Circular Business Models and Competitive Advantage in Fast-Moving Consumer Goods Industries

Abstract

The paper discusses how a circular business model (CBM) can be used to achieve competitive advantages in the fast-moving consumer goods industry (FMCG). With the rising sustainability pressures, the trend is toward the implementation of CBMs in FMCG companies to maximize the application of resources and minimize the level of wastage, in addition to sustaining profitability and competitive advantage. The paper examines how the CBMs, which include recycling, life extension of products, and circular supply chains, enhance high business performance. The study is based on a mixed-method design, which means that the data of 120 FMCG companies will be analysed regarding such key performance indicators as the reduction of the cost, retention of customers, increase in the market share, and the impact on the environment. The results prove that the cost of operation decreases by 15% and customer retention by 20% in three years in the companies that implement the principles of circularity than in traditional ones. In addition, 12 % market share increase, 25% brand value increase, and a huge increase in the alignment of these companies with global sustainability are observed, leading to long-term growth. The paper also determines the operational and financial benefits of using CBMs, which enable companies to manage environmental sustainability versus economic results. To sum up, CBMs bring significant strategic advantages to FMCG companies that will be able to enhance their financial performance as well as their sustainability reputation. The study fills the gaps in the literature by connecting the concept of circularity with competitive advantage because it proves that circular business practices are one of the major success factors in the world of FMCG.