Business Model Canvas and Strategic Analysis of AusCann Holdings Ltd

The report examines the business model of AusCann Holdings Ltd by using nine blocks of Business Model Canvas. It includes the strategic analysis of the company and identifies the strengths, weaknesses, opportunities and threats. The report also recommends some changes to the business model of AusCann Group Holdings Ltd.

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Executive Summary
The below report examines the business model of AusCann Holdings Ltd by using nine blocks of
Business Model Canvas. It assists to recognize the characteristics which have a significant
impact on the organization’s operations. Based in Australia, the organization offers quality
medicinal cannabis to its targeted customers. Its business model relies on different components
and attracting the targeted customers by using effective strategies. The business of company is
supported by several success factors like strong team and partnerships with different players.
Strategic analysis of company indicates that it can use its strengths and opportunities to
overcome the potential threats and weaknesses. By using effective processes, the company will
be able to its downside risks which are related to government laws and regulations.

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Table of Contents
Introduction.................................................................................................................................................4
Succinct Description about the Business.....................................................................................................4
Business Model Canvas...............................................................................................................................4
Key Partners............................................................................................................................................4
Key Activities...........................................................................................................................................5
Value Proposition....................................................................................................................................5
Customer Relationships...........................................................................................................................5
Customer Segments................................................................................................................................5
Key Resources..........................................................................................................................................5
Channels..................................................................................................................................................5
Cost Structure..........................................................................................................................................6
Revenues Streams...................................................................................................................................6
Key Relationships among above Nine Blocks...............................................................................................6
Strategic Analysis (SWOT Analysis)..............................................................................................................6
Strengths.................................................................................................................................................7
Weaknesses.............................................................................................................................................7
Opportunities..........................................................................................................................................8
Threats.....................................................................................................................................................8
Critical Success Factors................................................................................................................................8
Downside Risk.............................................................................................................................................9
Recommended Changes..............................................................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11

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Introduction
Business model plays an important role in defining different processes and activities of business.
Each and every organization needs to develop its business model canvas so that it can manage its
products and services and offer them to targeted customers. The objective of this report is to
identify the significance of business model in strategy formulation process of a company. The
report is totally focused on AusCann Group Holdings Ltd. It includes the business model canvas
of the chosen company and states the relationship between 9 blocks of canvas. Moreover, there is
the discussion about major factors which contribute to company’s success. The company is
facing some downside risks which can affect its performance. At the end, some changes are
recommended to the business model of AusCann Group Holdings Ltd.
Succinct Description about the Business
AusCann Group Holdings Ltd. is an Australia based organization that is involved in the
cultivation and distribution of medicinal marijuana. The organization was founded in the year
2014 and headquartered in Australia. AusCann emphasizes on seeking other opportunities in
medical cannabis sector including purchase or making investment in other global producers,
plant breeders and suppliers. This company ensures that Australian patients have right to use cost
effective, higher quality cannabinoid medicines (Auscann Group Holdings Ltd., 2018). The ASX
data indicates that company has good position on ASX and it has increased its stock price index
as compared to previous year. The major reason behind this is the increase in company’s
revenues and profits (AusCann, 2018).
Business Model Canvas
Business Model Canvas is a visual presentation of different components of a company (Joyce &
Paquin, 2016). It includes several components defining the value proposition, infrastructure,
customers and finances etc.

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Business Model Canvas of AusCann Holdings Ltd. is discussed below:
Key Partners
The major partners of AusCann Holdings Limited are various firms with which this organization
has strategic relationships. These firms are like Canopy Growth, Phytoplant Research, Murdoch
University, Foundation Daya. The alliance with Canopy Growth provides AusCann an access to
the intellectual property and expertise in cultivation, production and supply of medicinal
products. Other partners are such as its shareholders, pharmaceutical firms, distributors, logistic
companies, plant breeders etc. These partners assist AusCann in effective manufacturing and
distribution of medicinal marijuana to patients (Darby, 2017).

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Key Activities
One of the major activities of AusCann Organization is to manufacture clinically cannabis
medicines. For successful distribution, it has partnered with different plant breeders and raw
material suppliers. The company focuses on providing a cure to neuropathic pain and chronic
pain. As Marijuana is an illegal drug so AusCann is offering licensed services by complying with
related laws and regulations.
Value Proposition
AusCann Holding Limited is delivering effective value to its targeted customers by supplying a
reliable source of higher quality medicinal cannabis. It is very cost effective and offers treatment
for chemotherapy induced vomiting and nausea for enhancing patient-reported sclerosis
spasticity.
Customer Relationships
The company is making various efforts to maintain effective relationships with its targeted
customers. It has managed its customer base by providing economical and clinical validated
medicinal marijuana (Osterwalder, Pigneur, Bernarda & Smith, 2014). It is offering its products
considering the needs of patients towards medicines.
Customer Segments
AusCann is offering its products and services by targeting the people who are suffering from
severe diseases like chronic pain, neuropathic pain and treatment of Chemotherapy etc.
Key Resources
It is identified that key resources of AusCann are human resources, partners, manufacturing
practices and equipment and raw materials that is used to manufacture the medicinal marijuana.
It has managed its human resources effectively so that they can perform in the benefits of
organization (Gallagher, Ignatieva & McCulloch, 2015).
Channels
The major channels of AusCann Holdings are:
 Advertisement
 Pharma partners
 AusCann’s official website

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 Online partners
Cost Structure
Cost structure of AusCann Company includes different costs like website maintenance charges,
administrative costs, marketing expenses, salaries to employees and payment to the plant
breeders. It is able to manage the structure of costs and expenses by maintaining transparency.
Revenues Streams
This company generates its revenues by selling medicinal marijuana to the patients who need it.
In addition to this, it generates funds from investors and in the form of interest income. The
company has maintained good relationships with its shareholders and attained a good position on
ASX (TW Holdings Limited, 2016).
Key Relationships among above Nine Blocks
All the blocks of Business Model Canvas have an effective relationship with each other. From
the above analysis, it can be said that these blocks are interrelated as AusCann Company needs
all these components to reach on the top position in pharmaceutical industry. To initiate with
and operate its business activities, this organization needs to focus on a market segment by
developing its resources. Value proposition of AusCann can help the organization to form better
relations with its targeted segments i.e. patients. Under its business model canvas, the company
will make efforts to develop coordination among its components. By managing its resources and
activities, AusCann is able to generate considerable revenues and profits. This company is acting
on the interconnected functions like responsiveness and reliability. In this way, it is most
significant to manage the relationship among all components of business model canvas (TW
Holdings Limited, 2016).
Strategic Analysis (SWOT Analysis)
SWOT Analysis is a significant analysis that is used by an organization to analyze its internal
and external environmental factors. These factors include strengths, weaknesses, opportunities
and threats. As mentioned above, AusCann Holdings Limited is operating its business by selling
high quality and cost effective medicinal cannabis (Helms & Nixon, 2010). SWOT analysis of
AusCann Holdings is discussed below:

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Strengths
 Innovative Business Idea
Offering medicinal cannabis for treating diseases is an innovative idea which was not common
when AusCann has introduced its business in the country. This is the major reason that this
company is able to gain a significant customer base in the country (Bourgeault, 2018).
 Strong Team
This is one of the major strengths of AusCann that supports the company to grow its business in
competitive environment. By strategic collaboration with different players, it has hired expert
and talented team. It is positioned to have the advantages of development by coordinating with
the related skills and knowledge.
 Strategic Partnership with well-established firms
It has strategic partnership with different firms like Canopy Growth, Phytoplant Research,
Murdoch University, Foundation Daya which supports company’s growth.
Weaknesses
 Negative Stigma
There is still a negative stigma surrounding the consumption of marijuana and cannabis. People
consider that it is illegal to consume the medicines made by marijuana. This can affect the brand
image of AusCann among Australian population (Kohut, 2018).
 Higher investment on Marketing
Due to above weakness, the company needs to make higher investment on marketing and
promotion so that it can affect the customers’ perception positively.
 Unable to Overcome the challenges
The firm is not able to handle the challenge that is presented by new entrants in the industry. Due
to this, it has lost its market share. It has to create internal mechanism for feedback.
Opportunities
 Online Marketing

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Nowadays, most of the Australian population is actively using online shopping sites and social
media sites. So, AusCann has the opportunity to offer its products online and increase its
customer base.
 Business Expansion in emerging markets
Currently, AusCann is offering its products in Australia only. Now, the company can plan to
expand its business in other emerging markets. It can do this by considering the disease rate of
countries (Helms & Nixon, 2010).
Threats
 Increasing Competition
The organization is facing intense competition as there are various small players in the industry.
There are some substitutes of the products like naturopathy medicines which are also posing
competitive threat on AusCann.
 Government regulations
It is one of the major threats which can affect the business operations and revenues of AusCann
Holdings Limited. There may be frequent changes in the government laws and regulations
regarding the consumption of medicinal cannabis (Washer, 2017).
Critical Success Factors
There are several factors which assist AusCann Holdings Ltd. to gain growth and success in
today’s competitive business environment. One of the critical success factors is its strong team.
This organization is well-placed to take the benefits of its growth by bringing together a
powerful team with the complementary and related knowledge and skills. This team consists of
the largest manufacturer of cannabis in North America, medicinal cannabis grower of Chile
Foundacion Daya and Canopy Growth. Canopy is totally dedicated to educate the health
practitioners, offering access to high quality treatment, clinical research etc. Another success
factor of AusCann is that Canopy and AusCann have a strategic collaboration which provides it
the access to intellectual property and expertise in cultivation of medicinal marijuana (Nicoletti,
2017). Additionally, it has managed its strategic relationships with others like Phytoplant
Research, Murdoch University, Foundation Daya etc. Apart from this, another success factor is

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its Research and Development process that assists the company to find out the needs of patients
and the company develops the quality medicines accordingly. It assists the organization to
increase the number of customers for its medicinal cannabis.
Downside Risk
Downside risk is the risk that is related to the losses of a company. It is the probability which an
asset will fall in the prices. In the future, AusCann Holdings Ltd. may face some downside risks
which can affect the operations of company. One of the major risks that this firm may face is
related to the laws, guidelines and regulations (Ang, Chen & Xing, 2006). In Australia, the
medicinal cannabis sector is emerging and it may confront the risks related to government
regulation and law enforcement. Currently, AusCann is in the compliance with all laws, changes
in regulations and laws may cause negative impacts to its manufacturing and business operations.
The clinical trials including cannabis, approval, permits and licenses are needed. This delay in
getting all the needed approvals can affect its downstream processes. It will affect the brand
image of AusCann that can lead it to financial losses (TW Holdings Limited, 2016). The
organization may face the risks related to agriculture as there may be issues related to plant
diseases, insects, storm, fire, flood, frost, drought, bird damage, pests, water salinity etc.
Recommended Changes
However, AusCann Holding Limited is using an advanced business model canvas model, but
still there is a scope of improvement. It can make some changes to enhance its business activities
and processes. First, the company should try to upgrade its websites and make it more
informative so that people can understand the use of medicinal cannabis. The content should be
customer friendly so that they do not face issues while using it. The prices of company’s
products and services are high so it should reduce its prices considering the demands in targeted
market. It should update its business model and its objectives time to time looking at the changes
in market requirements and trends (Ebner, Buhnen & Urbach, 2014). It should promote its
products and medicines on social media sites and internet sources, so that most of the people can
become aware about these types of medicines.

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Conclusion
From the above analysis, it can be concluded that AusCann Holdings Limited is operating its
business by offering innovative products and services. The report concludes that business model
canvas plays a critical role in the growth of an organization. This company has started its
operations within last five years. Till now, it is able to gain effective brand presence among
Australian patients. The above report includes the business model canvas and its components in
context of AusCann Organization. The operations of company are supported by various critical
success factors. The company needs to prepare a contingency plan to eliminate the chances of
risks.

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References
Ang, A., Chen, J., & Xing, Y. (2006). Downside risk. The review of financial studies, 19(4).
Auscann Group Holdings Ltd. (2017). Auscann Group Holdings Ltd. Retrieved from
http://clients3.weblink.com.au/pdf/AC8/01901924.pdf
AusCann. (2018). Shaping The Futureof Medicinal Cannabis. Retrieved from
http://www.auscann.com.au/
Bourgeault, G. (2018). Will AusCann Group Become A Global Player In The Cannabis Sector?
Retrieved from https://seekingalpha.com/article/4149369-will-auscann-group-become-
global-player-cannabis-sector
Darby, E. (2017). Tasmanian alkaloids partners with AusCann. Australian Pharmacist, 36(7), 60.
Ebner, K., Buhnen, T., & Urbach, N. (2014). Think big with Big Data: Identifying suitable Big
Data strategies in corporate environments. In System Sciences (HICSS), 2014 47th
Hawaii International Conference on (pp. 3748-3757). IEEE.
Gallagher, D. R., Ignatieva, K., & McCulloch, J. (2015). Industry concentration, excess returns
and innovation in Australia. Accounting & Finance, 55(2).
Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis–where are we now? A review of
academic research from the last decade. Journal of strategy and management, 3(3), 215-
251.
Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design
more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.
Kohut, T. (2018). How To Challenge The Stigma Against Cannabis Consumption. Retrieved
from https://hightimes.com/news/challenge-stigma-against-cannabis-consumption/
Nicoletti, B. (2017). Critical Success Factors. In The Future of FinTech (pp. 161-175). Palgrave
Macmillan, Cham.

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Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How
to create products and services customers want. US: John Wiley & Sons.
TW Holdings Limited. (2016). AusCann. Retrieved from
http://clients3.weblink.com.au/pdf/TWH/01804815.pdf
Washer, S. (2017). Medical cannabis: The current and future investment market. Australasian
BioTechnology, 27(2), 26.

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