Fundamentally business exists to generate economic gain through the sale of goods and/or services. Increasing threats from existing competitors and/or new entrants resulted in the need for competitively priced products which meet market expectations. Mass industrialization resulted in both increased environmental impacts and diminishing critical materials.
Globalisation opened markets to new entrants via on-line channel distribution methods has eroded traditional pricing and distribution models. Increasing environmental regulations have imposed stricter controls on industry, which impacts upon the business cost model. Industry must ensure compliance by identification of material usage within a supply chain, then take actions: (1) customer declarations; (2) import notifications; (3) safe use guidance; (4) requesting approval for continued use; (5) look for alternative materials where additional controls are enforced against a given material. EPR has placed additional obligations on producers to act in a responsible manner in both product design and the collection and recovery of materials from end of life products. The aim of sustainability it to produce highly durable products, which require less repair, servicing ultimately eliminating the need for replacement products, moving towards the circular economy. The circular economy will aim to reuse as much as possible, this should result in much larger waste reduction, recycling to return materials back into the production cycle. Thereby minimizing the need to absorb new materials.
Moving towards the path of sustainability and the circular economy requires additional investment, for some industries where the use of scarce materials is a given, it will become a necessity. For other industries as material prices rise over time, it will become more attractive over time. Producers must adhere to maintaining the balance between lowering costs, to remain competitive whilst managing the costs meet regulation, recycling and renewal of products.
Contributions to theory
The purpose of this paper was to examine correlations between competitive pricing and factors such as EPR, sustainability and the circular economy: (1) traditional cost and pricing models may be inaccurate based on the requirements for sustainability, EPR and the circular economy;
(2) newer cost accounting models such as EFCA, SAM, MFCA, LCA and LCC offer different options for recording costs. No one model excels above another, the producer needs to develop cost recording systems as most applicable to their business; (3) sustainability frameworks do exist, however they are geared towards the environmental, social benefits, and economic benefits of products, as opposed to developing accurate cost reporting, reflecting accurate product pricing; (4) respondents showed an understanding of costs which should be factored into cost and pricing models; (5) Key factors for sustainability were (a) strong leadership; (b) regulatory environment; (c) financial stability; (6) producers should regularly revalidate cost and pricing models to ensure profitability is maintained.
Further research extensions
The expert interviews / on-line questionnaire could be extended in future research by examining understanding and awareness of (1) UN SDG implementations geographically and within an industry setting; (2) recycled materials which have been recycled (not product) to build a picture of which materials are readily available as secondary materials; (3) further interrogation of product pricing in relation to chemical regulations. In hindsight reducing the number of questions and size of answers in the questionnaire/survey design may have increased the number of responses. The final research extension would be to create a sustainability framework that factors in product costs, product pricing in relation to analyzing the economic, environmental and social benefits for a producer.
ACKNOWLEDGMENTS
Many thanks to the organizations and individuals that participated in both the expert interviews and on-line questionnaires.
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32-BD24-5765
A CONCEPTUAL MODEL FOR DEVELOPMENT NEEDS OF MIDDLE