A study of circular business model for SMEs in the CNC machine tool field

Abstract: The purpose of this study is to develop and evaluate a circular business model for SMEs in the CNC machine tool field. To make the thesis more in-depth and with higher practical values, a CNC tool supplier company, MAQ AB, is chosen as the case study company. Even though the scope of the thesis is focused on the studied company, the circular business model and the cost structure simulation model are designed to be applicable to a wider range of audiencessuch as the SMEs in the related field and/or similar product structure. To better select and organize the related literature as well as to conduct the thesis in a more structured way, the abductive reasoning approach is chosen for the study. It begins with a problem description, an incomplete observation of the current situation which led to the research questions, and the corresponding literature review. Then, it continues with the development of several assumptions, in this case, the three potential circular business models. To create a model that is accepted by the end-users, information must be collected from them as well, therefore a customer survey is conducted. Based on the evaluation of the empirical data and the coherence with the theoretical findings, a final business model has been developed. In the end, with an evaluation of the findings from modeling and simulation, the study came to its conclusion as well as some discussions. Based on the result of the modeling and simulation for the cost structure, it would be economically beneficial for the studied company to alter the designed circular business modelif certain parameters could be changed as the optimal option. However, whether it is more economically beneficial for the studied company to enter the circularity in the designed way can be looked at from two different perspectives. In this work, a new cost structure model for a modularized product is developed that can be adapted to different input parameters. The newly developed model can help companies understand the financial impact of switching to the circular business model described. In addition, the possible adjustments can simulate how the result would be affected over 20 years.