Waste Management Case Analysis Essay
Waste Management’s CEO, David Steiner, is seeking ways to help companies and communities keep as much trash out of landfills as possible, while turning a solid profit in the process. It is currently a cost leader in waste disposal with a fee for service business model and wants to convert to a recycling business with a fee for product business model. Many companies are aiming to have zero waste in the future, which is an issue for Waste Management, as it would slowly drive them out of business. The company took a look at everything that is put into the landfills and figured out that, if executed properly, it could someway be turned around to make money as opposed to being put in a landfill.
Taking all of the garbage and selling it into commodity markets would nearly double the revenues for the company. In its existing landfills, the company has a central pipe system that extracts the methane from trash and converts it into energy. While leading the industry in single stream recycling, the company still struggles to make people recycle and to do so efficiently. Through offering proper incentives, having the right partners, and resources, Waste Management will be able to reach its goals successfully.
Waste management needs to gain government support, residential support, and partner support for transitioning from fee service model to fee for product model of business.
One solution to reach the goals of Waste Management is to lobby governmental entities for subsidies for trash-to-energy and recycling initiatives and mandates for residential recycling. “…between 1994 and 2009 the U.S. oil and gas industries received a cumulative $446.96 billion in subsidies, compared to just $5.93 billion given to renewables in those years.” (Savitz) The government has little focus on alternative sources of energy, which causes emerging energy solutions to fail due to lack of funding. With proper funding the energy solution would excel and solve multiple problems for the environment and government. “There’s no uniformity and no penalty structure for those who does not follow the recycling guidelines set forward by either cities and/or states.” (Lierandi-Cruz) Despite telling people how much recycling helps the environment, they aren’t penalized for not doing so.
Creating some type of penalty would incentivize people to start recycling. Another possible solution is to partner with innovative companies in the recycling business. There are a number of recycling companies taking a different approach to recycling and offering different solutions for consumers. The most popular of these solutions is Upcycling. “Upcycling is the conversion of waste destined for landfills into new products of better quality or a higher environmental value.” (Hommes) Partnering with one of these companies would allow Waste Management to generate profits from the trash they are collecting, while not directly paying the customers. The final possible solution is to offer incentives to customers to separate waste. Possible incentive may be a reduction in service fees or payment for valuable goods. This solution will not only result in lower costs for the company to separate trash but increase the number of people that recycle.
The recommended solution for Waste Management is to combine governmental subsidies and mandates, partnering with innovative companies in the industry, and incentivize its customers. The combination of all solutions is crucial to the overall success. In order to increase the number of people that recycle, there needs to be some type of penalty for not doing so but also a reward when done. Government mandates will enforce the importance of recycling to the environment. Governmental subsidies will benefit as well by funding the trash to energy solution. Once mandates are enforced, Waste Management can offer further incentives to its customers to separate their trash and begin recycling.
Saving money is the biggest incentive for a consumer and by doing something so simple, the customer will save money and so will Waste Management. Mandates and incentives will increase the number of customers that recycle as well as the simple separation of products. In order to get rid of the increased amount of recycled products, partnering with innovative companies that are “Upcycling” will be an efficient solution. Partnering with one of these companies will allow Waste Management to increase revenues while effectively reducing the amount of trash in landfills. Tracking Metrics
Intermediate and conclusive tracking metrics will allow Waste Management to measure the success or failure of these new solutions. Intermediate metrics include % of revenue from new business and contribution margins. These will allow the company to see how effective the mandates and incentives are on customers starting to recycle and how much of the new business model is contributing to profit. Conclusive metrics include internal rate of return, surveys, earned value, and actual cost. These metrics will allow the company to see exactly how much it is costing them to operate with these solutions, what the value is, and the customer satisfaction.
Waste Management Inc. is an industry leading waste disposal company that is beginning to focus its efforts on reducing the amount of trash put in landfills and create a renewable energy source. In order to successfully reach these goals it needs to implement a combination of solutions to gain support from the government, residents, and partners. The recommended solutions for Waste Management are to lobby government entities for subsidies and mandates, partner with innovative recycling companies, and create incentives for its customers to recycle. The combination of these solutions will result in an increase in the amount of efficient recycling and allow Waste Management to increase its revenues, reduce the amount of waste and landfills, and create a renewable energy source on a large scale.
McPherson, Susan. “An Innovative Way To Recycle Electronics.” Forbes. Forbes Magazine, 16 Sept. 2013. Web. 22 Apr. 2014. Savitz, Eric. “Government Subsidies: Silent Killer Of Renewable Energy.” Forbes. Forbes Magazine, 14 Feb. 2013. Web. 22 Apr. 2014. Lierandi-Cruz, Ricardo. “Time for a National Recycling Mandate.” TheHill. N.p., 02 Nov. 2013. Web. 22 Apr. 2014. Hommes, Vrenni. “Cash for Trash: Innovative Companies Profitably Upcycle, Recycle and Reduce Waste.” Triple Pundit RSS. N.p., 05 Apr. 2012. Web. 22 Apr. 2014.