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Organization Background

 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.

 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 (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.

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 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 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.

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;

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.

Concept and Characteristics of Circular Economy

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.

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).  

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.

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).

Main Drivers of Circular Economy

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.                                                                                                                                    

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 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).

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.

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 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.  

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.

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 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.

Implementation of circular economy model by Bapco can enhance the social life of people in Kingdom of Bahrain. It will enrich the social status to another level. This company in Bahrain can save the lives of people by decreasing pollutions, like; water pollution, air pollution etc. Past data of country shows that people were dying due to diseases that are caused by wastage and pollutants. So, circular economy business model and supply chain can impact the lives of people positively. It is generating new employment options for the public (Zott, Amit and Massa, 2011). The individuals, who do not possess required skills, they can also get the jobs in recycling and remanufacturing processes.

It has already discussed in the report that environment is a significant concern for oil and gas industry firms. These companies are establishing standards for protecting the environment and its people. Bapco is resisting the emission of waste materials in natural sources, like; sea, river etc. In addition, company is reducing the influence of environmental problems by considering extraction process. A research shows that 5% of total emission is done by oil and gas sector. Thus, implementation of circular economy can reduce the use of new items (Bocken, De Pauw, Bakker and Grinten, 2016). Utilization of recycled goods can decrease the needs for energy demands.

Conclusion

From the above report, it can be concluded that implementation of circular economy is essential for unlocking the efficiency and effectiveness in the world. The above discussion includes different aspects related to circular economy and its application to Bahrain Petroleum Company. The concept of circular economy offers various benefits to the people, economy and environment. It assists in fulfilling the needs of customers for better products. This business model can enhance the productivity of resources and business. It plays a significant role in developing new employment options in the country. Thus, it can be said that circular economy is very important aspect for a company in any industry.

References

ACCA, 2016, The Circular Economy- A Revolutionary Model, Retrieved from https://www.accaglobal.com/in/en/member/member/accounting-business/2016/11-12/in-focus/circ-economy.html.

Andrews, D, 2015, The circular economy, design thinking and education for sustainability, Local Economy, 30(3), pp.305-315.

Anastassacos, T., 2016, The Circular Economy, Oil and Gas Upstream Industry Rethinking by Schluberger and Other Assorted News, Retrieved from https://serviceinindustry.com/2016/04/04/the-circular-economy-oil-and-gas-upstream-industry-rethinking-by-schlumberger-and-other-assorted-news/.

Babar, Z. and Gardner, A., 2016. Circular Migration and the Gulf States. In Impact of Circular Migration on Human, Political and Civil Rights (pp. 45-62). Springer International Publishing.

BizBahrain, 2017, Applying the principles of Circular Economy in Qatar, retrieved from https://www.bizbahrain.com/39941-2/.

BizBahrain, 2015, BAPCO Awarded as Part of Gulf Traffic Week, Retrieved from https://www.bizbahrain.com/bapco-awarded-as-part-of-gulf-traffic-week/.

Bapco, 2017, About Bapco, Retrieved from https://www.bapco.net/en-us/about-bapco/our-company.

Bocken, N.M., de Pauw, I., Bakker, C. and van der Grinten, B., 2016. Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33(5), pp.308-320.

Clift & Allwood, 2011, Rethinking the economy, The Chemical Engineer.

Casadesus?Masanell, R., & Zhu, F, 2013, Business model innovation and competitive imitation: The case of sponsor?based business models, Strategic management journal, 34(4), 464-482.

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Hollander, M., Bakker, C. and Hultink, E., 2017, Product Design in a Circular Economy: Development of a Typology of Key Concepts and Terms, Journal of Industrial Ecology.

Johnson, M.W., Christensen, C.M. and Kagermann, H., 2008. Reinventing your business model. Harvard business review, 86(12), pp.57-68.

Kun, H. & Jian, Z, 2011, Circular Economy Strategic of Oil and Gas Exploitation in China, Elsevier Journal.

Lacy, P. & Rutqvist, J, 2016, Waste to Wealth: The Circular Economy Advantage, Springer Publications.

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Planing, P., 2015, Business model innovation in a circular economy reasons for non-acceptance of circular business models, Open journal of business model innovation, 1, p.11.

Pan, S.Y., Du, M.A., Huang, I.T., Liu, I.H., Chang, E.E. and Chiang, P.C., 2015. Strategies on implementation of waste-to-energy (WTE) supply chain for circular economy system: a review. Journal of Cleaner Production, 108, pp.409-421.

Preston, F., 2012. A Global Redesign?: Shaping the Circular Economy. London: Chatham House.

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Tukker, A., 2015, Product services for a resource-efficient and circular economy–a review, Journal of cleaner production, 97, pp.76-91.

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Weetman, C, 2016, A Circular Economy Handbook for Business and Supply Chains: Repair, Remake, Redesign, Rethink, Kogan Page Limited.

Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future research. Journal of management, 37(4), pp.1019-1042.

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