Using by-product synergy for competitive advantage
By: Deishin Lee
Contributors: Harvard Business School. Division of Research
Series: Working paper / Division of Research, Harvard Business School -- 07-098; Working paper (Harvard Business School. Division of Research) -- 07-098
Publisher: Division of Research, Harvard Business School
Published: 2007
Place of publication: Boston
Language: eng
Number of pages: 31
Description: We study how a manufacturer can leverage by-product synergy for competitive advantage. By focusing on the economic impact to the firm and the competitive market, this paper complements the existing industrial ecology literature that highlights the environmental benefits of by-product synergy. By-product synergy is defined as the conversion of a firm's waste stream from a manufacturing process into valuable feedstock for another manufacturing process. The distinguishing operational characteristic of a firm practicing by-product synergy is that quantities of the primary product and by-product are linked, with production of the primary product defining the upper bound of the quantity of the by-product. Optimization of a by-product synergy operation requires the firm to shift from a "product and waste" mentality to a "product and product" mentality, and thereby actively manage the quantities of both products to maximize profit. We find that it is almost never profit-maximizing for the firm to continue business-as-usual producing the primary product and converting all its waste into by-product.
Notes: "Draft: 5 July 2007"--Added t.p.

Includes bibliographical references.