Business plan for green collector bottles and cans collection system

SUMMARY OF MASTER’S THESIS This thesis sought to determine the viability of creating a solid waste collection and categorization business in Ho Chi Minh City, Vietnam.. LIST OF ABBREVIAT

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

HO XUAN HOANG

BOTTLES AND CANS COLLECTION SYSTEM

Major: Business Administration

Major code: 8340101

MASTER’S THESIS

HO CHI MINH CITY, July 2022

THIS RESEARCH IS COMPLETED AT UNIVERSITY OF TECHNOLOGY – VNU – HCM CITY

Instructor: Dr Nguy n V Quang

Examiner 1: Dr Phan Tri u Anh

Examiner 2: Dr Thanh L u

Master’s thesis is defended at HCM city University of Technology, VNU-

HCM City on 22/07/2022

The board of the Master’s Thesis Defense Council includes:

1 Chairman: Assoc Prof Ph m Qu c Trung

2 Member: Dr Nguy n V Quang

3 Secretary: Dr Nguy n Th c Nguyên

4 Reviewer 1: Dr Phan Tri u Anh

Verification of the Chairman of the Master’s Thesis Defense Council and

the Dean of School of Industrial Management after the thesis being corrected (If any)

CHAIRMAN OF THE COUNCIL DEAN OF INDUSTRIAL

MANAGEMENT

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

SOCIALIST REPUBLIC OF

VIETNAM Independence – Freedom -

Happiness

THE TASK SHEET OF MASTER’S THESIS

Date of birth: 21/01/1996 Place of birth: Ho Chi

Minh

Major: Business Administration Major code: 8340101

I THESIS TOPIC: Business plan for Green Collector – bottles and cans

2 Identify business idea, concept

3 Analyze the economy, industry, market, and customer behavior

4 Develop a business plan

5 Risk assessment and exit option

III TASKS STARTING DATE: 01/03/2022

IV TASKS ENDING DATE: 30/06/2022

V INSTRUCTOR : Nguyen Vu Quang, PhD

HCM City, date 30 month 06 year 2022

DEAN OF INDUSTRIAL MANAGEMENT

ACKNOWLEDGEMENT

Without the assistance of numerous people, this endeavor would not have been feasible Many thanks to Dr Nguyen Vu Quang, my adviser, who read through my multiple edits and assisted in clearing up the confusion Also, many thanks to my classmate Nguyen Dung Uyen Thi for her invaluable assistance

I'm grateful to the University of Technology Ho Chi Minh for offering training classes that gave me the expertise I needed to finish this project And finally, many thanks to my parents, sweetheart, and many friends who stood by me during this drawn-out process and never failed to show their love and support

SUMMARY OF MASTER’S THESIS

This thesis sought to determine the viability of creating a solid waste collection and categorization business in Ho Chi Minh City, Vietnam In addition, the primary purpose of the thesis was to create a business plan for

"Green Collector." In accordance with a conceptual framework, the market research was conducted This framework contained a business concept, PESTLE analysis, Porter's five factors analysis, analysis of competitors, SWOT analysis, empirical research, and a business plan The author conceived the "Green Collector" after observing the Deposit Return system in European countries, where he had the opportunity to study In addition, qualitative research methodology was selected for the study To collect data, however, semi-structured interviews were used The interview sample consisted of an expert from the solid waste treatment company E.TECO In addition, observation was employed as a method of data collecting For both online and offline respondents, the survey questions were created in a themes-based fashion

According to the data, the economy of Ho Chi Minh is solid, and both the government and the HCMC committee encourage investments in environmental management In addition, the SWOT analysis revealed that the "Green Collector" firm offers strengths, such as cutting-edge technology, a distinctive operation model, and further chances However, the thesis also emphasized obstacles such as high investment, ease of operation, and overwhelming competition

In addition, the business strategy was created with Business Model Canvas in mind The business plan said that the required startup capital was 1.1 billion Vietnamese Dong, with the author providing 100 percent of the stock According to the financial plan, after three years of operation, "Green Collector" will have a positive net present value (NPV) The required start-

up money, an estimate of profits and losses, and further appendices were also included with the thesis

Consequently, the results of the study predict the success of "Green Collector" in Ho Chi Minh City

TÓM T T LU N V N TH C S

Lu n v n này nh m xác đ nh tính th c ti n và kh thi c a vi c hình thành

Chí Minh, Vi t Nam Ngoài ra, m c đích chính c a lu n v n là l p m t k

ho ch kinh doanh chi ti t cho d án kh i nghi p "Green Collector." Các

ch ng c a lu n v n bao g m khái ni m kinh doanh, phân tích PESTLE, phân tích n m y u t c a Porter, phân tích đ i th c nh tranh, phân tích

SWOT, nghiên c u th c nghi m và k ho ch kinh doanh

Tác gi đã hình thành nh ng ý t ng v “H đi u hành Xanh” sau khi

quan sát h th ng Hoàn tr ti n g i các n c Châu Âu, n i tác gi đã có

c h i h c t p Ngoài ra, ph ng pháp nghiên c u đ nh tính đã đ c l a

ch n cho nghiên c u Tuy nhiên, đ thu th p d li u, ph ng pháp ph ng

v n chuyên gia đã đ c áp d ng Các câu h i ph ng v n đ c tr l i b i

m t chuyên gia t công ty x lý ch t th i r n E.Teco Ngoài ra, quan sát

th c ti n c ng nh d li u trên m ng c ng đ c s d ng nh m t ph ng

pháp thu th p d li u i v i kh o sát tr c tuy n, các câu h i kh o sát

đ c t o ra d a trên nh ng nhu c u v thông tin đ u vào c ng nh tìm hi u

các th hi u c a ng i tiêu dùng ti m n ng

Theo s li u, n n kinh t c a Thành ph H Chí Minh đang phát tri n

v ng ch c, và c chính ph và y ban Thành ph H Chí Minh đ u khuy n khích đ u t vào qu n lý môi tr ng Ngoài ra, phân tích SWOT ph n nào

c ng c r ng công ty "Green Collector" cung c p các th m nh, ch ng h n

nh công ngh tiên ti n, mô hình ho t đ ng đ c bi t và nhi u c h i h n

n a Tuy nhiên, lu n v n c ng nh n m nh nh ng tr ng i nh đ u t cao,

cách th c v n hành và s c nh tranh t các đ i th

Ngoài ra, chi n l c kinh doanh đ c t o ra v i mô hình kinh doanh

Canvas K ho ch kinh doanh cho bi t, v n kh i nghi p c n thi t là 1,1 t

đ ng Vi t Nam, v i s v n đ u t t nh ng nhà sáng l p Theo k ho ch tài chính, sau ba n m ho t đ ng, “Green Collector” s có giá tr hi n t i

ròng d ng (NPV) S ti n đ u t ban đ u, b ng d tính doanh thu, báo

cáo dòng ti n m t và các ph l c khác c ng đ c li t kê chi ti t trong lu n

v n

Do đó, k t qu c a nghiên c u c a lu n v n s ph n nào đ nh h ng

đ c s thành công c a mô hình kinh doanh “Green Collector” t i Thành

ph H Chí Minh

C OMMITMENT OF THE THESIS’ AUTHOR

I declare that I am the sole author of this thesis and that it has not been presented, in whole or in part, in any previous degree application Unless otherwise specified by reference or credit, all of the work given is my own

Author

Ho Xuan Hoang

TABLE OF CONTENT

TABLE OF CONTENT vi

LIST OF TABLES x

LIST OF FIGURES xi

LIST OF ABBREVIATIONS xii

CHAPTER I INTRODUCTION 1

1 Vietnam’s environmental issues and business opportunity 1

2 Problem statement 4

3 Objectives of the thesis 5

4 Scope of the study 7

5 Research significance 7

CHAPTER II LITERATURE REVIEW 8

1 Start-up process and Business plan for a start-up 8

1.1 Start-up 8

1.2 Business plan 9

2 Industry and competition analysis 11

2.1 The industry of waste collection and treatment process 11

2.1 Deposit return scheme 12

2.1.1 Multi-use deposit return scheme 13

2.1.2 Single-use deposit return scheme 14

2.1.3 Reverse Vending Machine type 14

2.2 Competition analysis 15

2.2.1 Political, Economic, Socio-Cultural, Technological, Legal, and Environmental (PESTLE) Analysis 15

2.2.2 Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis 18 2.2.3 Porter's Five Forces 19

3 Deposit Return Scheme related to the previous project 21

3.1 History of Deposit Return Scheme 21

3.2 Successful factors for DRS 21

3.3 Significance of DRS 22

4 Business Model Canvas 25

4.1 Key Partnership 25

4.2 Key activities 26

4.3 Key Resources 26

4.4 Value Propositions 26

4.5 Customer Relationship 26

4.6 Channels 27

4.7 Segmentation of Customers 27

4.8 Cost Structure 27

4.9 Streams of Revenue 28

CHAPTER III RESEARCH METHODOLOGY 29

1 Research Process 29

2 Data collection 30

2.1 Secondary data 31

2.2 Primary data 31

3 Data Analysis 33

4 Financial issues 33

CHAPTER IV BUSINESS CONCEPT 35

1 Introduction of the business concept 35

2 Market segmentation 35

2.1 Customers 35

2.2 Suppliers 35

2.3 Partnerships 36

2.4 Products 36

3 Business Canvas Model 36

3.1 Key partnerships 37

3.2 Key activities 37

3.3 Key resources 38

3.4 Value propositions 38

3.5 Customers relationship 38

3.6 Channels 39

3.7 Cost structure 39

3.8 Revenue stream 39

40

1 Economic Environmental Analysis 40

1.1 Political 40

1.2 Economic 41

1.3 Social 41

1.4 Technological 42

1.5 Legal 43

1.6 Environmental 44

1.7 PESTLE Analysis Summary 44

2 Industry Analysis 45

2.1 Industry competition 45

2.2 Suppliers' leverage 45

2.3 New entrants to the industry 46

2.4 Bargaining power of customers 46

2.5 Substitute products or services 47

3 Market Analysis 48

3.1 Characteristic of the surveyed group 48

3.2 Summary of the survey 50

3.3 Summary of the interview 53

CHAPTER VI DETAILED BUSINESS PLAN 55

1 Executive Summary 55

2 Competitive Advantage 55

3 Marketing Plan 57

3.1 Products/Services 57

3.1.1 Products 57

3.1.2 Advertising services 60

3.2 Place 61

3.3 Price 63

3.3.1 Deposit Value 63

3.3.2 Advertising Service Price 64

3.4 Promotion 65

4 Operation Plan 66

4.1 Startup Phase (2023-2025) 66

4.1.1 Human resources 67

4.1.2 Daily operation 68

4.2 Near future (2025-2028) 69

4.3 Long-term operation strategy (2028-2030) 69

5 Financial Plan 69

5.1 Initial capital investment 69

5.2 Collection scenarios and profit, loss projection 71

5.2.1 Collection scenarios 71

5.2.2 Profit, loss projection 76

5.3 Calculation of Net Present Value 78

5.3.1 Cash flow statement with exit option 79

5.3.2 Cash flow statement with continue in operation 80

6 CRITIAL RISKS MANAGEMENT AND EXIT OPTIONS 81

6.1 Critical Risks Management 81

6.1.1 Identify the risks 82

6.1.2 Prioritize the risks 83

6.2 Exit options 84

CHAPTER VII CONCLUSION 84

REFERENCE 86

APPENDICES 93

1 Appendix 1 93

2 Appendix 2 94

a Interview question 94

b Interview answer 94

LIST OF TABLES

Table 1 Financial Issues 33

Table 2 Business Canvas Model 37

Table 3 Comparison between S1 Rugged and YC-104 59

Table 4 Deposit value of "Green Collector" 64

Table 5 Price of Television Commercials 65

Table 6 Expected human resources at “Green Collector” 67

Table 7 Green Collector establishment costs 70

Table 8 Comparision pricing strategy between "Green Collector" and "Ve chai" 72

Table 9 Collecting price from TOP VIET Company(Topviet, 2022) 74 Table 10 Pessimistic scenario 75

Table 11 Average scenario 75

Table 12 Optimistic scenario 75

Table 13 Projected income statement of the "Green Collector" from 2023 to 2025 (Unit: VND) 76

Table 14 TVC Revenue per Customer in VND 77

Table 15 Projected cash flow statement with liquidation 79

Table 16 Projected cash flow statement without liquidation 80

Table 17 Risk analysis matrix 83

LIST OF FIGURES

Figure 1 Reverse Vending Machine 13

Figure 2 Mini Reverse Vending Machine (Source: Internet) 14

Figure 3 Medium Reverse Vending Machine (Source: Internet) 15

Figure 4 Revolutionary Reverse Vending Machine (Source: Internet) 15

Figure 5 PESTLE Analysis Source: (Saga.vn, 2020) 16

Figure 6 PESTLE Analysis of the Green Collector 17

Figure 7 SWOT Analysis Source: (Bow-Now.com, 2021) 18

Figure 8 Income statement of Infinitum in the year 2018-2019 (INFINITUM,2019) 23

Figure 9 Income statement of Infinitum in the year 2019-2020 (INFINITUM,2020) 23

Figure 10 Business Model Canvas Source: (Corporate Finance Institute, 2020) 25

Figure 11 Research Process 30

Figure 12 Genders 49

Figure 13 Genders 49

Figure 14 Occupation 50

Figure 15 Amount of beverages used in one week 51

Figure 16 After-use behaviors 51

Figure 17 Plastic usage trend 52

Figure 18 Opinion about the business model “Green Collector” 53

Figure 19 Type of containers frequently use 58

Figure 20 TOMRA S1 RUGGED model (Tomra, Standalone Tomra S1 Rugged, 2022) 59

Figure 21 INCOM YC-104 model 59

Figure 22 List of the companies using the virtual office of Arenal (Arental, 2021) 61

Figure 23 Place the consumer wants to exchange the containers 62

Figure 24 Deposit value of other countries in the year 2018 (Tomra, Key elements of high-performing deposit return systems:#2 – minimum deposit value, 2018) 63

Figure 25 Deposit value voucher form in Iceland (Rvmsystems, 2022) 64

Figure 26 Poster on the vending machine (UniqueOOH, 2020) 65

Figure 27 Business Process Flowchart 68

LIST OF ABBREVIATIONS

BMC Business Model Canvas

DRS Deposit Return Scheme

FDI Foreign Direct Investment

GDP Gross Domestic Product

RVM Reverse Vending Machine

SWOT Strengths, Weaknesses, Opportunities, and Threats TVC Television Commercial

UPC Universal Product Code

VND Vietnamese Dong

CHAPTER I INTRODUCTION

1 Vietnam’s environmental issues and business opportunity

Vietnam is one of the fastest-growing economies in Southeast Asia as well as in the world This is reflected in Vietnam's economic statistics in the last 10 years (2009 - 2019), according to which gross domestic product (GDP) reached about 266 billion USD, per capita reached 2,800 USD, from

a growth rate of 5.40 percent in 2009 has increased to 7.02 percent in 2019, the highest in the past 10 years 2019 is also the second year, that Vietnam's GDP growth reached over 7.0 percent and exceeded the set plan (6.6 - 6.8percent) (People's Deputies Newspaper, 2020) In addition, international economic integration also has a strong impact on growth, contributing to promoting economic development and international trade activities in Vietnam The process of economic growth and rapid urbanization with the growing number of production and business industries, industrial zones, and urban services has created migration flows from rural to urban areas Economic development and urbanization on the one hand create millions of jobs for workers, but on the other hand, it also creates pressure on the environment, increasing the amount of solid waste generated especially domestic solid waste With a population of approximately 100 million, it presents significant challenges in terms of subsistence, living standards, economic growth, and environmental protection Currently, ecological hazards in our country are being influenced by industrialization, modernization, and climate change, particularly the contradiction between development and backwardness, which is a result of the strong influence of traditional thinking As a result, small farmer habits have not yet been perfected The following are some specific manifestations of Vietnam's environmental challenges today

In addition to being destroyed by continuous wars in the past, Vietnam’s

natural environment is also harmed by unconscious behaviors, reckless attitudes, and a lack of planning in the exploitation and use of natural resources According to the General Department of Forestry, the ratio of trees per person in major cities in Vietnam is now only 2-3 square meters per person, and the index of trees per person in urban areas is limited The world's modern streets have a population density of 20-25 square meters per person (T Dung, 2021) The area of eroded arable land has expanded dramatically to approximately 13.4 million hectares The primary cause of this scenario is shifting farming, illicit logging, increased traffic, and hydropower development that do not follow a coherent plan The issue of irrational land use planning is squandering the country's most important resource

Ecological contamination is a significant issue in the modern-day Numerous factories release industrial and daily-life wastes and harmful substances directly into the environment, producing ecological

contamination and human sickness folks According to Ministry of Natural Resources and Environment figures, the country today boasts over 5,400 craft villages, with over 1350 in Hanoi capital alone, but 95 percent of production activities degrade the environment, with more than half causing major pollution (Minh Thu, 2022) These are small businesses and manufacturing facilities that use generally obsolete equipment and have not made appropriate investments in the remediation of environmental pollution and waste In metropolitan places, dust concentrations are many times the permitted limit Carbon Dioxide emissions are 1.5 to 2.5 times higher than the allowed threshold, particularly in large cities and industrial zones Additionally, noise pollution is an issue in residential neighborhoods Additionally, the issue of mining, building materials, gold, and gemstones both legal and unofficial, has been wreaking havoc on the ecological environment Mines are upsetting the ecological equilibrium in

a variety of fields

According to numerous international experts, Vietnam is today confronted with several major environmental issues, including deforestation, soil erosion, and overexploitation of coastal resources, all of which threaten ecosystems, biodiversity, and genetic depletion This environmental situation, combined with climate change and sea-level rise, poses significant challenges to Vietnam's rapid and sustainable development in the coming years In the next few years, to effectively undertake environmental protection activities under changing international and domestic conditions, it is believed that, in addition to the aforementioned orientations, the government should concentrate on the following major solutions According to the report by Associate Professor, Doctor of Science Tran Nguyen Tuyen, from the Central Theoretical Council, he claimed that

Continue to raise awareness, educate the public about the critical nature

of the ecological environment, and on this basis, cultivate ecological consciousness, or the conscious knowledge of the interaction between man and nature Humans must rediscover their function in the natural system and the role of society Through the process of scientific and technological development, particularly in the context of the Industry 4.0 revolution, people must grasp the laws of nature and find rational ways to rationally apply them to the reality of society, to establish a sustainable natural foundation for social development

Technological innovation can take place in two ways: through technology transfer and through self-absorption of advanced technology with a high gray matter content and clean technology, which enables to achieve accelerated industrialization and modernization Simultaneously, it

is the most effective method of achieving economic development and environmental conservation Science and technology development are inextricably linked to environmental protection and improvement and

ensure rapid and sustainable socio-economic development Economic development at the expense of the environment also means that its future is doomed The goal of technology transfer must be to find a way to meet economic growth goals while also protecting the environment

Vietnam has already applied the technological aspect in handling waste

in general and solid waste in particular The primary methods are landfilling, biofuel production, and incineration Vietnam was able to design and construct sanitary landfills in advance, ensuring compliance with Vietnamese norms and regulations However, according to reports from the Ministry of Construction in 2017, out of 660 landfills with a scale

of over 1 hectare, only 120 are sanitary landfills with an area of about 977.3

ha, the rest of which is accounted for 73.5 percent unsanitary (Members of Committee on Science, 2019) These landfills are usually temporary, open-air landfills without a leachate collection and treatment system, which is a source of water and air pollution

With the technology of creating microbial fertilizers from domestic solid waste treatment, facilities use aerobic or anaerobic incubation technology for about 40-45 days Some facilities using technology lines imported from Korea, Spain, and Belgium typically have to enhance to match the characteristics of unclassified domestic solid waste in Vietnam such as waste treatment plants Nam Binh Duong domestic solid waste (Binh Duong) with a capacity of 420 tons/day, Cam Xuyen waste treatment and processing plant (Ha Tinh province) with a capacity of 200 tons/day, Trang Cat waste treatment plant (Hai Phong) capacity 200 tons/day (News Agency Vietnam, 2019)

The incineration technique has been utilized in several places, mainly cities, heavily populated urban regions, or some districts and communes with different sizes from 10 to 150 tons/day In which, largely small-scale non-fuel combustion technology of 10-12 tons/day Some areas have also engaged in heat recovery combustion technology to dry waste and forest products such as Thang Long Environmental Services Joint Stock Company, Waste treatment, and fertilizer production firm in Thai Binh city (News Agency Vietnam, 2019)

Although technology has been applied in the waste treatment process, generally, solid waste recycling remains modest and sporadic, carried out primarily by the informal sector in craft communities, resulting in environmental damage The management and control are deficient in environmental protection by municipal governments The majority of recycling plants are small in size and require little investment in technology The majority of technologies are obsolete, with obsolete gear and equipment that contribute to secondary environmental contamination The primary technique of treating solid waste is still burial The primary landfill sites have lasted for a long period, depleting the land supply; the

rate of waste treatment combined with energy recovery remains low (Ministry of Natural Resources and Environment, 2019)

Furthermore, it can be seen that the majority of people are still unaware

of the collection, classification, transportation, and treatment of solid waste, particularly plastic garbage, such as bottles, cans, and plastic bags People's habit of using non-biodegradable plastic bags persists because they are unaware of the negative effects of plastic waste on the environment and ecosystems; they are also unaware of the economic benefits of sorting, collecting, and recycling plastic waste, resulting in a low collection ratio relative to the amount generated

Understanding the current situation of solid waste treatment in Vietnam, the entrepreneur desire to find a solution or a business concept that would elaborate the consciousness among people

2 Problem statement

According to Wikipedia, there are many types of solid waste, such as municipal, agricultural, domestic, medical, and industrial solid waste (EPA NSW, 2021) Municipal solid waste is generated by offices, households, markets, and schools, among others Agricultural solid waste includes straw, rice husks, packaging, maize cobs, and pesticide packaging Domestic solid trash generated in daily life includes all sorts of waste, including food, beverages, bottles, cans, and other domestic waste Industrial solid waste includes garbage from factories, industrial parks, and manufacturing facilities such as scrap iron, metal, plastic, rubber, paper, glass, etc Solid waste in urban areas accounts for more than 50 percent of the total amount of solid waste in the country, increasing from 32,000 tons per day in 2014 to 35,624 tons per day in 2019 (Environmental status report in 2019, 2019) According to Article 15 Decree 38/2015/ND-CP, domestic solid waste needs to be classified and stored in different containers And this activity is monitored, supervised, and inspired by both organizations and individuals to comply (Government, 2015) Although the Committee of Ho Chi Minh City (HCMC) has propagated the citizens to follow this policy, only a 74percent of the citizens are sorting the domestic solid waste Other ways of treating domestic solid waste are incineration and sanitary burying or landfilling Ho Chi Minh City has begun construction of a garbage incineration plant with a capacity of 2,000 tons per day in the Northwest Solid Waste Treatment Complex The investor is Vietstar Joint Stock Company The initiative is expected to alleviate HCMC's trash problem However, this plant is still required to classify garbage before processing, as the city's waste categorization at the source remains "stagnant" despite numerous implementation plans The purpose

of plants equipped with contemporary technology is to process trash to create composite fertilizers for agriculture; however, composite fertilizers can only be created from solid food waste; all other substances, such as

plastic, rubber, and nylon, must be recycled Meanwhile, recycling and treatment plants have fallen short of technological targets; just t 40percent

of waste is recycled; the remaining is either buried, burned, or destroyed

HCMC’s current waste treatment technology in total includes 31percent

incineration, recycling composting; and 69percent sanitary landfilling By

2020, the rate of domestic solid waste processed with sanitary landfill technology should be no more than 50 percent and no more than20 percent

by 2025 (Resource & Environment Paper, 2018)

Domestic solid waste in Vietnam in general, and Ho Chi Minh City in particular, is composed primarily of organic waste, has a high moisture content, and has a low calorific value, making it generally easy to eliminate

As a result, Mr Huynh Minh Nhut - Director of Ho Chi Minh City Urban

- Environment Company Limited - believes that the ideal option is to focus resources on educating people about waste sorting in their own homes (Minh Van, 2021) Therefore, the need of classifying solid waste in general and domestic waste, in particular, has provided the entrepreneur incentives

to start the business model in collecting and categorizing plastic bottles and aluminum cans One typical type of this business is based on the container Deposit Return Scheme (DRS) system This container deposit return schemes work by adding a small deposit on top of the price of a beverage

– such as those in plastic and glass bottles and aluminum cans – which is

refunded to the consumer when they return the empty bottle or can for recycling Think of it as buying the beverage but borrowing the container These programs are also known as container deposit systems or bottle bills

To integrate this system, it is necessary to conduct studies and interviews

to understand the business opportunity for applying DRS in Vietnam, then propose proper business models with a comprehensive business plan to establish a company in this field This thesis aims to complete the research

in specific districts in HCMC because HCMC is one of the largest cities in Vietnam

Going through all the above idea, this thesis focuses on some key points

to cover the following questions:

1) What is the consumer behavior toward the collecting and recycling of domestic solid wastes?

2) What are the business model and its benefit to the business toward the society in general and the consumer in specific?

3) What should be taken into notice in building the Green Collector business plan?

4) How should the entrepreneur analyze the sustainability factors such as risks, growth, or exit options?

3 Objectives of the thesis

The purpose of the thesis is to assist a business in developing a business plan for the author and a business strategy for the investors This entails

studying the business environment and identifying channels that may be beneficial to the organization As a start-up, potential investors and other stakeholders must have a clear understanding of the written plan, the company's operations, and goals, as well as the strategies and plans with objectives A business plan can be an excellent tool for guiding the growth and activities of a business

To assess the opportunity, market research will be undertaken to

understand the consumers’ behaviors toward the DRS in Ho Chi Minh City

in Vietnam and then the market's attractiveness will be determined The thesis will create an appropriate questionnaire for market surveys based on the market's attractiveness to determine target market segments and the

consumers’ reactions For instance, if the outcome is that some consumers

never recycle, a question to them could be "Are you willing to recycle if

there is an incentive reward?” By identifying the behaviors, a business

model may be created that benefits all stakeholders involved in DRS For instance, the supermarket could have a chance to increase the sales of beverages when more and more people participate in the DRS A complete plan for marketing, sales, operations, and management will be prepared based on the business model Finally, a financial pack will be estimated to demonstrate the operating cash flow and return on investment for the project

To ensure that the thesis is completed on time and with acceptable results, all of the following surveys and market research will be undertaken

in District 7, Ho Chi Minh City A group of random consumers will be asked to survey to ascertain their true desires (e.g., are they likely to recycle, and if yes then how often, do they prefer to use bottles or cans, etc.) Expert in waste treatment industry will be interviewed, to provide facts and experiences from his or her perspective compare to the business model, and how should the entrepreneur pursuit the success

In sum, the business scale is aimed only at a small number of supermarkets in District 7, in Ho Chi Minh City, to understand the

consumers’ behaviors before expanding the business

The objectives of the thesis are:

• Defining the business model and analyzing the benefits of the business toward a society in general and toward the consumer in specific

• Conducting feasibility analysis to establish that the business proposal is financially viable through economic, industry, market, business, and financial analysis

• Conducting sustainability analysis through the plethora of factors such as risks, exit options for the business

4 Scope of the study

The following describes the scope of the study for the business plan:

- Data was gathered and analyzed at the Department of Natural Resources and Environment of Ho Chi Minh City, solid waste market research, and public information on other Deposit Return Scheme in Vietnam and all over the world To understand the current market in deploying the project, as well as the potential market for further expansion

to other districts or provinces in the near future

- Conduct both online and offline surveys of consumers’ behaviors and

conduct interviews with waste treatment industry expert

5 Research significance

The findings from this thesis can assist the author in conducting an efficient and synchronous analysis and evaluation of the business plan as well as give the investors a positive viewpoint in investing in the project

As Vietnam is one of the fastest-growing economies, and with certain encouragement from the authority in the environmental preservation industry, there are obvious opportunities for the “Green Collector” start-

ups to capitalize on Additionally, this thesis also clearly defines the business strategy; growth strategy; operation plan; marketing plan; and financial projections and analysis Additionally, these findings aid identifying potential risks stand and growth for the project

CHAPTER II LITERATURE REVIEW

1 Start-up process and Business plan for a start-up

1.1.Start-up

The term "start-up" was first used in 1976 in the magazine Forbes

(Start-Up, 2016), and has since become one of the world's most famous buzzwords However, what does the term "start-up" mean Numerous definitions are available on the Internet, for example:

• A start-up is a business that is in its infancy It is typically financed

by its founder/entrepreneur, who attempts to capitalize on a developing product or service in the hope that sufficient demand exists for it Most of these small start-ups face long-term difficulties because of financial constraints caused by high initial costs or low revenue (Investopedia, 2018)

• (BusinessDictionary, 2018) defines a start-up as the period during which a business establishes its basic hierarchy and set-up This period can be defined as the period between the conception of an idea and the resolution of all financial concerns

Paul Graham, who has financed over 1000 start-ups, takes a slightly different view (Kiska, 2014) A start-up does not have to be a newly formed business Nor is it necessary to develop novel technological solutions or to secure funding from a variety of venture capitalists The word "growth" is at the heart of the start-up Graham cites examples of thousands of new businesses across the United States, primarily in service industries such as restaurants and bakeries However, these businesses are not structured for rapid growth They must have "distinct DNA" and be distinct from the start

There is even widespread agreement on the "age" of start-ups The preceding definitions refer exclusively to the early or initial stages of a business, but how long does this stage last? Some assert five years, while others assert three years A third group asserts ten years Other tensions are evident in the profitability and employee count of start-ups Once again, the precise edge is missing Finally, can the acquisition of a start-up be considered the conclusion? Additionally, there is no correct answer to this question Overall, Natalie Robehmed of Forbes magazine concludes the start-up debate with the following: "Similarly, if you've recently founded a small for-profit business to grow large enough to take over the world –

even if you're still working from your bedroom – you're probably a startup

founder." (Robehmed, 2013)

Mr Ries described an approach aimed at assisting firms in conducting tests and iterating when seeking a viable business model as the term "Lean Startup" (Ries, 2011) The steps in the lean start-up process are described (Chuong, 2020)

First, building the business vision: This stage, also known as ideation, is where the entrepreneur goes through the creative process of generating ideas and constructing the business that he or she wants to start Based on the problem statement, and the need for classification and recycling of solid waste, the entrepreneur has constructed the idea of the Green Collector project

Second, forming the business model and hypotheses: this process involves designing the value delivery model for customers A hypothesis is

a formalization of explicit or tacit assumptions about one or more characteristics of the business model, which were previously regarded as unknown or suspect Forming the business model may require different techniques, such as Business Model Canvas, PESTLE, SWOT analysis, or

Porter’s Five Forces, which are explained later in the following section

Third, building experiments is a scientific activity in which a researcher

or entrepreneur observes the change of independent variables by manipulating controlled factors They're utilized to put business model hypotheses to the test Qualitative interviews, a/b tests, prototypes, launch pages, minimal viable product (MVP), smoke tests, and concierge are all examples of experiments In this thesis, qualitative interviews are mostly used to experiment with the hypothesis

Fourth, measuring results: the entrepreneur must analyze and monitor the results of their experiments using data analysis and statistical methods, and compare them to previously specified hypotheses

In the final step, learning is an important notion and goal for a startup in its early phases Experiments are used to either confirm or disprove hypotheses Validated learning, as defined by (Ries, 2011), has four outcomes: pivoting, iterating, escalating, and giving up Pivoting is the action of dramatically modifying one or more parameters of the business model after running an experiment and abandoning a hypothesis to construct a new hypothesis and test it through fresh tests Iterating is a more moderate alternative to pivoting It entails promoting one or more adjustments in the company model or product to test the new hypotheses, thanks to the knowledge gained Entrepreneurs who believe they have discovered a viable business model and are willing to invest more in it to build a working organization around it and achieve economies of scale are said to be escalating When tests and trials reveal that the company vision set is unable to develop a sustainable business model, it is time to give up After going through all the above steps, which lead to the learning decision

of the entrepreneur

1.2.Business plan

By definition, a business plan is a thorough document that outlines the startup's business strategy and details the nature and context of the

company’s ideas and precise plans used to accomplish the objectives

(Hayes, 2021) A business strategy can be thought of as the bridge between concepts and realities The purpose of the business plan is to provide a detailed explanation of the product or service, the entrepreneur's needs and capabilities, and the development and investment requirements Without a solid business plan, small enterprises frequently lack a feasible strategy that addresses investment and resources and hence are anticipated to fail to grow

The act of planning compels entrepreneurs to provide a detailed overview of all areas of the business plan, including the situation and cost estimates for a company project, as well as all the numerous components that contribute to the success of business ideas A business plan is fundamentally the primary material required for the preparation of a business enterprise There are numerous benefits to developing a strong business plan, including the ability of the business project owner to invite and debate company ideas with investors to secure funding for the business ideas

A business plan enables entrepreneurs to gain a thorough understanding of the obstacles their business ideas may face, as well as who they need to impress as a realistic assessment of their condition and analysis of their competitive advantages in the market

On the other hand, it is critical to recognize the value of an accurate business plan, as completing a business plan does not guarantee the entrepreneur's success The importance of a business plan is in developing the necessary abilities for conducting research and developing a business plan as part of the aptitude development process The vision established

in the business strategy serves as the foundation for skill development At all times, the entrepreneur should commit time to research and get answers to all critical issues to evaluate and re-shape business chances, as the plan would be unsuccessful without them These factors result in the avoidance of unnecessarily wasting money and effort, and the likelihood

of success is conceivably increased

A business plan's essential components include cover sheets, tables of contents, summaries, a general company description, products and services,

a marketing plan, an operating plan, management and organization, personal financial statements, start-up costs and capitalization, and a financial plan, and appendices The summary is the most critical of these sections and also the most difficult to write (Sellars, 2009) This section offers the necessary information to pique the interest of all readers

2 Industry and competition analysis

2.1.The industry of waste collection and treatment process

There are three primary methods in Vietnam for treating domestic and industrial solid waste: biological composting, composting, and gas collection; and concentrating solid waste in landfills for landfilling, gas processing, composting, and incineration with or without energy recovery Currently, the Ministry of Construction has recognized five solid waste treatment technologies, including two bio-composting technologies for the production of organic fertilizers (Seraphin and Ansinh-ASC); one technology MBT-CD.08 (RDF pelletizing); and two combustion technologies (ENVIC and BD-ANPHA technology) According to the General Department of Environment, the country has approximately 200 conventional solid waste incinerators, the majority of which have a treatment capacity of less than 500kg/hour (Hà, 2019) However, if the operation does not meet technical requirements (the furnace's combustion temperature is not guaranteed, the volume of solid waste burned exceeds the allowed capacity ), or if the incinerator's technology is inefficient, obsolete waste can also result in toxic wastes such as dioxins, furans As of 2016, there were approximately 458 solid waste landfills with a capacity greater than 1 hectare; in addition, there are small-scale landfills in communes that have not been fully enumerated There are still unsanitary solid waste landfills in towns and rural areas, in particular Composting technology is primarily used to treat the organic matter in facilities that convert solid waste to organic fertilizer rural regions Composting technology is primarily used to treat the organic matter in facilities that convert solid waste to organic fertilizer

in rural regions Composting technology is primarily used to treat the organic matter in facilities that convert solid waste to organic fertilizer According to the Vietnam Environment Administration's 2019 National State of the Environment Report - Thematic "Urban Environment," approximately a 34 percent of domestic solid waste is directly buried in urban areas Around 42 percent of domestic waste is recycled at treatment facilities, while the remaining 24 percent of solid waste is waste from the landfill process (Environmental status report in 2019) Today, the practice of burying unclassified solid waste in concentrated waste dumps has demonstrated numerous shortcomings due

to the enormous amount of land required, overcrowded landfills, and adverse effects on the environment, water resources, and air, most notably

on human health Solid waste collection and treatment are also a financial burden on the state budget, as these activities are still largely subsidized

by the state Cleaning fees collected at residences and businesses are insufficient to support on-site collection activities

According to the 2017 Economic Census, the entire country had 1,791 enterprises engaged in water supply, waste management, and treatment, employing more than 107 thousand people However, large enterprises accounted for only 6 percent of the total (107 enterprises), while small enterprises accounted for 30.5 percent (547 enterprises) Micro enterprises accounted for 60.6 percent (1,086 enterprises), while medium enterprises accounted for the remainder

2.1.Deposit return scheme

From ocean plastic garbage and waste management expenses to government collection targets, more countries are prioritizing sustainable resource management An advantageous strategy that is currently being discussed is the notion of returning a small amount of financial value per amount of collected garbage to encourage people to keep collecting it for recycling This is a particularly popular solution for scattered and discovered seas things, like beverage containers Container Deposit Return Schemes (DRS) charge an additional deposit on the container in addition

to the beverage price, which is refunded when the container is recycled

In detail, when consumers purchase a beverage in a single-use container under a DRS, they are charged an extra deposit fee This deposit serves as a financial incentive to encourage recycling; it is redeemed when the consumer returns the empty container to a collection location There are plenty of ways for customers to return the container, for instance, directly

go to a collection point, call upon some bottle rack store or they can return

automatically via a “reverse vending machine” Following that, the

containers are collected and recycled, promoting bottle-to-bottle material reuse A reverse vending machine (RVM) is a machine that accepts used or empty glass, plastic, or aluminum bottles in exchange for a reward After inserting the recyclable item, it is compressed, sorted, and examined using the Universal Product Code (UPC) on the container to determine the number of weights, materials, and brands After the object has been scanned and authorized, it is crushed and sorted into the appropriate classified material storage location After processing the item, the machine provides incentives to the user, such as cash or coupons The collected bottles and cans, which are referred to as scraps, will be handled by the business and transported to a recycling facility This facility has all the necessary production lines to recycle the scraps and give them a new life cycle Ten European nations, including Croatia, Denmark, Estonia, Finland, Germany, Iceland, Lithuania, the Netherlands, Norway, and Sweden, have previously enacted the Deposit Return Systems Each of which has produced notable outcomes Estonia is the least successful country, with an excellent 82.7 percent overall return rate – including cans,

plastic bottles, and glasses – already greater than several other European

countries (Plasticsmartcities, 2019)

Recycling, littering, and the environment has always been treated extremely seriously in the soft drinks and bottled water industries Along with increasing recycling rates, an effective DRS should improve the quality and amount of material collected for recycling and reuse as new packaging This will help many producers shift toward a more circular packaging model, enabling bottle-to-bottle and can-to-can recycling, and ultimately toward the circular economy that the world desires

Figure 1 Reverse Vending Machine There are two types of deposit return schemes, the multi-use sch me,

e and the single-use scheme

2.1.1 Multi-use deposit return scheme

Multi-purpose DRS have been established a long time ago They operate in the following procedure: a beverage is bottled, transported, and consumed The bottle is then returned, cleaned, and re-used

Glass bottles can be reused over 50 times, whereas polyethylene terephthalate (PET) bottles can be reused up to 15 times (Simon, 2010) This conserves raw resources and energy and emits less CO2 than single-use bottles do Typically, multi-purpose DRS are the result of industry initiatives Several of these technologies have been in use for decades, for example, in the transportation of milk and beer bottles The deposit amount reflects the producer's economic interest in reclaiming its bottles Reusable bottles are often constructed of glass or PET and are occasionally packaged

in crates that include a deposit

Multi-use containers are more environmentally friendly than use containers, as long as the transport routes are not very long; otherwise, the energy expenditures and CO2 emissions outweigh the benefits Containers with several reuse cycles conserve resources and release less

single-greenhouse gas during the manufacturing process than single-use containers

The benefits of multi-use containers apply across the value chain (manufacturing, transportation, and disposal), and the benefits rise with the repeated use of uniform containers These advantages reduce as the number

of bottle types increases and the logistics become more convoluted and costly

2.1.2 Single-use deposit return scheme

Single-use containers are less environmentally friendly than use containers, at least when short transport paths are assumed The containers require additional resources and energy to manufacture For longer transport routes, these disadvantages can be offset by the benefits

multi-A good effort for the environment is that where single-use DRmulti-AS is in place, collection rates of single-use containers are generally high, allowing for the collection of significant amounts of single-origin packaging material This encourages the use of recyclable materials and contributes to resource conservation Additionally, single-use systems tend to be more adaptable and handy for the user, as evidenced by the availability of smaller bottles, which are frequently perceived as useful due to their decreased weight Single-use containers ease international commerce regulations by streamlining distribution structures

2.1.3 Reverse Vending Machine type

Nowadays, in the market, there is plenty of model of the Reverse Vending Machine that comes with different powers, capabilities, spaces, or purposes The first and smallest one is called the mini RVM, which is ideal for convenience stores and small businesses looking for a space-saving recycling option

Figure 2 Mini Reverse Vending Machine (Source: Internet)

The second model is the middle-size RVM, which offers a medium

to high volume capacity for medium and big stores that demand a custom recycling solution with increased storage space

Figure 3 Medium Reverse Vending Machine (Source: Internet) And the final model is the revolutionary model, which is designed with modular counting and sorting systems for beverage wholesalers, logistic centers, system operators, bottle depots, redemption centers, and industrial facilities with high to extremely high volumes

Figure 4 Revolutionary Reverse Vending Machine (Source: Internet) 2.2.Competition analysis

2.2.1 Political, Economic, Socio-Cultural, Technological, Legal, and Environmental (PESTLE) Analysis

Opportunities may arise as a result of new technologies that enable the firms to reach new customers and new funding sources New chances could urge firms to invest in better equipment, or changes in government policy which allow the firms to enter new markets On the other hand, threats may include deregulation, which exposes the firms to increased competition, a shrinking market, or interest rate increases, which can create difficulties if any business is heavily in debt (Corporate Finance Institute,

2019) PESTLE Analysis is a straightforward and widely used technique for analyzing the political, economic, sociocultural, technological, legal, and environmental changes affecting the

organization’s business environment Thus, the entrepreneurs can

gain a better understanding of the "big picture" forces of change to which they are exposed and, as a result, capitalize on the opportunities presented by them The following figure describes all factors in PESTLE Analysis

Figure 5 PESTLE Analysis Source: (Saga.vn, 2020)

Political factors influence a government's ability to influence the economy or a particular industry Political factors include tax policies, fiscal policy, trade tariffs, and other measures that a government may implement around the fiscal year and which can have a significant impact on the business environment (economic environment)

Economic variables are important determinants of an economy's performance because they have a direct impact on a business and have long-term repercussions For instance, an increase in any economy's inflation rate would impact how businesses price their products and services Additionally, it would affect a consumer's purchasing power and alter the economy's demand/supply models Economic factors include the rate of inflation, interest rates, currency exchange rates, and patterns of economic growth It also takes into account foreign direct investment (FDI), which varies by industry

Social factors assess the market's social environment and determinants such as cultural trends, demographics, and population analytics, among others Consider purchasing trends in Western countries such as the United States, where demand is particularly high during the holiday season, such as Christmas,

New Year’s Eve, Black Friday, and Cyber Monday

Technological considerations relate to technological advancements that may have a positive or negative effect on the

operation of the industry and market This is a term that refers to

automation, research and development, and the degree to which a

market is technologically aware

Legal factors have external as well as internal components

Certain laws affect the business climate in a particular country,

while businesses maintain their policies The legal analysis takes

both of these perspectives into account and then develops

strategies in light of these statutes Consumer protection laws,

occupational safety standards, and labor laws are just a few

examples

Environmental factors encompass all those that affect or are influenced by the surrounding environment This aspect of the

PESTLE is critical for certain industries, including tourism,

agriculture, and farming A business environmental analysis

considers a variety of factors, including but not limited to climate,

weather, geography, global climate change, and environmental

change, etc. Legal

- Government encouraging the recycling of solid waste

- Environmental protection must be placed at the center of development decisions

Society -Rise in population comes with the rise wastes

- The consciousness of classify and recycle waste among citizen is not high Technology

- With the explosion of technology in the 4.0 industry, applying advanced ICT are more common in the enterprises

Economy -Promising investment

from government in the

waste treatment

industry

Environment

-More and more wastes are

discharge to the environment

every seconds, especially in

the big city.

2.2.2 Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

SWOT analysis is a technique for evaluating a business's performance, competitiveness, risk, and potential, as well as the performance of a subset of the business, such as a product line or division,

an industry, or another entity Using internal and external data, the technique can direct businesses toward strategies that are more likely to succeed and away from those that have been less successful in the past or are likely to be in the future Additionally, they can receive guidance from independent SWOT analysts, investors, or competitors regarding whether

a company, product line, or industry is strong or weak and why

Analysts visualize a SWOT analysis as a square divided into four quadrants, each representing a different aspect of SWOT This visual representation provides a concise summary of the company's position While not all of the points under a given heading may be equally significant, they should all provide critical insights into the balance of opportunities and threats, advantages and disadvantages, and so on

Figure 7 SWOT Analysis Source: (Bow-Now.com, 2021)

The top quadrant represents the internal factors The left side shows the strengths The term "strengths" refers to what an organization excels at and what differentiates it from the competition: a strong brand, a loyal customer base, a strong balance sheet, and unique technology, for example For instance, a hedge fund may have developed a proprietary trading strategy that consistently outperforms the market It must then determine how to best leverage those findings to attract new investors Or in the Green Collector project, the strength is the technology drive factor in the procedure, such as automated collector, convenient incentive reward, etc

The opposite of strength in the top right quadrant is weaknesses Weaknesses prevent an organization from operating at maximum efficiency They are areas in which the business must improve to remain competitive: a weak brand, higher-than-average revenue, and lack of capital, due to the total new project development

The bottom quadrant represents the external factors First, on the left is opportunities Opportunities refer to external factors that favor an organization and may provide it with a competitive edge For instance, if

a country lowers tariffs on automobiles, a manufacturer can export them

to a new market, thereby increasing sales and market share The opportunities of the Green Collector are analyzed in the PESTLE methodology in the previous section, for example, the encouragement and support from the authority toward the waste treatment industry, and to companies who are investing in this portion

On the other right side, threats are defined as events or circumstances that have the potential to cause harm to an organization For instance, drought poses a threat to a wheat-producing company because it has the potential to destroy or reduce crop yield Other common threats include rising material costs, increased competition, and a scarcity

of labor One important factor which may threaten the Green Collector business is the opposite side of the opportunity, which is the insufficient support from the authorities Without the help, the project might suffer from a great amount of money in the initial investment phase

A SWOT analysis is a straightforward and effective method for identifying a company's strengths, weaknesses, opportunities, and threats

It is critical to capitalize on strengths, minimize threats, and seize

available opportunities Conducting a SWOT analysis is beneficial for strategic planning and determining a company's objectives

2.2.3 Porter's Five Forces

Porter's Five Forces Model is a framework for identifying and analyzing the five competitive forces that shape every industry and assisting in determining an industry's weaknesses and strengths Five Forces analysis is frequently used to determine the structure of an industry and thus corporate strategy Porter's model can be applied to any sector of the economy to better understand industry competition and to increase a company's long-term profitability The Five Forces model was developed

in 1979 by Michael E Porter, a Harvard Business School professor (CGMA.ORG, 2013)

Porter identified five unavoidable forces that shape every market and industry on the planet, with some qualifications The five forces are frequently used to assess an industry's or market's competitiveness, attractiveness, and profitability

Porter's five forces are as follows:

The first of the five forces is industry competition, which is defined

as the number of competitors and their ability to undercut a business The greater the number of competitors and the more comparable products and services they offer, the weaker a company's position Suppliers and buyers will seek out the competition of a business if they can offer a better deal

or lower prices On the other hand, when competitive rivalry is low, a business has greater leverage to increase prices and negotiate terms of deals to increase sales and profits

The force of new entrants into a market also affects a company's power The less time and money a competitor must invest to enter and compete effectively in a company's market, the more an established company's position may be significantly weakened An industry with high entry barriers benefits existing businesses by allowing them to charge higher prices and negotiate better terms

The following factor in the five forces model is the ease with which suppliers can increase the cost of inputs It is influenced by the number of suppliers of critical inputs to a good or service, the uniqueness of these inputs, and the cost of switching suppliers The fewer suppliers an industry has, the more reliant a business will be on a single supplier As a result, the supplier gains leverage and can increase input costs and pursue other trade advantages On the other hand, when a company has a large number of suppliers or low switching costs between rival suppliers, it can reduce its input costs and increase profits

Customer ability to influence price reductions or their level of power

is one of the five forces It is influenced by the number of buyers or customers a business has, the importance of each customer, and the cost

of acquiring new customers or markets for the business's output With a smaller and more powerful client base, each customer has more bargaining power when it comes to negotiating lower prices and better deals A business with a large number of smaller, independent customers will find it easier to increase prices to increase profitability

The final of the five forces is concerned with substitutes Substitute goods and services are a threat because they can be used in place of a company's products or services Businesses that produce goods or services with no close substitutes will have a greater ability to increase prices and lock in favorable terms When close substitutes are available,

customers can opt-out of purchasing a company's product, eroding the company's power

Understanding Porter's Five Forces and how they apply to a particular industry enables a business to adjust its business strategy to make the best use of its resources and maximize earnings for its investors

3 Deposit Return Scheme related to the previous project

3.1.History of Deposit Return Scheme

In 1970, British Columbia, Canada, implemented the world's first legally binding Deposit Return Scheme for single-use beverage containers (Wikipedia) When customers purchased a bottle or can, they were required

to pay a deposit, which was refunded in full when they returned the empty container to a collection point Depository Return Systems (DRSs) are present in 46 jurisdictions, including several Canadian provinces and Australian states, ten federal US states, ten European countries, Israel, and several Caribbean countries These programs recover single-use containers made of plastic, glass, and metal Fifteen additional countries have stated their intention to implement similar programs in their respective jurisdictions by 2023 (Ballerini, 2021) According to the Global Deposit Book report, published in December 2020 by Brussels think tank Reloop Platform, when DRS is implemented in these additional countries, approximately half a billion people in the world's most developed countries will be eligible to receive rewards for returning plastic, glass, or metal containers

3.2.Successful factors for DRS

The Global Deposit Book established that a more expensive deposit equates to a higher rate of return through a comparison of different deposit return systems The average return rate for deposits less than 7 US cents per container is 68 percent, increasing to 81 percent for deposits between

7 and 9.9 cents and 88 percent for deposits between 10 and 15 US cents (or higher) Europe is home to some of the most successful programs in the world, with return rates of up to 94 percent and minimum deposits of

15 US cents (Reloop Deposit Book, 2020)

Another critical factor in DRS's success is its collection systems for used containers Almost every collection system in Europe is based on the return-to-retail principle This means that retailers of alcoholic beverages are legally obligated to collect empty containers, which are then reused or recycled Alternatively, a return-to-depot system may be in place; these are more prevalent in the United States and Canada – Iceland is the only

European country that uses this model – and requires consumers to return

empty containers to a collection center

According to Reloop Platform's research, the average collection rate for return-to-retail schemes is 89 percent, compared to 81 percent for return-to-depot schemes Return-to-retail, the authors argue, works better because

it is more convenient for consumers and more profitable for retailers This

is because consumers are rewarded for returning containers, and retailers earn a handling fee and benefit from an improved brand image as a result

of their participation in the program

3.3.Significance of DRS

According to a study conducted by the European Court of Auditors, the legally mandated introduction of DRS for PET beverage containers in all European countries could be a critical tool for meeting the Single-Use Plastics (SUP) directive's minimum collection requirements (77 percent by 2025 and 90 percent by 2029) (Ballerini, 2021) According to Zero Waste Europe, legally mandated Deposit Return Systems should apply to all types of materials (plastic, glass, aluminum, etc.) and not just beverage containers, but also coffee cups and food containers (Auditors, 2020)

South Korea has already implemented a deposit system for coffee cups and takeaway food containers in May 2020 According to a Korea Herald article, the DRS will take effect in 2022 and, according to Korea's environment ministry, the new law will also help reduce CO2 emissions by 66percent, making a significant contribution to climate change mitigation Additionally, the Korea Herald reports that the plan will generate 36 million USD in economic benefits each year and will alleviate consumer inconvenience by liaising with producers and distributors to ensure that cups can be returned throughout the country (Yonhap, 2020)

One typical enterprise which implemented the DRS is Infinitum, located

in Norway Norway has a highly effective nationwide deposit and recycling system for non-refillable beverage packaging Infinitum administers the system Infinitum has been established by the beverage manufacturers and grocery chains in Norway to conduct efficient collection and recycling of beverage bottles and cans To prevent cans and bottles from becoming rubbish, the authorities have imposed a high environmental tax on beverage packaging The fee decreases in line with the proportion of packaging collected This motivates the industry and is the basis for Infinitum Products included in the deposit system display Infinitum’s distinctive

symbol This symbol assures the consumers that the deposit will be

refunded when the empty packaging is returned Infinitum’s easy-to-read

symbol also guides store staff who handle returns manually Every year, Infinitum accepts more than 1.3 billion returned bottles and cans at its three processing plants: in Bjerkvik, Trondheim, and Heia in Fetsund There, they are prepared for recycling, so they can be turned into new bottles and

cans The figures below show the income statement for the three respective

years 2018, 2019, and 2020 Infinitum

Figure 8 Income statement of Infinitum in the year 2018-2019

(Infinitum, 2019)

Figure 9 Income statement of Infinitum in the year 2019-2020

(Infinitum, 2020)

From the income statement, investors can easily observe that Infinitum has four sources of revenue: From Extended Producer Responsibilities (EPR), Deposit Return, sales of collected materials, and other operating revenues The revenue of Deposit Return accounted for more than 92.5percent of the total operating revenue Meanwhile, on the cost aspect, the Deposit Return Expenditure also tool a great portion of the total operating costs, with more than 86percent The secret to assisting this Nordic country in making such a significant leap is the extensive and synchronized adoption of the deposit system As a result, while buying a bottle of drink (juice, soda, etc ), consumers will have to pay a little more money (about 3,000-7,000 VND), which will be refunded when the bottle

is returned They can receive their money back in a variety of methods, including scanning the barcode of the bottle at a vending machine and having the money transferred to their account Many convenience stores and gas stations will also give consumers money or reward points if they return the bottle Each time a plastic bottle is recycled, the businesses can also make a profit Every new plastic bottle contains roughly 10 percent recycled material, and Norway intends to enhance this ratio by levying a tax to encourage producers to employ recycled plastic instead of the more expensive new plastic Another success factor of this operation is the company had support from the authorities, especially the government The 97percent recycling rate will never be achieved if simply targeted at consumers The Norwegian government has imposed an environmental levy on enterprises that manufacture and import plastic since 2014 However, the lower the tax, the more the corporation recycles If the recycling rate is greater than 95percent, the company will be tax-free (Nguyen, 2020)

Environmental thinking at all levels, which means the involvement of all stakeholders is a critical factor to the success of Infinitum To begin, customers return the empty goods to the store or via the Reverse Vending Machine Because people still go to the store for shopping purposes, meanwhile they can put the waste in the RVM, which is both efficient and environmentally friendly Cans and bottles are compressed at the pawnshop

so that they take up as little space as possible during shipping The conveyance further away from the store makes use of space in trucks that have already delivered items and are on their way back to the wholesale warehouse The empty goods are brought to Infinitum's sorting plant from the wholesaler Infinitum's three facilities in Bjerkvik, Trondheim, and Fetsund are used for sorting Plastic and aluminum are segregated and crushed further for volume-efficient recycling transport When plastic and metal are repurposed into new items, they are recycled The deposit system ensures that all materials are of excellent quality, allowing the plastic from bottles to be recycled and the aluminum from boxes to be recycled into new boxes Collection: 94 percent in grocery through 3700 pawnbrokers, 6

percent through 11,300 pickups (kiosks, gas stations, canteens, Red Cross,

Sports clubs, associations, and so on), and1 percent from online buying

(Infinitum, 2019)

4 Business Model Canvas

The Business Model Canvas (BMC) is a strategic management tool for

visualizing and evaluating any business concept or idea It consists of nine

boxes representing various fundamental aspects of a business The right

side of the BMC is devoted to the customer or market (external factors),

whereas the left side is devoted to the business (internal factors) Value

propositions in the middle represent the exchange of value between the

business and customers Alex Osterwalder, a Swiss business theorist,

entrepreneur, and Yves Pigneur, a computer scientist from Belgium,

originally developed the BMC and introduced it in their book 'Business

Model Generation as a visual framework for planning, developing, and

testing an organization's business models (Mansfield, 2019) The below

figure describes the template of Business Model Canvas

Figure 10 Business Model Canvas Source: (Corporate Finance

Institute, 2020)

4.1.Key Partnership

Depending on the size of the business, the entrepreneur could develop

a network of critical partners Business partners can be defined as

individuals or organizations that assist the company in achieving a

particular value frame As illustrated above, this is also solid advice Enterprises should prioritize developing partners who will participate in and support the business's primary activities

4.2.Key activities

This refers to activities that contribute to the creation of proposed value In other words, activities relating to the development, production, and provision of services to a particular customer segment Additionally, key activities can be response tasks that involve the development and management of distribution systems Additionally, it includes research to improve and develop business products and services The primary activities can be performed by humans or machines However, it is necessary to maintain a laser-like focus on value-creating activities rather than straying into unrelated jobs This will evaluate the organization's performance and operational capacity

4.3.Key Resources

This factor is also referred to as the resources required by the business The company's most valuable strategic asset is its resources Within a specific market niche, with a comprehensive competitor portfolio The critical resource must outperform the competition Typically, compared resources are comparable to the business's core competencies, which include the following: product, market scope, and infrastructure

In general, primary resources include capital, capital structure, various types of assets, both material and immaterial, and human resources According to the BMC, the primary resource is a component of the business infrastructure and is the most important group due to its influence over all other groups in the value system

4.4.Value Propositions

The proposed value must be based on the customer segment's needs and problems (selling what the customer needs) Based on Customer Segmentation, when clearly defining the customer personalities, their unique needs, and problems, about the benefits and characteristics of the product or service offered by the business Create a set of proposed values from there A list of the product's or service's values will be generated There are prior priority and priority values What matters is that those priority values translate into advantages in terms of the resources and capabilities that the business can develop In the BMC, the typical value proposition is a one-liner describing the value the company provides 4.5.Customer Relationship

Customers of the business can be organizations or individuals They are still primarily represented by one or more identifiable individuals