Internal and External Challenges in the Waste Management Industry Term Paper

Pages: 34 (8532 words)  ·  Bibliography Sources: ≈ 90  ·  File: .docx  ·  Level: Master's  ·  Topic: Transportation - Environmental Issues

123). Currently, approximately 10% of municipal solid waste is transferred between states nationwide (Highfill & Mcasey, 2004).

3.1.4. Socio-Cultural Segment. There is a growing movement among American consumers to recycle their municipal solid waste (Herndon, 2012).

3.1.5. Technological Segment. Waste Management's investments are aimed primarily at acquiring new technology and production capacity (Herndon, 2012).

3.1.6. Global Segment. The company competes in the North American market only.

3.1.7. Summary of General Environment Analysis. There is a growing trend for municipal waste disposal services to extract as much value as possible from the wastes they handle, including energy generation schemes that are intended to divert as much solid wastes from landfills as possible (Herndon, 2012).

3.1.8. Driving Forces. Increasingly onerous environmental regulations are forcing many municipalities to reevaluate their waste disposal regimens to include recycling and compositing alternatives (Herndon, 2012).

3.2. Industry Analysis

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3.2.1. Description of the Industry. The term "municipal solid waste" is used to describe a specific segment of the waste stream that is generated by commercial, residential, institutional, and certain industrial sources, comprised of mostly solid wastes (Tiller & Jakus, 2005). According to Tiller and Jakus, "Traditionally, municipal solid waste management has been the responsibility of local governments, with landfilling the most common method of disposal" (p. 220). Local governments, though, may elect to outsource services such as municipal waste management. In this regard, McDavid (2000) notes that, "Local governments, organized on behalf of their residents, can make decisions to provide services to their residents or choose to let residents provide those services for themselves" (p. 157). Most local governments, though, have retained this aspect of waste management. For example, Villanueva (2008) reports that, "The management of these wastes is the responsibility of local governments in accordance with a hierarchical system developed by the U.S. Environmental Protection Agency and adopted by most states" (p. 205).

Term Paper on Internal and External Challenges in the Waste Management Industry Assignment

The municipal solid waste industry is faced with a wide range of materials for disposal, as depicted graphically in Figure 1 below.

Figure 1. Total municipal solid waste by material in the United States: 2012

Source: EPA (2014)

Each of these groups of materials has its on unique disposal requirements and/or the opportunity for recycling or energy generation (Herndon, 2012). According to the U.S. Environmental Protection Agency (EPA), approximately 251 million tons of trash was generated in the United States in 2012; of this amount, about 87 million tons of this material was recycled or composted, representing a 34.5% rate of recycling rate (Municipal solid waste, 2014).

3.2.2. Industry Dominant Economic Features. The company's market is comprised on a wide range of customers, including private consumers, certain industries as well as commercial enterprises. Depending on the type of wastes that are involved, they can be recycled, composted or transformed into energy (Herndon, 2012).

3.2.3. Market Size. The U.S. Environmental Protection Agency reports that approximately 251 million tons of trash was generated in the United States in 2012; of this amount, about 87 million tons was recycled or composted, representing a 34.5% rate of recycling rate (Municipal solid waste, 2014).

3.2.4. Market Growth Rate. The municipal solid waste industry has experienced sustained growth in recent years (Herndon, 2012). During the last several decades, though, the market growth rate for the solid waste management industry has changed. According to the EPA, "Solid waste generation per person per day peaked in 2000 while the 4.38 pounds per person per day is the lowest since the 1980s" (Municipal solid waste generation, recycling, and disposal in the United States: Facts and figures for 2012, 2014).

By contrast, the rate of recycling has increased from less than 10% of municipal solid wastes generated in 1980 to more than 34% by 2012 (Municipal solid waste generation, recycling, and disposal in the United States: Facts and figures for 2012, 2014). In addition, the disposal of municipal solid wastes to landfills has decreased from 89% of the amount generated in 1980 to less than 54% in 2012 (Municipal solid waste generation, recycling, and disposal in the United States: Facts and figures for 2012, 2014).

3.2.5. Industry Trends. There is a growing trend among waste management providers to extract as much value as possible from the materials they process, including trash-to-energy regimens (Tiller & Jakus, 2005). In response to the growing problems associated with municipal waste management, the United Kingdom produced and published the Government's Sustainable Development Strategy which outlined the country's environmental policies and guidance for improve waste management practices that are reflective of current trends in the industry (Edgar, 2005). For instance, according to Edgar, "The report introduced the principle that the 'polluter pays' and is associated with the precautionary principle that 'prevention is better than cure'. The Government viewed this as an important means of influencing potential polluters" (p. 15). The operational strategy for improving solid waste management practices included the following three main objectives:

1. To reduce the amount of waste that society produces;

2. To make best use of the waste that is produced; and,

3. To choose waste management practices that minimize the risks of immediate and future environmental pollution and harm to human health (Edgar, 2005, p. 16).

In addition, the strategy developed by the UK also addressed a so-called "waste hierarchy" for reduction, re-use and recovery of solid municipal wastes that serves as the basis for its sustainable waste management policies (Edgar, 2005). These trends are consistent with the efforts being made in the United States where recycling has become an increasingly popular alternative strategy for dealing with the growing solid waste disposal needs of many U.S. municipalities (Folz, 2008). According to the EPA, "Recycling and composting prevented 86.6 million tons of material away from being disposed in 2012, up from 15 million tons in 1980" (Municipal solid waste, 2014, para. 2).

The diversion of this amount of municipal solid waste reduced the release of approximately 168 million metric tons of carbon dioxide equivalent into the atmosphere in 2012 (Municipal solid waste, 2014, para. 3). These trends are due in large part to the increasing costs of landfilling as a result of a more stringent regulatory environment. In this regard, Folz reports that, "Whether faced with dwindling landfill capacity, rising charges for waste disposal or tougher federal, state, and county solid waste management policies, the appeal of recycling lies in its potential to be a primary method, along with source reduction and composting for managing the municipal solid waste stream" (p. 300). By diverting municipal solid wastes to prevent them from entering the waste stream, it is possible to reduce the costs associated with landfilling. As Folz points out, "Recycling can help to control the sky-rocketing costs of landfill disposal and incineration by diverting a significant proportion of the solid waste produced locally" (2008, p. 300).

3.2.6. Five Forces Analysis. An application of Porter's five forces is provided below.

Power of Buyers: Municipalities currently have few viable alternatives available for their waste disposal needs. The provision of waste management services by municipalities rather than outsourcing these services may become more prevalent in the future as technological innovations and increased value from waste are realized.

Power of Suppliers. Larger waste management companies such as Waste Management enjoy a competitive advantage through economies of scale.

This competitive advantage can be eroded by cut-throat pricing from lower-priced competitors that have leaner operations. Threat of Substitution. Recycling may remove significant portions of municipal solid wastes from the waste stream. Waste Management is currently searching for new ways to extract value from municipal wastes.

Threat of Entry. As traditional methods of municipal solid waste management have become increasingly expensive as a result of increased regulation, a growing number of municipalities across the country are considering cooperation as a viable waste management strategy (Tiller & Jakus, 2005).

The threat of this new entrant into the waste management field will vary, though, depending on the unique circumstances of the municipality. In this regard, Tiller and Jakus point out that, "While economies of scale may be a factor in the consolidation decision, similarities and differences between counties in current individual provision levels of solid waste services, ability to pay for services, and expectations for future solid waste service demands are statistically more important" (2005, p. 221).Despite its competitive advantage by virtue of its larger size, the barriers to entry in this industry are relatively low. One of the company's main competitors, Casella Waste Systems, Inc., started business with just one truck.

Internal Rivalry. None identified.

Kermally (2003) advises that Porter's five forces framework can provide an improved understanding of the competition in a given industry. In this regard, Kermally notes that, "In order to construct a competitive strategy, an organization needs to know what is likely to happen in the markets in which the organization delivers its products and services. It also has to know who its competitors are in a particular industry structure" (2003, p. 58). To this end, a summary of Porter's five forces applied to Waste Management, Inc. is provided in Table 1… [END OF PREVIEW] . . . READ MORE

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