and increasing the life of
products throughout the whole product life cycle. It can be done by improving,
sustaining, promoting, repairing and remanufacturing process.
 Other important characteristics of circular economy are versatility, adaptability and
modularity, which needed to be preferred in fast changing business environment. To get

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better results, organizations may use different systems and scales (Casadesus‐Masanell &
Zhu, 2013).
 Mainly, this business model has the capacity to resolve the issues related to pollution and
wastage. It offers a continuous cycle that safeguards and enhances the natural
environment and reduces the risks and challenges of systems by managing the stocks.
Main Drivers of Circular Economy
There are some business processes and activities, which work main forces, which drives circular
economy and supports to transform this economy model into reality. These forces of circular
economy are described below;
Next-life Products and materials
This is one of the major drivers of circular economy. This concept implies when a company can
enhance and re-situate the goods and materials after their utilization and keep them in the market
to earn money again and again (Freedman & Enssle, 2015). There are so many car companies,
which are the best examples for this. These organizations hand pick the cars and refurbish them
in their factory outlets. It decreases company’s cost of production on these products.
Product Transformation
This is a right thing that all the products and materials cannot be renovated and restored wholly,
but most of the products in a company are made of same parts, that have higher value. In
addition to products, materials also have the quality of getting implanted that makes them more
valued than original product (Hollander, Bakker and Hultink, 2017). With effective designing of
product and production abilities, manufacturers can place them to manufacture new products and
services. This factor forces the company to implement circular economy business model.
Risks associated with supply and prices
There are various firms, which believe that linear business model increases the risks related to
prices and supply disruption. Moreover, an organization may confront the risks of raw material
supplies. These types of risks are directing the company to adopt circular economy model in the
business activities and process of operation management (Johnson, Christensen and Kagermann,
2008).

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From the above drivers, it can be understood that circular economy is a significant concept
because it offers many benefits to environment, economy and society in the nation. The primary
benefits of this business model are for natural environment. This type of business model assists
in decreasing the wastage and reducing the dependence on the import of raw materials. The
approach of circular economy is different from traditional approach of disposal. This method
considers the limitations of environment by enhancing the renewable and recyclable sources with
the decrease in the utilization of raw material (Kun & Jian, 2011). It can cut the loss of emissions
and resources. There are some processes, which play an important role in this context, like;
communicating, re-utilizing, remanufacturing and recycling new and old products. These
processes can have a significant role in the management of products and resources and managing
their value. This concept is not just good for the environment, society and business, but it can
solve the issues related to unemployment. It in turn enhances the efficiency and productivity of
manufactured products (Lacy & Rutqvist, 2016). Implementation of circular economy can assist
the companies in decreasing the production and other related costs. It assists in reduction of
manufacturing expenses and costs.
Circular supply chains supporting circular economy
A circular supply chain is the process that places assets of organization in the use for a longer
time. This is the type of business model that decreases wastage at every phase of supply chain
management, i.e. from production to delivery of goods. Under this business model, the products
that flow in circular form, assists firm in increasing the usage of assets and decreasing wastage
by effective designing. The circular supply chain can avoid many hindrances and economic
losses in addition to value chain and adverse impact of traditional method of production that is
linear business model (Lewandowski & Mateusz, 2016). This type of supply chain aids the
execution of circular economy in a manufacturing organization. Under this model, adoption of
digital supply chain can enhance transparency and decrease costs of expensive transactions and
assist in establishing effective communication among producers and clients (Planing, 2015).

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Circular supply chain also helps in developing an effective inventory management system.
Execution of digital supply chain will assist in interacting and tracking all the devices that a
circular economy needs (Pan et al, 2015). Thus, it is stated that circular supply chain plays a
significant role in implementation of circular economy model. These types of supply chain have
the potential to decrease the risks of non-payment. In the process of circular supply chain, the
players of this system become buyers and suppliers of materials and products. There are so many
companies, which are implementing new business models for fulfilling the demands and
expectations of customers.
Role of Circular Economy in Promoting Job Creation
Adoption of circular economy concept can generate many job and employment opportunities in
nation, because it can consider the skills gaps in domestic unemployment and labor market. This
can generate the job opportunities in countries, where unemployment rate is comparatively high.
It constructs economic value by using and putting more labor and less resources in the processes.
Increased use of circular economy can decrease the rate of unemployment that is happening via

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regional and occupational disparity (Preston, 2012). This type of economy increases the
effectiveness and efficiency of the business activities and operations. It may have good impact
on the figures of employment of a country as it develops new jobs in restoration and promoting
the services and remanufacturing and recycling processes that are very labor intensive. The
company can hire the people in the repair and remanufacturing department.
Thus, it is generating the job opportunities for the population of the country, which is not more
educated and possess higher skills. In addition, selling the goods for re-production and reuse
adds more effective job opportunities in respective sector (Reh, 2013). In this way, it can be
stated that the approach of circular economy has capacity to improve manufacturing and
designing of the goods and ensure that manufacturing businesses recycle, remanufacture and
reutilize the products. This circulation of valued resources in economy helps the sector for
secondary goods in all the locations of nation that can produce several employment opportunities
in the country with higher unemployment rate (Tukker, 2015).
Practical Perspective
After gaining proper understanding about the theoretical perspective of circular economy, it is
very necessary to implement this concept to a real life organization, i.e. The Bahrain Petroleum
Company (BAPCO). This study will assist in understanding the overall impact, when a firm
implements the circular economy as its business model. The next paragraphs of this report
include the application of circular economy on Bapco.
Company’s Business Model
Bapco is mainly engaged with refining, exploration, production, storage, marketing, training and
development and taking various environmental initiatives in the Kingdom of Bahrain. The prime
customers of Bapco for oil and refined products are based in the India, the Far East, Middle East,
Africa and South East Asia. Bapco is a company that is implementing the business model, which
is completely emphasized on protection of environment and people. The business operations and
business model of Bapco are an example of arrangement of entity to thinking and modern
attitude of the business in the country (BizBahrain, 2017). The organization has set quality

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standards with security, trustworthiness, corporate social responsibility and environmental
safeguarding.
The organization is implementing a business model with circular economy and utilizing all the
energy resources by renovating the technologies. It can be more effective utilization of energy
and reutilize without consuming the energy resources. By implementing this circular economy
model, it can effectively use the energy resources and it can hire a team of expert and
professionals to organize a research and handle the area, where there is wastage of energy. The
company needs to do an effective planning to get the solutions for remanufacturing, recycling
and reutilizing current resources (Bocken, De Pauw, Bakker and Grinten, 2016). As the
organizations in China, Bapco can also adopt the air compressor renovation system that can be
used with the objective of energy saving. Under the model on circular economy, the company
can use the technology approaches, which will enable the entity to reduce energy utilization to
developing levels and reusing the remaining heat. These business operations and processes
indicate the restorative and regenerative business model of Bapco.

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The business model of Bapco is created by focusing on environment protection. Bapco is one of
the organizations in Bahrain that is implementing a practical approach to substantiate
environmental agreements of its operations. The firm has created eco-friendly environment
around the company’s site, like; tree plantation, clean water pool, Bird Park etc. Along with the
circular economy business model, the organization is using renovating technology in the systems
(The Bahrain Petroleum Company, 2009). It can use modern technologies for recognizing the oil
and gas, like; remote sensing, aerial surveys etc. As it is an oil company, so there is a need of
technology innovation for emitting and recycling of waste materials. Majorly, firm is focusing on
the production of value added items with wastes and filtrates.
Economic Benefits
Adoption of circular economy may have various benefits to the companies in Kingdom of
Bahrain. It can assist the company in increasing the efficiency and productivity of a business
entity. The organization may have an economic growth by implying this concept. If Bahrain
Petroleum Company implements circular economy model, it will help the firm in declining
different costs, like; operating costs, production costs, manufacturing costs and other associated
costs. The company can earn economic growth by combining the profits from circular economy
activities and decrease the manufacturing costs by use of inputs (Weetman, 2016). These
variations in input and output will influence the demand, supply and prices of products. By

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expanding the business processes and operations at Bapco, it will create more employment
opportunities in the area of reusing, recycling and renovating etc.
Unemployment rate is highest in gulf countries, like; Bahrain and Oman. The below stated graph
includes the unemployment rate of gulf countries.
The above graph indicates that The Kingdom of Bahrain has a constant rate at 3.70%. This job
creation rate is less than Asian and European nations. The organizations may have various
occupations, which are using circular economy. As per the past figures, waste and recycling
comprises a higher part of lower skilled and salaried workers, i.e. about 40%. In country,
repairing process require mid-paid workers, i.e. about 60 to 65%. As per the past assumptions
and computations, it is examined that by the year 2030, circular economy can develop more than
one lakh jobs and decline the unemployment rate (Bocken, De Pauw, Bakker and Grinten, 2016).
As per past calculation it can be stated that circular economy can develop more than 100,000
jobs and decline the number of unemployment by around 50000. If the companies will expand
the circular economy activities, then it would definitely double these figures. Decrease in
unemployment rate will enhance the economic conditions in country.
The below-given graph shows how implementation of circular economy will enhance the
employment rate in the kingdom.