IB Business Management SLTopic 8 — The Pre-Released StatementPaper 1Toolkit~9 min read
Bringing Circular Business Models Into Your Answers
Most businesses run in a straight line: take materials, make something, throw it away. A circular model bends that line into a loop, so the material comes back round and gets used again. For ABC this is not a bolt-on idea — it is the thread that ties concrete and e-waste into a single story.
What you need to know
A circular business model aims to cut the use of scarce resources and reduce waste, while getting the most value out of the materials already in use.
It replaces the traditional take, make, dispose approach, and is also called cradle-to-cradle.
Products are designed to be durable, repairable and recyclable.
The core idea in one phrase: waste becomes a resource.
ABC fits this in two ways: recovering metals from e-waste, and reusing crushed concrete as aggregate.
The honest limitation: ABC still makes cement, and cement still releases CO2.
Linear against circular
The loop is the whole idea. Nothing leaves the system as rubbish; it re-enters as an input.
How ABC already fits the model
1. Recovering metals from e-waste
Old circuit boards would otherwise go to landfill. ABC pulls the gold and other precious metals back out and sells them on. That is the textbook example of turning waste into a resource, and it cuts the need to mine new metal.
2. Recycled aggregates in concrete
When old buildings and roads come down, the concrete can be crushed and used as aggregate in new concrete. That keeps demolition waste out of landfill and reduces quarrying. It is a closed loop within one industry — construction waste becoming construction material.
3. Improving production efficiency
ABC wants to raise efficiency in its concrete factories. Using less energy per tonne means less fuel burned and fewer emissions for the same output. Efficiency is a circular idea even when nobody calls it one.
4. Depending less on finite resources
Limestone has to be quarried and gold has to be mined. Both damage landscapes and both eventually run short. Every tonne ABC recovers is a tonne it does not have to dig up.
If a question asks about sustainability, do not just say “ABC recycles”. Say which loop it closes, and what it replaces. Recovered gold replaces mined gold. Crushed concrete replaces quarried stone. That specificity is the analysis mark.
What ABC gains, and what it risks
Advantage
Why it matters
The counter-argument
Less waste generated
Less e-waste to landfill and less construction rubble discarded.
ABC only handles what it can collect, and most e-waste is never collected.
Lower reliance on finite resources
Less mining and less quarrying needed for the same output.
Recycled aggregate cannot fully replace natural stone in structural work.
Cost savings and new revenue
Recovered metals create a second income stream; efficiency cuts energy bills.
Metal prices swing, so that revenue is unpredictable.
Stronger reputation
Supports CSR objectives and appeals to governments, investors and green-minded customers.
Cement still emits heavily, so ABC is exposed to greenwashing accusations.
Resilience to price shocks
If raw material prices rise, recycled inputs give an alternative supply.
Building that capacity needs large upfront investment before any return.
The greenwashing point. If ABC promotes its recycling loudly but does nothing about emissions from cement production, stakeholders can reasonably say the changes are cosmetic. Keep this in your back pocket — it is the strongest counter-argument in any CSR or sustainability question about ABC.
WORKED EXAMPLE
Define the term circular business model. [2]
Statement 1
A way of running a business that aims to reduce waste and cut the use of scarce resources [1]
Statement 2
Materials are recycled, reused or recovered and fed back into production instead of being thrown away after use [1]
2 marks“Cradle-to-cradle” is the alternative name. Worth knowing, not worth building your whole answer around.
WORKED EXAMPLE
Analyse the advantages and disadvantages to ABC of adopting a circular business model. [6]
Advantage 1: costs and supply
Recovering metals from e-waste and reusing crushed concrete reduce how much ABC must buy in [1]. Since limestone quarrying and metal prices both feed directly into its costs, recycled inputs give an alternative supply that softens raw material price rises [1]
Advantage 2: reputation and demand
A circular model supports ABC’s environmental objectives and its CSR profile [1]. Public construction projects increasingly require sustainable materials, so greener concrete could win contracts that rivals cannot bid for [1]
Disadvantage and judgementHowever, the investment comes years before the return, and recycled aggregate must clear strict safety standards before builders will use it structurally [1]. More seriously, cement production still emits large amounts of CO₂, so unless ABC tackles that too it risks being accused of greenwashing, which would undo the reputational gain it is chasing [1]6 marks: two developed advantages plus a substantiated counterNotice the counter-argument is not “it costs money”. It is specific to ABC’s actual position.
Exam tip
Use the phrase “turning waste into a resource”. It is the clearest one-line summary of the model.
Name the loop you mean. E-waste to metals, or demolition rubble to aggregate. Vagueness costs marks.
Say what the recycled input replaces. That is the difference between describing and analysing.
Link it to CSR and to costs. A circular model is an ethical argument and a financial one at the same time.
Always raise the cement problem. It keeps your evaluation balanced and shows you have read the whole case.
Remember the supply limit. A loop only works if material actually comes back round.
Common mix-up
Treating circular and recycling as the same word. Recycling is one part of it; the model also covers designing for durability and repair.
Assuming circular always means cheaper. The savings come later; the investment comes first.
Saying ABC is now a sustainable company. It is a heavy emitter running a recycling arm. Both halves are true.
Forgetting quality standards. Recycled aggregate has real technical limits in buildings.
Listing advantages with no consequence. “Reduces waste” is a fact; say what that does for ABC.
Ignoring collection. No incoming e-waste, no loop, however good the technology.
Up next: Practice Questions on the Statement — a full set of questions in every command style, with worked answers.
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