Management Final Project

8/16/2020 Hemp: Replacing Plastic as we

know it

Table of Contents:

1) Introduction/Description of the Case ………………………………………. 1

2) Analyses of the Case………………………………………………………… 2

3) Discussion and Conclusion…………………………………………………... 4

4) References …………………………………………………………………… 7

5) Appendices …………………………………………………………………... 8

Sidharth Balaji
 Introduction

The main purpose of this report is to allow venture capitalists and other entrepreneurs

to discontinue the use of plastic and consider emerging trends of alternative

approaches whose applications need to meet the demand of plastic to successfully

reduce the need for plastic. Our relationship with plastic (see Appendices 1) has had a

significant economic impact since the 1950’s but has continued to grow exponentially

creating plastic debris in the oceans creating a significant impact of pollution with

increasingly verifiable social, economic and environmental impacts (Kershaw, 2018).

Hemp is a type of bioplastic or plant-based plastic that has the potential to replace

plastic in several applications like paper industries, fiber-based industries,

textiles/clothing industries, construction/insulation for buildings, Food/Feed, and

Transport (Wenger and Bell, 2018). A SWOT analysis of using a substitute to plastic

polymers or using bioplastics like plant-based materials like Hemp (Appendices 3)

illustrates a trillion-dollar industry in the making. This report can be used by

entrepreneurs to find solutions effectively manage a Hemp based business. An

effective management process will be the key component of this report in addressing

issues on how to start up a Hemp Business in 2020 with great success. As the world

grows into a more sustainable and ethical approach, business should strategies their

objectives/goals to meet demands of these emerging trends. A great need for new

managemental approach will be the foundation of an international managemental

approach to a sustainable Hemp business. Organizing and building a dynamic Hemp

organization, followed by leading and mobilizing individuals related to sustainable

practices, and controlling these changes will empower and compel an organization to

find a suitable approach in replacing plastics with bioplastics. Finally, any

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 organization that looks to initiate a corporate social act or to capitalize on this

growing trend of replacing plastic can use this report to gain an understanding of the

management process involved with a Hemp organization.

Analysis of the case

On a macro-economic standpoint, countries/continents like China, North America,

Europe produce the most amount of plastic (Appendices 5). Although relatively

outdated, this key demographic gives us an understanding of the extent to which

plastic was produced in the 2013 and gives us an idea on the large market Hemp can

capitalize on. In the same year, In Europe alone plastic was dominated by the

packaging sector by 39.6% and by the consumer and household applications 21.7%

(Appendices 6). These figures are relatively important in deeming the segment that

could be targeted initially by Hemp plastics or bioplastics. The SWOT analyses from

Appendices 3 and 1 respectively sums up the need for bioplastics vs conventional

plastics. The main differences that should be highlighted are that conventional plastics

are unstainable, eco-toxic, highly inefficient as it uses more energy in its production

process (65%), it increases global warming, leads to abiotic depletion and reduces soil

fertility. On the other hand, bioplastics are more sustainable, non-toxic, the use less

energy, eco-friendly, no harm to abiotic factors, and improve soil fertility. These key

differences were highlighted after a phone call interview with the manager of Velica –

an Italian biorefinery company of Hemp and flax into fiber based green composite

materials, oil-based fatty acids, fuels and chemicals. The main strategic objective of

Velica was to create a biorefinery that produces materials and products of the future

using old age crops like Hemp and flax seed. They also seeked to relaunch biorefinery

schemes for full biomass exploitation. This small case study is essential to

understanding how Velica offered such a broad product differentiated market in a

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 market dominated by Plastic based products highlighted above. Organizations like

Velicia can play a vital role in revolutionizing the bioplastic industry and certainly

add value to the several products they offer as they seek to establish a global supply

chain. Velicia was mentioned in this report for two key reasons: to empower

entrepreneurs and venture capitalists to capitalize on this growing trend and to

illustrate the small market that bioplastic currently occupies (room for excessive

growth) in comparison to the plastic industry. Additionally, in 2012 the global use of

natural fibers was less than 1% and is concurrently dominated by cotton long thread

fiber by 84% (Appendices 4). This highlights a market that shows room for growth

like the organization Velicia. However, there are several impacts of Hemp production

that should be considered if one delves into this industry. For instance, the Hemp bill

in 2018 in USA highlighted that finding processors and lack of banking services were

offered particularly due to the stigmatized perspective society portrays of Hemp that

is derived from weed/cannabis sativa. Finding harvesting equipment and managing

growth and scalability were two of the biggest indirect consequences of the Hemp 208

Bill (Appendices 2). According to Porters five forces, these direct and indirect

impacts will be significant barriers to entry into the Hemp business but offer a great

threat to substitute plastic products. Because of this highly monopolized Hemp sector,

competitive rivalry is lower but threat to entry is higher. With limited suppliers, the

supplier power is higher and consequently the buyer power is lower as more business

fail to enter the Hemp Market. Even though these forces are applicable to only USA,

it will significantly impact other countries that look to the USA as a powerful

economically ally. Despite these impacts, the Hemp industry can be a powerful tool to

replace plastic with the above analyses we can conclude that Hemp fiber is small

industry in comparison to other substitute plant-based fibers, but this tiny industry

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 provides Hemp more leverage to grow profitably. As several companies turn towards

a sustainable approach, they often lack an effective management process that falls

prey to these impacts and limits them from profiteering in the Bioplastic Industry.

Discussion of Case/Conclusions:

From the Introduction and the Analyses section of this report we have a great sense of

the foundations of management required (SWOT analyses and other external

constraints like Hemp Bill 2018) and the how to deliver strategic value (Velicia case

study). Moving along the management process we’ll need to determine the best

possible approach to building a dynamic Hemp organization. A network organization

can be implemented where a web of relationships can be used to collaborated and

improve the scalability of bioplastics like Hemp to compete as a substitute product

like Plastic. Venture capitalists can start a series of individual firms like production of

Hemp, a firm to over view supply the Hemp, a firm to control the distribution of

Hemp or scale it up, a firm that markets positively markets Hemp over conventional

plastic etc. This dynamic network usually held together by contracts empowers a

startup to specialize in a particular market mechanism and enable each firm in the

network to work independently as decentralized organization. Furthermore, each of

these divisions under the network organization can operate as its own organization.

For instance, the production firm of Hemp can enable its managers to focus on

specific product lines, it would enable them to have significant autonomy and control,

employees under this production team would be more specialized with broader

training capabilities. All in all, these individual divisional firms guided by the network

organization work culture can integrate with one and other to maximize scalability to

dominate the plastic industry in segments like consumer and housing applications and

packaging segment used by almost every individual/business. An entrepreneur or

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 venture capitalist can start-up or invest into one firm under this network organization

or all the firms under this network depending on their disposable financial resources.

The bottom line being, these networks can improve effectiveness in costs, quality,

services, speed, innovativeness and most importantly sustainability if undertaken with

intricate precision. Moving on, employees can be hired for under each of these

divisional networks based on their expertise in their respective fields. Another firm

can be added to this network that only specializes in hiring employees with

sustainable practices and approaches towards business. This would make the HR

process of the other firms in the network to be made redundant as they can solely rely

on the firm that specializes in hiring sustainable employees. This new division/firm

under the network can conduct the HR process needed to find the right employees for

the other firms in the network and would save the other firms from dealing with the

time consuming and costly process of hiring externally. Remember everything under a

network organization is flexible and dynamic solely because of the application of

contracts. The HR division firm can recruit employees/train employees/ oversee

appraisals/design reward systems for their sister firms according to their specific roles

and hence reduces the costs of the other firms in the network. While, the other

divisional firms in the network can calibrate the reconciling of supply and demand of

employees and negotiate with its sister HR firm to fill their needs. Moving on, each

leader within each divisional firm can adapt a situational approach to leadership

enabling participative teamwork within their firm and motivating for performance.

Note a charismatic and transformational approach towards leadership is needed as

replacing plastic with Hemp is an emerging trend that can be successfully capitalized

when lead by enthusiasm and grit. A series of reinforcement measures attributed

towards managing mistakes and providing feedback to employees can be overseen by

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 the HR firm under the divisional network organization. Within a network organization

boundarylessness communication is essential in eliminating mixed signals,

misperception and communicating the whole message the way it was intended. When

there are no barriers to information flow, there will not be a need for company politics

or insider information will be eliminated as everyone including employees down the

hierarchy in each divisional firm under the network will have the same information

24/7. This would eliminate any grapevines within the network as it can destructive

when misinformation proliferates and harms people and operational work flows.

Moving on, a conventional managerial approach needs to update by implementing six

sigma for each firms divisional manager. While management audits, external audits

and internal audits can be adhered to by the HR division under the network

organization. An accounting firm can be established to oversee the budgetary controls

and financial controls of the Hemp firms under the network. This would improve

transparency related to fraudulent activities within the network organizations. Each

Hemp firm under the network can oversee their own efficiency using management

information systems and can key points should be sent to the HR firm under the

network to allow them to take necessary reinforcement actions by leading and

creating changes.

All in all, the network organization with subordinate divisions (HR firm, Accounting

firm, Production firm/ Supply chain/distribution firm, Marketing firm) allow each

firm to operate dynamically and improve its efficiency within the network. It reduces

costs, implements a new approach to sustainable ventures rather than the conventional

top-down hierarchy management. Entrepreneurs can establish one or more of these

Hemp divisional firms and integrate with other firms under this network to scale up

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 the Hemp industry as a whole and to meet the demand recognized by plastic. While

venture capitalists can invest into one or more divisions/firms of the Hemp network to

capitalize and encourage the future growth these Hemp markets can evolve into.

References:

(1) Kershaw, P., 2018. Exploring The Potential For Adopting Alternative Materials To Reduce
Marine Plastic Litter. [pdf] the United Nations Environment Programme (UNEP), pp.17-20.
Available at:
<https://wedocs.unep.org/bitstream/handle/20.500.11822/25485/plastic_alternative.pdf>
[Accessed 13 August 2020].

(2) Wenger, J. and Bell, G., 2018. Natural Fibers And Fiber-Based Materials In Biorefineries.
[ebook] IEA Bioenergy, pp.5,14, 33-39, 45. Available at:
<http://task42.ieabioenergy.com/wp-content/uploads/2018/12/IEA-Bioenergy-Task42-
Fibres-Report_FINAL_181214JW.pdf> [Accessed 14 August 2020].

(3) Shahid, R. and Younas, T., 2018. Hemp Is The Future Of Plastics. [ebook] Pakistan: Web
of Conferences, pp.3-4. Available at:
<https://pdfs.semanticscholar.org/0122/53803cb741d2ad4631d8d5c1eb9da000063f.pdf>
[Accessed 10 August 2020].

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 Appendices

1. SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) of conventional

synthetic polymers. (Our Existing Relationship with Plastic)

S1. Improved human health outcomes W1. Utilises fossil fuels and is not
from medical applications carbon neutral
S2. Packaging reduces food wastage W2. Risk to human health during
from field to market and market to production due to exposure to
consumer chemicals, including endocrine-
S3. Lower water and energy disrupting chemicals
consumption in production W3. Risk to human health, social and
S4. Novel applications where there are economic well-being and the
no equivalents environment during use and end-of-life
S5. Lower fuel consumption in aviation phases
and vehicular transport W4. Very limited biodegradation in the
S6. Packaging reduces damage to goods environment, especially in the ocean,
during transport leading to rapid accumulation
S7. Convenience to consumers, W5. Waste management solutions are
including for ‘take-away’ or ‘fast-food’ grossly inadequate in most countries
applications W6. Circular production patterns are
rarely implemented
O1. Development of new polymers and T1. Continuing accumulation of plastics
composites for diverse applications and microplastics in the environment
O2. Redesign of products to allow lower T2. Long term consequences for human
material use, product re-use and reproductive and developmental health
improved recycling potential, in a T3. Long term consequences for social
circular or closed-loop production cycle and economic well-being due to impact
O3. Utilisation of intrinsically lower of plastic waste
risk chemicals in production and as
additives to maintain performance

2. Top Challenges for Hemp production of 2018 Farm Bill USA

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 3. SWOT analysis of using plant materials like hemp fibre as a substitute for
conventional synthetic polymers (or bioplastics instead of plastics)

S1. Utilises renewable natural resources
S2. Potential to be carbon neutral
S3. Provides social and economic
opportunities in rural areas for vulnerable
groups in society
S4. Can be composted in a domestic or
industrial facility or decomposed by
anaerobic digestion at end-of-life S5.
Biodegradable in the environment
O1. Expanded utilisation of renewable
natural resources
O2. Development of social and economic
independence in rural area
O3. Substitution for single-use consumer
products such as shopping bags
W1. Biocides and artificial fertiliser may
be used on commercial crops, resulting in
risks to human health and the
environment
W2. Limited availability may inhibit
development of wider markets
W3. Substitution for conventional
polymers limited by intrinsic properties
of the material
W4. Supply chains to market may be
poorly developed
T1. Loss of habitat and biodiversity
T2. Intensification of production will
drive greater use of biocides and artificial
fertiliser, and hence increased risks to
human health and the environment
T3. Use of agricultural land for non-food
use may drive up prices and impact food
security

4. Global use of natural fibres by major group in 2012, excluding use of straw, grass and
wood fibres (adapted from Natural Fibres and Fibre-based Materials in biorefineries)

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 5. World Production of Plastics in 2013

6. European Plastic Demand by Segment in 2013

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