Rules governing tire disposal
With increased motorable transportation, several tires have been used. A majority of them have lost their first functional life, causing a disposal crisis. Germany has millions of tires that have been disposed of, and if left unrecycled, they pose a significant threat to the environment. However, the research identifies recycling as one key opportunity for investors. Instead of disposing of tires, they are recycled. Hence, recycling has been recommended as a business opportunity that investors are going to exploit to contain tire disposal crisis.
Business Model
Recycling has been considered one way of repurposing tires in Germany. According to Manuzon, Bornillo, & Diaz (2018), rubber materials that have been used like tires can provide carbon black. In addition, some oil can be extracted from the tires and be turned into use at an industrial level. With the possibility of tires being turned into carbon black, flammable gas, steel wire, and fuel oil, investors can turn this into a profit-earning venture. Now that tires can be turned into a money-making venture, investors in Germany can leverage this opportunity.
Repurposing tires in Germany will offer investors an excellent opportunity to maximize profits. Making first-time customers recurrent ones is one approach investors can use to maximize profit. In the event, the investors get clients for the final products of spent tires such as carbon black; it will be crucial to retain them. A one-time client can still be a client in future. In their research, Mizani, Sheikh, Gholami, & Sana (2018), customers always add value to an organization, mainly if they are retained. They further recommended that organizations should strive to attract and retain customers to stay competitive. Once customers have been attracted and retained, the organization must create customer loyalty. Thus, for investors to get the most out of opportunities created by spent tires, it will be vital to make first-time clients recurrent ones. By doing so, there shall be a market for the final products from spent tires. The frequent clients will increase the flow of inventory, and create opportunities for the investors to maximize profits.
Offering discounts on shipping will be vital in maximizing profits. Some clients will be concerned about shipping costs. This will be an opportunity for the company to make a sale in Germany. Offering shipping discounts within Germany will encourage some clients to consider buying the firm’s products. Notably, these tires will produce fuel oil as well and still be used to make shoes. By providing discounts on shipping, a majority of customers across Germany will not be bothered by the shipping costs. As a result, they will buy either fuel oil or black carbon from the company, hence generating revenues to the company.
Increasing bulk sales will be one way of maximizing profits. Selling in small volumes will not be of much economic value. However, trading in large scale will make it possible for the company to generate huge profits. Increased sales translate into profits. Although sometimes huge sales volumes do not turn into profit, some company generates enormous profits from selling in bulk. According to Syam, Hess, & Yang (2016), firms are likely to gain in case of elevated sales uncertainty. The authors add that firms that take risks and promote their products stand an opportunity to generate profits. Therefore, pushing for higher sales is likely to help investors maximize earnings in Germany.
Nevertheless, there is a high level of openness in this market. This business ecosystem is hybrid. It is both private and public, and this implies that anyone that meets the legal requirement can enter this ecosystem. Ideally, the market is open to new entrants, but they have to meet several legal needs before they can start operating. The fact that the business ecosystem for spent tires is free-market it vulnerable to competition. Any other investor who feels that this is an opportunity can get into it, and this is likely to increase competition.
Further, this ecosystem has diverse industries. Other manufacturing industries can use carbon black and fuel oil produced from tires. Therefore, investors in the waste tire business can partner with other industries that will consider fuel oil and carbon black raw materials for their manufacturing activities.
Supply Chain
Prevalence of tires
Germany has a vibrant motor industry which has necessitated tire disposal crisis. With many vehicles on the road, the prevalence of tire replacement is unavoidably high. However, the tire trade is believed to be robust, but the disposal crisis has always been witnessed. In an article written by Ewan Scott addressing disposal of tires in Germany, the author indicated the increasing and irresponsible dumping of tires in areas such as Ebernhahn district, Reifental district and Hillscheid district (Scott, 2018). This illegal dumping of tires signifies an opportunity for a business person. These tires being dumped illegally in German regions are the raw material that can be turned into products that can fetch money in the market. With an innovative mind, investors can recycle these tires and make huge profits out of them.
The worst part of it; these tires are dumped on the road obstructing the movement of people and traffic flow. With many tires dumped on the road, it is reasonable to claim that there is limited recycling. If recycling business was vibrant, the tires could not be littering the roads; instead, they could have been delivered to an industry where they are turned into useful products. The entire of Europe, which Germany is part, has had a waste tire crisis. With illegal dumping becoming more rampant in some countries like Germany, an entrepreneur needs to create an opportunity of it.
Rules governing tire disposal
Tires are dangerous to the environment. They cause massive pollution, and given that governments across the world are taking environmental management serious Germany takes serious the issue of disposal. Germany has a Waste Management Act, which regulates how waste disposal is done. It is illegal to throw waste in public places. That is why the dumping of waste tires on the roads was considered illegal dumping. The German government takes the issue of waste dumping seriously, and the individual who disposes of waste anyhow can be punished or fined under this Act.
In addition to the Waste Management Act, Germany has some acts implemented at other levels of government to manage the disposal of waste. For instance, Bundeslander and municipal laws that give guidelines on how tires are used. Tire use is dependent on how a person uses their vehicles. Individuals that carelessly use vehicles are likely to damage their tires. Also, truck tires are likely to get damaged, and this makes their end-life short. With a short end-life, it means that waste tires are likely to be released to the environment frequently. Besides, there is FOEN (Federal Office for the Environment) with a primary role of guiding how spent tires are disposed of. The organization further offers guidelines on how tires are used to avoid shortening of their end-life. Hence, the following disposal rules will prevent instances of illegal dumping that result in environmental pollution. In essence, Germany is keen on environmental management, and therefore any misconduct like unlawful dumping can be punished under laws such as the Waste Management Act or municipal laws.
Product
Recommended products
Repurposing of tires will lead to the production of carbon black, fuel oil, steel wires and even shoes. Tires can replay skin in shoe-making. However, making shoes from tires is not a common practice in Africa among some artisans. In the event, shoes are made from tires; it will not be hard to get market in other countries, especially in Africa. However, for sure other products can be used to complement tires, and finally, it will be possible to produce nice shoes that can be supplied to several markets. Also, fuel oil that is produced from spent tires has industrial use. Therefore, shoes, carbon black and fuel oil are some of the final products that can be made from spent tires.
Advantages of repurposed tire products
One key advantage customers have from repurposed tires is the price. These final products from tires will be cheap, but of high quality. The cost of production for the products such as shoes, carbon black and fuel oil is likely to be low. It will be prudent to keep these final products affordable or cheap to attract customers. According to Rowe, Chullen, & Kirchoff (2016), high-quality product with low prices, are likely to motivate customers to buy these products. Therefore, keeping prices for these products low is expected to encourage customers to buy them. It will be advantageous for the customer to get high-quality products at lower prices. Mostly, high-quality products come at a high cost, but in the case, they come with low prices.
Similar competitive products
Nevertheless, the above products have similar competitive products. For instance, in the case of shoes, there are companies such as Puma and Nike that make some good shoes. Also, in the case of fuel oil, OPEC countries produce enough oil that is used in industries. This, then, imply that similar competitive products are likely to pose an intense competition against spent tire products. These competing products are reasonably priced in the market, meaning that they are affordable to many people.
Product regulations
Besides, the Germany government is steady and committed to protecting consumers. It also ensures that products produced to the market meet high standards to avoid cases of sub-standard products flooding the market. For instance, the ProSA (German Product Safety Act) ensures that products released to the market are safe to be used. This product regulation seeks to protect consumers from harmful products that are likely to flood the market in case of non-regulation. Besides, the Germany government has rules on packaging and standards that demand the manufacturer ensure the ingredients used to make the product are made manifest.
Protecting investors
Besides, to protect investors in the marketplace, I intend to stop losses. Stopping losses would require that I increase sales, retain customers and expand the market. When losses are prevented, and profits are maximized, it will be feasible to generate huge profits for investors. Also, diversification shall be leveraged to cushion investors from possible losses in the marketplace. Diversification will be achieved through research and development, which will innovate other products. With a broad product portfolio, it becomes feasible to protect customers.
Customers
Customers that exist in the country
In the case of shoes, customers are across the country. Tires can be used to make closed shoes that can be worn by children, adults or people of any age, given that they can be in different sizes. For the case, of carbon black customers can automakers, which use carbon black to make new tires. Fuel oil from spent tires can be used in industries. Essentially, customers for the products from tires are available across Germany, especially for the shoes. Nevertheless, carbon black can still be used in road construction or to make rubber runway.
Converting current customers to my products
Consistent advertising and promotion would help attract and persuade customers to purchase my products. According to Alalwan (2018), one can use social media for advertising or promoting products ostensibly to attract new customers. Thus, advertising on social media and the mainstream press is likely to persuade customers to buy new products that will be offered by the firm. No producer or manufacturer takes customers as theirs, and that is to mean if I advertise persuasively and adequately, I will win new customers. However, at present sales organizations are not vibrant, given that this is a new company. Nevertheless, given that people value shoes and some of the products the company will offer, it is likely that the company will win customers and make huge sales.
I intend to test to validate the interests of the market by promoting the new products. Promotion of the spent tire products will popularize the company and the brand. During the promotion, some first-time customers will be offered freebies. However, this promotion will cost the company, but it will help it validate the market’s interest as well as customers’ willingness to buy the new products from us. Nonetheless, this being the first market for our products, the sales volume is expected to amount to $200 for each customer per annum. Also, the customer specifications for the proposed products will include high quality, satisfying and durable. Besides, the customers will get these proposed products from retail chain outlets. The shoes the company will make from tires will be supplied to retail outlets, for easy access to customers.
Production
Manufacturing process
Different manufacturing processes will be used to make the proposed products. For instance, carbon black will entail crashing and overheating of the tires. While for apparel products, manufacturing processes observed in making shoes shall be employed. For shoes, stamping and cutting processes shall be applied in the manufacturing process. For fuel oil, overheating of the tires will be observed to melt it and get the final product.
Any land can be used to produce these products. However, due to environmental concerns, the land will be isolated from places occupied by people. Hence, the land for this company will be found in an industrial area or zone. Equipment used in mechanical systems, cryogenic systems, milling and cleaning, will be the ones to be utilized to make the proposed products.
The production process will be staffed through hiring. Engineers, marketers, planners and all individuals that will be required in various departments of the company will be hired competitively. People are looking for jobs and therefore, with enough capital getting human resource will not be a hurdle. In Germany, companies operate in a legal environment, and therefore before beginning operations; it is mandatory to observe or follow governmental regulations. There will be licensing, trade requirement, environmental requirement, and operational rules that the government has put in place for any business to operate in Germany. Nevertheless, my daily output will be determined by the market demands, but it is likely to be large scale because we target the entire Germany population.
Logistics
Partnering with some transportation firms will make it easier to get the tires to a manufacturing company. This is a business opportunity that other companies will be willing to seize, and therefore, it will be challenging to get a supplier of the tires. Also, the finished products will be supplied to the market through a partnership with retailers. In some instances, the company will deliver the products to the market and sometimes the customer will organize shipping of the products to their business premises. Nonetheless, the waste generated from the manufacturing will be disposed to the environment after treatment. The waste will only be disposed to the place recommended by the Germany government.
Financial Analysis
For sure, the selling product will be at a maximum of $50, and the cost of production is estimated at $13. The total revenue for the five years the company is likely to accrue will be $15 billion. Of the total revenue accumulated within five years, $5 billion will be profit. In the first three years, profit is estimated at an average of $3 billion. The remaining two years, profit is rated at an average of $2 billion.
Funding to launch the business will be obtained from commercial banks and investors. About $10 billion will be required to start the operations of this company. Therefore, sources of funding need to be diversified, given that this is a considerable business that demands substantial capital investment for its operations. The $10 billion will cater for labour, overhead expenses and materials. Material, overhead and labour costs are likely to cost about $2 billion for the first five years.