T.8 Circular business models questions for IB Business Management

Tumi Dlamini grew up in Soweto, South Africa, where old car tyres are often dumped or burned. In 2022 she started Tread Again, which collects worn tyres from local garages free of charge and cuts them into soles for sandals. The uppers are made from offcuts of traditional shweshwe cotton fabric, bought cheaply from a clothing factory. Tumi employs six young people from her neighbourhood, whom she trained herself, and sells the sandals at craft markets and through an online shop to customers in Europe.

Genbrug Garderobe is a clothing rental business in Copenhagen, Denmark. Members pay DKK 399 a month to borrow up to four items at a time. Non-members can rent single items for DKK 150 each. When an item is too worn to rent, it is repaired and sold in the shop. In September, Genbrug Garderobe had 1 200 members, made 650 single rentals and sold 300 used items at an average price of DKK 120.

Recicla Unidos Cooperativa (RU)

Recicla Unidos (RU) is a workers’ cooperative of waste pickers in Asunción, Paraguay. Its members collect paper, cardboard, plastic and metal from streets and businesses, sort it at a shared warehouse and sell it in bales to dealers. Each member has one vote at the monthly assembly, which elects a president, currently Rosa Benítez. After paying costs, RU divides its revenue among members according to the hours they work.

Read the resources and answer the questions that follow.

Resource 1: Extract from a newspaper article

Asunción produces more than 1 500 tonnes of household waste a day, yet only about 5 % is recycled. Most recycling is done by informal waste pickers, who sort rubbish by hand without gloves, earn far less than the minimum wage of about PYG 2 800 000 a month and are often treated with suspicion by residents. A new national law requires every city to collect recyclable waste separately from 2028.

Resource 2: RU’s results, 2023–2025

Resource 3: Email from the city’s environment department to Rosa Benítez

To meet the new law, the city intends to contract an organization to collect separated recyclables door to door in four districts from January 2027. We would pay PYG 180 million a month. The contractor must provide six collection trucks, uniforms and safety equipment, pay its collectors at least the minimum wage, and provide health insurance. We would welcome a bid from RU.

Resource 4: Social media posts

“The RU collectors on our street are always polite. I now separate my plastic for them.” (resident, Villa Morra)

“Dealers pay us whatever they want. When oil prices fall, plastic prices fall and we earn less.” (RU member)

“We would pay 40 % more per tonne for clean, washed plastic flakes than for mixed bales.” (purchasing manager, a plastic packaging factory)

Resource 5: Notes from RU’s monthly assembly

A development bank has offered RU a five-year loan of PYG 900 million at 12 % interest for a machine that shreds and washes plastic, or for collection trucks, but not both. Older members are worried about debt and say RU should “keep doing what we know”. Younger members want RU to bid for the city contract. Several members cannot read well, which makes training on new machines difficult.

Srov Sen Rice Collective

[1] Srov Sen Rice Collective (SSRC) is a social enterprise in Battambang, Cambodia. It buys organic jasmine rice from 600 farming families, mills it and exports it to fair trade shops in Europe. SSRC pays farmers 25 % more per tonne than local traders do, and it pays its mill workers above the local average wage. In Cambodia, prices are often quoted in US dollars.

[2] SSRC’s costs include the rice it buys, the mill workers’ wages, which are paid per tonne milled, electricity for the mill, packaging, shipping, the rent of its warehouse and the salaries of a small management team.

[3] Most of SSRC’s revenue comes from rice exports. It also sells broken rice grains to local noodle makers and sells rice husks, the hard outer shell removed in milling, as fuel to brick kilns. A grant from an international development agency pays for SSRC’s training programme for farmers, but the grant ends next year.

Groeneveld Floors B.V. (GF)

Groeneveld Floors B.V. (GF) makes carpet tiles for offices in Eindhoven, the Netherlands. Since 2023 its tiles have been designed so that, at the end of their life, the nylon top layer can be separated from the backing. GF collects used tiles from customers free of charge; the nylon is chemically recycled into new yarn, and the backing, made from a plant-based material, can be composted.

GF uses no glue that would contaminate the materials, and designs each tile so that it can be lifted and replaced individually. Recycled yarn currently costs GF about 12 % more than new nylon.

Second Grain Woodworks (SGW)

Read the resources and answer the questions that follow.

Second Grain Woodworks (SGW) is a social enterprise in Detroit, Michigan, USA, founded in 2018 by Marcus Greene, who learned carpentry during nine years in prison, and Rachel Novak, a furniture designer. SGW employs 22 “returning citizens” – people recently released from prison – who often find it very hard to get jobs. They salvage timber from houses being demolished in the city and turn it into handmade tables, benches and shelves, each made to the customer’s order. Every employee learns a full set of woodworking skills. SGW is a limited liability company that reinvests its profit.

Image: a long dining table made from planks of old timber in different shades of brown, with nail holes and saw marks still visible, standing in a bright workshop. A small brass plate on the table reads: “Made by James. Wood from 4127 Elm Street, built 1924. Second Grain – every board has a second chance”.

Resource 1 – News article from the *Detroit Enterprise Weekly*

From prison cell to workbench: the furniture firm with a 9 % re-offending rate

In Michigan, around a quarter of people released from prison return within three years. Among SGW’s former and current employees, the figure is 9 %. “A skill and a paycheck change everything,” says Marcus Greene. SGW’s furniture sells to homeowners and restaurants who value its story. But with fewer old houses now being demolished, salvaged timber is getting harder to find.

Table 1: SGW production

Resource 2 – Social media posts from a customer

Our Second Grain table arrived today with a plate saying who made it and which house the wood came from. My grandmother grew up three streets away from that house. I cried. Worth every cent. [1/2]

It did take 14 weeks to arrive, though – almost cancelled. If they could speed things up they’d sell thousands. [2/2]

Resource 3 – Internal email from Rachel Novak to Marcus Greene

From: Rachel Novak, Co-founder (design and operations)

To: Marcus Greene, Co-founder

Subject: The Lakeview Hotels order

Lakeview Hotels wants 1 800 identical bedside tables over two years (900 a year) for new hotels across the Midwest, at $310 each. To make them we would need a CNC* cutting machine ($240 000) and a production line where each person does one or two tasks. The hotels want identical tables, so we would use new plywood with an oak veneer, not salvaged timber.

A third idea: use the CNC machine for mass customization – a website where customers design a table from standard modules and choose salvaged wood and finishes, made in eight hours instead of thirty.

Our workshop has about 18 000 production hours a year; custom pieces now use about 15 600.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

* CNC (computer numerical control): a machine that cuts wood automatically from a digital design.

Resource 4 – Cost and price data

Table 2: SGW cost and price data

SGW’s fixed costs are $260 000 a year. The CNC machine would add $30 000 a year in fixed costs (maintenance, power, space). Without a CNC machine, a hotel table would take about 10 labour hours.

Resource 5 – Survey of SGW employees (20 replies)

Resource 6 – Interview with Denise Carter, a Michigan parole officer

“Employers who hire returning citizens are rare. What makes SGW special is not just the job but the craft: people finish a table and see what they are capable of. Machine operators are in demand in Michigan too, so CNC skills are valuable. But if the work becomes repetitive and the mentoring disappears, I would worry about some of my clients.”