Key Idea: A linear business takes, makes and throws away; a circular one keeps products and materials in use. This topic is the five circular models and how a business chooses one.
What goes in and out
- Circular supply: renewable or recycled inputs, like sugar-cane cups.
- Resource recovery: turning waste into something useful, like crusts sold to a brewery.
- Product life extension: repair and rebuild, like the oven rebuilt for $6,000.
Using things fully
- Sharing: letting others use what sits idle.
- Celia's Cakes rents the oven three days a week: $450 a week.
- Product service systems: pay for the use, not the thing, like Brevo's coffee machines.
Choosing one
- Benefits: lower costs, new income, a better name with customers.
- Challenges: set-up cost, hygiene and control, customers' habits.
- Choose the model that fits the product: a loaf cannot be shared.
The words to know
| Word | Means | Do not confuse with |
|---|---|---|
| Linear business model | take, make, use and throw away | a business that recycles |
| Circular business model | a way of doing business that keeps products and materials in use | recycling alone |
| Sharing model | letting others use assets that would otherwise sit idle | selling second-hand |
| Product service system | the customer pays for the use of a product, not for owning it | a service business |
Name the model from what the case describes, then weigh what it saves or earns against what it costs and risks, with the case's figures.
Exam-style question
The Mill Lane oven stands idle after the night's baking. Celia's Cakes offers to rent it from 10 a.m. to 4 p.m. three days a week at $25 an hour. Explain one advantage and one disadvantage for Lena's Bakery Ltd of this sharing model.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.
Important: Recycling is only one idea. Name which of the five models the case shows, and say why it fits this product.
Tap each card to check yourself.
Sugar-cane takeaway cups: which model? Circular supply. A renewable input in place of a single-use plastic one.
Crusts and leftovers sold to Old Forge Brewery? Resource recovery. Waste becomes another business's input, and brings in $2,496 a year.
Rebuilding the oven instead of buying a new one? Product life extension. It keeps the asset working for longer.
Why can't loaves suit a sharing model? A loaf is eaten once; sharing works for assets used again and again, like the oven.
One challenge of going circular? Set-up cost and new processes, and customers may not change their habits.
Paying per cup for a coffee machine? Product service system. Brevo owns the machine and charges 12 cents a cup.
Exam tips
- Name which of the five models the case shows.
- Weigh benefits against challenges with the case's figures.
- Say why the model fits this product, or why it does not.
- Circular is more than recycling.
- Every point needs a detail from the case.