VIETNAM JAPAN UNIVERSITY MASTER’S

PROGRAM IN BUSINESS ADMINISTRATION

---------------------------

THE FINAL EXAMINATION

The summer semester, Academic year: 2021-2022

General information:
Subject: Methodology and Informatics for Sustainability Science
Class: MBA 05
Student name: Vu Thu Tra
Student ID: 20117016

Question: Differentiate between the model of Linear Economy and Circular Economy.
Discuss the opportunities and challenges for your country to develop the Circular
Economy?
 I. RATIONALE
- Resource exploitation is a global urgent issue
How to optimize the resource has become a global problem in the last two decades. The
supply of natural resources has been in danger of being depleted. The demand for raw
materials in production is increasing while the supply is increasingly exhausted, especially
for mineral resources which are non-renewable resources.
Figure 1: The necessity of a new economic model.

Source: ICED, 2021

The United Nations forecast by 2030, the demand for natural resources will increase 3
times compared to the present. Thus, discussions to promote the concept of economic
development to protect the environment were discussed at the United Nations
Conference on the Human Environment and more than that. The official definition of
sustainable development was first established (WECD, 1987). The concept of sustainable
development has rapidly been adopted by more and more organizations (Matthew, 1999).
The world economy has also had many changes in the way of exploitation, use, and
regeneration to protect and restore natural resources. To adapt to issues, the transition
from a traditional linear economy to a circular economy is an inevitable need of all
countries in the world.

- The rising of climate change

Figure 2: Key global trend 2015 - 2050

The rapid rising of climate change such as greenhouse gases emissions, especially CO2. It
has serious consequences for the environment. The movement to a circular economy
aiming to use sustainable energy will reduce climate change.
- A traditional linear economy is reaching its limits
The main feature of the economy in the process of industrialization is compliance with
the linear economic model. Mining companies, natural resources use them to produce
finished products. When the product reaches the consumer, they discard it when it is no
longer worth using. Any operating system that relies on consumption rather than
recovery of non-renewable resources leads to significant losses up the production value
chain. Humanity has succeeded in making great strides in improving the efficiency of
natural resource extraction and finding new forms of energy. But little consideration has
been given to the systematic approach to resource extraction. The traditional linear
economic limit the disposal of resources or their reuse.
Recently, companies have begun to find that following a traditional linear system
increases their exposure to risk in the manufacturing value chain, most notably with
disrupted input materials. Without an actionable strategy in place, high prices and
volatility can not deal with the growing population of urbanization, and the cost of
resource extraction continuing to rise. The linear economy does its limitations. On both
the micro-and macro-economic levels, the circular economy has played an important role
in practice. The rise of the global economy and the signs of resource depletion lead to
opportunities for a new economic model. Business leaders are looking for a new way and
an industrial model that separates revenue from inputs: the "circular economy". The
circular economy is a restored or regenerated industrial system which believed to be a
means to achieve harmony between ecology and the environment. A circular economy is
a model that functions similarly to a natural ecosystem. An ecosystem that produces no
waste, nor a circular economy - all materials can be reused.
The Ellen MacArthur Foundation — an institute established in 2010 to accelerate
the transition to the circular economy — identifies the following as the key circular
economy principles:
(1) Waste removal design.
(2) Understand that everything in the economy counts;
(3) Distinguish between consumable and durable components.
Biomaterials return to nature; durable materials, or technology, to last as long as possible;
(4) Find ways to reuse materials throughout the value chain;
(5) Eliminates harmful chemicals, making it easier to reuse components without the risk
of contamination;
(6) Fuel the system with renewable energy;
(7) Building resilience through diversity;
8) Adjust prices to reflect the true cost of effort required to produce a product;
9) Design with disassembly and reuse in mind, with minimal changes necessary to reuse
product components;
10) Thinking in systems, taking into account how one action will affect the whole.
Figure 4: Transition towards a circular economy

II. Differentiate between the model of Linear Economy and Circular Economy
Figure 5: The linear economy-The 'take, make and waste' approach of production

Source: (Exploring the Role of Independent Retailers in the Circular Economy: A Case
Study Approach, 2018)
The circular economy operates on four main levels: product, company, network, and
policy. First, the product needs to be designed to be recyclable and reusable, based
on a green supply chain and clean manufacturing. Second, companies need to
innovate new business models to create private value and contribute to the
community. Third, the system of companies and customers produces and consumes
the main products. Fourth, policy to support the market. Enterprises are considered
the most important driving force contributing to the transition of the circular economy.
Moving from a traditional linear economy to a circular economy requires designing a
business model that encourages and promotes its implementation. Businesses
recognize the role of the circular economy through the risks associated with price
fluctuations and resource sourcing that a linear economy is likely to pose.
Figure 6: The linear economy-The 'take, make and waste' approach of production

Source:(Exploring the Role of Independent Retailers in the Circular Economy: A Case

Study Approach, 2018)
 - Circular Economy
At the conceptual framework, there are various potential benefits from the transition to
a circular economy for example material cost savings; reduced price volatility; improved
security of supply; employment creation; and reduced environmental pressures.
For governments, a circular economy represents a promising alternative to the current
linear economic model, which develops economic growth from natural resources
consumption and fosters innovation and job creation. For businesses, the key reasons are
mainly practical such as reduced risks of resource supply disruptions and new sources of
revenue and techniques such as new technologies easing the implementation of circular
economy principles.
According to the Ellen MacArthur Foundation - 2013 & 2015, a circular economy is an
industrial system that is restored or recreated by intention and design to keep products,
components, and materials at a utility level. and the highest value. It replaces the concept
of 'end of life' with recovery, transitions to renewable energy, eliminates the use of
hazardous chemicals that deplete reuse, and aims to eliminate waste through the
superior design of materials, products, systems, and to this extent, business models. The
circular economy business model is divided into two groups:
(1) models that encourage reuse and prolong life through repair, remanufacturing,
upgrading, and retrofitting.
(2) and things that turn old goods into new resources by recycling materials.
Since the 20th century, the concept of CE has been approached by European and
American economists with the view that "the economy is a circular flow" and "the earth
is not an infinite reserve, man must create it". A circular ecological system capable of
continuously renewing matter.
In 2013, the Ellen MacArthur Foundation (EMF) released an official definition of CE. The
model is piloted in both developed and developing economies (Germany, USA, Canada,
Japan, China, Korea).
In 2015, the United Nations issued 17 Sustainable Development Goals as a collective call
to action for poverty eradication, planet protection, environmental sustainability, and
economic development. Circular economy covers 8/17 goals and has been the practice
ever since.
Figure 7: Benefits of Circular Economy

Natural resource
preservation
Turn old goods into as-
Circular Closed loop
new resources by
economy material recycling the materials
Maximize the
return of resource
Foster reuse, extend
Economic service life through
growth repair, remanufature,
upgrades and retrofits

Source: The lecture of Assoc. Prof. Tran Thi Thanh Tu

III. Circular Economy in Vietnam
- Orientations, laws, and policies relevant to CE in Vietnam
The circular economic model appeared in Vietnam in the past 20 years with many
different approaches. The concepts of “eco-industry”, “clean production”, “zero
emissions”, recycling, reuse, and remanufacturing are part of the circular economy. At the
macro level, Vietnam has policies to facilitate the circular economy. Law on
Environmental Protection No. 72/2020/QH14, Article 142: “Circular economy is an
economic model in which design, production, consumption and service activities aim to
reduce the exploitation of raw materials and materials. materials, extending product
lifecycle, limiting waste generation, and minimizing waste. minimize adverse impacts on
the environment.
Figure 8: Current status of policy framework

Source: The lecture of Dr. Nguyen Thi An Hang

The National Assembly requires "Integrating and promoting circular and green economic
models in the formulation and implementation of socio-economic development
strategies, plans, programs, and projects".
In 1998, Directive No. 36/CTTW mentioned “Apply clean technology, less waste, less raw
materials, and energy consumption”.
In 2004, Resolution No. 41-NQ-TW gave the orientation "encouraging recycling and use
of recycled products", "recovery and treatment of used products".
In 2012, the Sustainable Development Strategy for the period 2010-2020.
In 2013, Resolution No. 24-NQ-TW on responding to climate change, strengthening
natural resource management, and environmental protection.
In 2014, the Law on Environmental Protection
In 2016, the National Action Plan on sustainable production and consumption to 2020 and
a vision to 2030
In 2017, the proposal to develop Vietnam's environmental industry by 2025 meets the
contents of the Circular economy
In 2018, the National Strategy on Integrated Solid Waste Management 2018
In 2019, the Ministry of Natural Resources and Environment was assigned by the
Government to act as the focal point for solid waste management and uniformity
throughout the country in Resolution No. 09/NQ-CP dated February 3, 2019, of the
Government.
In 2020, Decision No. 889 / QD-TTg: For a zero-waste future
Decision No. 889/QD-TTg: For a Zero-Waste Future (put into use from June 24, 2020):
Specific goals to be achieved by 2030
IV. Circular Business Model
The circular economy operates on four main levels: product, company, network, and
policy. First, the product needs to be designed to be recyclable and reusable, based on a
green supply chain and clean manufacturing. Second, companies need to innovate new
business models to create private value and contribute to the community. Third, the
system of companies and customers produces and consumes the main products. Fourth,
policy to support the market. Enterprises are considered the most important driving force
contributing to the transition of the circular economy. Moving from a traditional linear
economy to a circular economy requires designing a business model that encourages and
promotes its implementation. Businesses recognize the role of the circular economy
through the risks associated with price fluctuations and resource sourcing that a linear
economy is likely to pose.
Table 1: Circular Business Model SWOT

Strength Opportunity
- Natural resource preservation
- Maximize the return of resource
- Turn old goods into as-new resources by
recycling the materials
- Foster reuse, extend service life through
repair, remanufacture, upgrades, and
retrofits
-Innovation for production
Weakness
- Proper understanding of the nature of
the circular economy
- Lacking a legal corridor for circular
economy development
- Outdated technology and small-scale
production
- Lacking a set of criteria to evaluate and
classify the circular economy
development level
- This is a global trend that has been
proven successful in many countries
around the world so Vietnam can learn
from their experiences
- Viet Nam is in process of completing the
institutions and policies on circular
economy
- Opportunities for private investment in
the circular economy
- We are moving towards revolution 4.0
while
- Government pays attention to
environmental risks caused by economic
development, SDG implementation,
Climate change adaptation.
Threat
-Competitiveness of linear business
models
-Substitutes of scarce materials
-Service model requires higher up-front
investment costs and longer time
horizons of revenue generation
-Limitations of the legislation on waste
transport
 - Requirement of big investment in -Low awareness of the urgency to adopt
technologies more sustainable production and
- Lacking experts to handle from design to consumption patterns.
the last -Enterprises still have limited capacity in
stage of reuse and recycling of waste recycling and reuse technology, people
-Low people’s awareness of classifying and businesses still have inherent habits
wastes at the source in the production and consumption of
products that cause environmental
pollution.

V. Implementation of Circular Economy in Vietnam

Specifically, at the macro level, Vietnam has policies to facilitate the circular economy.
Since 2016, the Government has issued the National Action Plan on Sustainable
Production and Consumption. In 2017, the Prime Minister also approved the Project to
develop Vietnam's environmental industry 2025 to form an environmental industry that
can meet the contents of the circular economy. Currently, the Ministry of Industry and
Trade is also drafting a National Action Program on Sustainable Production and
Consumption with solutions and views of the circular economy for implementation in
2021-2030.
At the micro-level, Ho Chi Minh City has set a series of goals such as reducing the amount
of non-biodegradable plastic bags by 60% in supermarkets and trade centers by 2020 and
50% in traditional markets. Renewable and new energy will reach 1.7% of total energy
capacity. Along with that, the relocation of polluting production facilities in residential
areas is still taking place. There are not many programs to implement the circular
economy model by enterprises in Vietnam, mainly related to large enterprises.
Unilever with a program to collect and recycle plastic packaging and sort waste at the
source. Coca-Cola with a program to collect and sort plastic bottles. These are also the
two core units in the "Zero Waste to Nature" initiative within the framework of the
Circular Economy Center (VCCE) project chaired by the Vietnam Business Council for
Sustainable Development. Heineken Vietnam, which announced that nearly 99% of waste
or by-products are reused or recycled, 4 out of 6 breweries use thermal energy from
renewable energy and biomass fuel, with no carbon emissions. Nestlé's Vietnam typical
waste recycling projects are the production of unburnt bricks from boiler waste, the
processing of fertilizers from non-hazardous sludge, and the use of milk cartons as
ecological roofing. In addition, Nestlé Vietnam has announced a plan to recycle and reuse
100% of product packaging by 2025. Similarly, NS BlueScope Vietnam Company which is
a member of the world's leading steel corporation BlueScope, also introduced the
practice of applying its circular economy model, including reduce, reuse, recycle, export,
and recycle. In which the idea of remanufacturing steel wind turbine products of the
company has achieved many successes: the rate of return has increased significantly, the
cost of products to customers is 25-50% cheaper, save 80% energy and shorten
production time
• Case study 1: Nguyen Khoi Farm - Circular Organic Agriculture Model (COAM)
COAM is an innovative agricultural production model that keeps the nutrient cycle closed
thanks to the application of available modern, environmentally friendly scientific and
technical technologies to a higher level:
- Continuity: technologies are applied synchronously, scientifically, and continue to meet
the standards of Good Agricultural Practices in Vietnam VietGAP.
- Circulation: Livestock waste, crop waste is produced into animal feed, organic fertilizer
for plants in a completely closed loop. The main object of the circular organic agriculture
model and livestock and crop production. Specifically, waste from pig production is
separated into solid and liquid forms and goes through a pure cycle.
- Biotechnology is widely used: The effective organisms (EM) are deeply applied in all
farming processes to maximally replace mechanical and chemical methods to reduce
 labor, to reduce the use of fossil fuels and, to reduce the use of chemicals. At the same
time, the application of EM promotes the decomposition of organic matter,
shortening the processing time of agricultural waste.
- Diversity of products: Each stage of environmental treatment creates usable
products to replace micro-waste.
Figure 9: COEM Model

Source: Nguyen Khoi farm company

• Case study 2: The Coca-Cola Company, EKOCENTER
EKOCENTER is a combination of a community center and department store launched in
2013 by Coca-Cola in over the world. The center is powered by solar energy and is
designed to meet the basic needs of some of the most remote and disadvantaged parts
of the world.
EKOCENTER operations are run by women from local communities. The center also builds
local partnerships to maintain its operations sustainably. The general store sells a variety
of products such as solar lights, mosquito repellents, household products, and toothpaste.
The Company's sustainability efforts cover a wide range of topics including water, women,
community well-being, sustainable packaging, climate protection, human rights and
workplaces, and sustainable agriculture.
Source: CocaCola Vietnam
• Case study 3: ANFOODS joint-stock company
ANFOODS joint-stock company is a sustainable production-consumption model. The
business activity aims to build a value chain model, and forest farmers are involved in the
chain, with the market driving force being customers, and the desire to demonstrate
social responsibility. Farmers participating in the model must meet the requirements of
harvesting size, not stocking GMO seeds, complying with harvesting methods, forest area
management, water environment management, management postharvest quality.
Consumers will pay a reasonable price with the values received (product quality,
environmental value, protection value, etc).
 Image 1: Ecological forest for shrimp farming

Source: ANFOODS joint-stock company

The number of farmers participating in the project is 50 households, the expansion plan
in 2019 in 40 households. The consumer community is over 500 regular customers, the
number of stores that are provided with products is 50 stores.
- Actions to protect the environment
The planting - management - development of mangroves contributes to stabilizing
environmental quality and limiting the impact of climate change.
- Maintaining biodiversity
Rational exploitation has both economic benefits and encourages experimental studies
of integrated aquaculture models. Some models have been successfully applied such as
oyster culture on substrates, blood cockle/clam culture in mangroves. The additional
stocking is introduced and encouraged for the people. However, the stocking must ensure
the following factors: indigenous varieties, disease-free controlled breeds.
- Ecotourism development
The creation of the model is to encourage people to participate in tourism, they directly
guide, provide housing, food services (with the coordination support of the project) solve
redundant female migrant workers, increase income. Encourage them to take care of the
forest to become more beautiful, greener, more hygienic, and improve the quality of life.
In 2018 attracted more than 700 visitors, generating revenue of more than VND
250,000,000
VI. Discussion of implementation of Circular Economy in Vietnam
The circular economy still requires the consolidation of the entire product lifecycle from
raw material supply to destruction. Therefore, it is not simple to find a completely closed
cycle. And this is even more difficult for developing countries with a technological
background that is still backward compared to the world like Vietnam. The process of
turning 3R awareness (reduce - reuse - recycle) into behavior and action will take time.
Moreover, the process of building a circular economy requires technology and innovation
to effectively reuse resources, which is not only good for the environment but also good
for the competitiveness of enterprises. According to the survey data of the General
Statistics Office of Vietnam, more than 95% of Vietnamese enterprises are small
businesses that lack capital, human resources, and innovation ability to apply the
principles of the circular economy.
In terms of both theory and practice, the circular economy in Vietnam is still very new.
However, in the current national and international context, with goals and requirements
towards sustainable development. Being well aware of the benefits of the widespread
deployment of the circular economy is a necessity for our country today. For the
application and implementation of the circular economy to go smoothly, the following
recommendations should be seriously considered in the coming time.
First, focus on encouraging research and innovation. Research and innovation is the first
element recommended by Stahel (2010) for all levels and fields from social, technological
to commercial. Economists, materials scientists, and environmentalists need to assess the
ecological impact as well as the costs and benefits of products. The design of products to
serve the needs of reuse needs to become a mandatory requirement, whereby products
from the design stage have seen their role and position in the cycle.
Second, widespread, national and international communication and information
programs should be developed to raise awareness among producers and consumers of
their responsibilities about products in the industry throughout their life cycle.
For example, instead of scientific journals, fashion magazines should promote the
movement of sharing jewelry, renting jeans and bags; government and manufacturers of
electronics, automobiles, etc. They must offer programs to encourage used cars or
exchange old products for new products.
Third, it is necessary to encourage the internalization of exogenous costs such as pollution
and discharge into the direct cost of products through tight tax mechanisms. Policies
should encourage socially beneficial activity and punish harmful activities. The
government also needs to raise taxes on the consumption of non-recyclable resources.
Value-added tax should only be applied to value-added activities, such as mining,
construction, and manufacturing, and should not be applied to activities aimed at
maintaining or preserving value, such as reuse, repair, and remanufacturing. At the same
time, it is also necessary to increase the carbon score for actions to prevent emissions
similar to reducing emissions.
Fourth, the policies and programs set out towards the circular economy must be placed in
the context of Industrial Revolution 4.0, which has basic features such as the network
connection of all everyday items day, cloud computing technology and automation
system with artificial intelligence. Because Industry 4.0 will play an important role in
promoting the transition from a linear economy to a circular economy.
Finally, it is necessary to develop more appropriate measures for social welfare and
economic growth, which should take into account the success of the cycle as well as the
presence of products in that closed cycle. One of the major differences is that instead of
valuing the end products of a manufacturing process, researchers should look at the net
benefits of each closed cycle for each product group.
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