Central Queensland University Business Model Report

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Central Queensland University, Australia
Term – 2019
MGMT20143 ASSIGNMENT 2 IDEA GENERATION
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Executive summary
The reports chose Advvy, an Australian online tech company and analyzed its current business
model. The key issues have identified such as an expansion of partner base, data protection
system and widening customer segments. Following potential benefits to customers, a new
business model is proposed with changes along with the description of their inter-relationships.
The crucial success factors are identified for Advvy as strategic focus, people, marketing and
operations. The risks and assumptions have also analyzed the new business model. An overall
feasibility test has also been conducted on a new business model. The results of this test were
depicted as +5 which is a good score.
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Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Customer/market problems identified in current business model...................................................4
Customer/client benefits from the new business idea......................................................................4
Proposed business model.................................................................................................................5
Key inter-relationships in the new business model.........................................................................7
Critical success factors for Advvy in the new business model........................................................8
Crucial risks and assumptions in new business model....................................................................9
Overall feasibility of new business idea........................................................................................10
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
Appendix........................................................................................................................................15
Appendices 1: New business model of Advvy..........................................................................15
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Introduction
The report will analyze the business model of Advvy, an Australian company. The company
engages in offering solutions to workflow and productivity to agencies for smart working
internally and externally with suppliers and clients. This report will uncover the market or
customer problems in the current business model of Advvy. The main aim of this report is to
provide an innovative solution for the identified issues. A new proposed model will construct
with innovative solutions. Evaluating the feasibility of this new business model is vital for the
company for decision-making.
Customer/market problems identified in the current business model
The current business model of Advvy clearly shows the key partners, key resources, key
activities, channels, customer segments, customer relationships, value proposition, cost structure
and revenue streams of the company. The company has Microsoft, LinkedIn and Simple as the
key partners who are strong players of the global business market. Advvy has a wide variety of
services to provide to its customers that helps them to a large extent. The major issues are
identified in customer segments, key partners and key activities. The company requires widening
the key partner base in which there should be stronger and diversified partners. The company
should widen its key partnerships with suppliers, consultants and more IT-related companies.
Advvy is engaged in offering productivity and workflow solutions where it requires storage and
management of big data about the clients and partners (Wells, 2018). But, the company
somewhere lacks in designing and implementing a system for effective data protection. Apart
from this, the target customer segments of the company are ranged from E-commerce
companies, business start-ups, manufacturing companies and digital media businesses. It requires
widening of its customer base as well by adding more customer segments. These segments may
be retailing companies, small businesses and IT firms.
Customer/client benefits from the new business idea
The changes have been identified for the betterment of Advvy’s business model. These changes
have selected considering the capability for yielding more for the company. The identified
changes are the expansion of customer segments and partner base along with the integration of a
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data protection system. Widening partner base would assist in enhancing the quality of services
provided and it would enable Advvy to expand its products and services portfolio. The customer
segments when increased would increase the chances of customers to associate with the
company (Mark, et. al., 2012). Enhanced quality of services provided would lead to the attraction
and preference of a huge customer base. Apart from this, an effective data protection system
would help in protecting and securing the customers, partners and employees’ data. It would
result in gaining trust from customers, clients, partners and employees. Advvy would become
able to associate with more partners and customers. It would help in enhancing the revenue
sources for the company which would make it enable to invest more for business expansion.
Using these changes, the company can attain a strong position in the highly competitive
technological business environment.
Proposed business model
The business model canvas considers as a strategic management tool for the visual representation
of a company’s strategic aspects and documenting the new or existing business model. The new
business model of Advvy would develop with the integration of identified changes.
1. Key partners
Microsoft, Simple, LinkedIn, Media agencies, Suppliers, Clients, Consultants
2. Key activities
Customer support services, Digital media support, Program management and configuration of
workflow, Customization of applications, Data protection, Marketing
3. Key resources
Human resource, Technical resource, financial resources, Partner base, Customer base, IT
infrastructure, Website (Guesalaga, et. al., 2018)
4. Value propositions
Automated solutions for resolving complex business problems to clients and customers,
Corporate goal of preparing business for technology-oriented marketplace in future, Corporate
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aim of developing sound relationships with clients for developing a win-win situation in business
dealings, Assistance to businesses for transforming from manual campaigns to digital-oriented
operations, Great customer and client satisfaction, Wide service portfolio for clients and
customers, Desired prices for services, Works on latest technology, Data protection system
5. Customer relationships
Low prices for customized services, direct interaction with customers, Transparency, Customer
trust
6. Customer segments
E-commerce companies, Business start-ups, Manufacturing companies, Digital media
companies, Small firms, Retail companies, IT firms (Thakur & Workman, 2016)
7. Channels
Direct channels, online services, Website promotions
8. Cost structure
Human resource, Online platform, Customized services, IT infrastructure, Marketing
9. Revenue streams
Interests from customers, Customers, Website advertisements
Key inter-relationships in the new business model
All the nine building blocks of the new business model share a direct relationship with each
other. Change in one strategic element leads to the change in another variable. Widening of the
partner base would help in providing more effective and efficient services to customers and
clients. Advvy would become able to achieve higher customer satisfaction and sales level which
would ultimately result in profit enhancement. It would positively affect the revenue streams but
more partnerships come with more costs. Also, the company would get assistance in providing a
better value to its clients and customers through these partnerships.
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High-value proposition encourages customers to prefer the brand and this encouragement boosts
revenue within the company (Ladd, 2018). With key resources, Advvy can provide better
services to customers and these services would get support from channels to reach to customers
and clients. Increasing customer segments is always a profitable situation for any company. In
the case of Advvy, more customer segments would imply more revenue and more investment
options for business expansion. Key activities are also dependent on the availability of adequate
resources within Advvy since, without adequate resources, the company would lose its ability to
provide even average services.
Critical success factors for Advvy in the new business model
 Strategic focus: It involves the key components such as challenging mission, defining
vision, strategy, attainable goals, a guidance system and most significantly a leaning
organization. Implementing new changes or changing the business model should never do
by affecting the strategic focus of the company. Consistency in strategic focus helps in
gaining long-term success by attaining the corporate goals and objectives using pre-
determined strategy.
 People: People in any organization help in bringing efficiency and effectiveness within
the organization and these people enable it to attain a competitive advantage. In the case
of Advvy, implementing a new system and associating with new partners do not indicate
to ignore the existing staffs. The company should provide them with regular training and
development opportunities (Tang, et. al., 2012).
 Operations: A company becomes able to offer products and services to customers
because of its business operations. These operations include processes of manufacturing
and others in the context of products and services. Advvy should consider that
implementation of new changes within the business model should not affect its current
business operation. And it should always strive for improving these operations for
attaining efficiency so that they can provide better customer value.
 Marketing: The main aim of marketing is the promotion of the company and awareness
generation of products and services. It can be a success factor when undertaken with
proper measures and considerations. Advvy needs to focus on its marketing activities for
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gaining more insights into customer reach, needs and wants. It should maintain customer
relationships and be active in responding to customers.
Crucial risks and assumptions in the new business model
Risks
Different risks have identified in the new business model for Advvy. Firstly, the business
environment of the tech industry is characterized by a high degree of flexibility. It means that
frequent changes prevalent in this industry. Here, the risk is that this changing business
environment may bring several opportunities and threats for Advvy. The effects of this risk can
be seen in customer segments and data protection system implementation. The data protection
system would come with risks such as data security, data privacy and other data-related risks.
Implementing these changes may come with the huge resistance to change by employees of the
company. It is natural to deal with this resistance issues while implementing change. Next, the
company may have insufficient resources for implementing these changes or these changes may
adversely impact the resource allocation effectiveness of Advvy.
Assumptions
 The employees would be motivated enough to accept these changes and depict effective
outcomes.
 Advvy would have sufficient resources for designing and implementing a new system of
data protection and associating with more partners.
 High competition would prevalent due to the increase in digital orientation in business
processes and business model by other companies.
 The changes in the tech business environment would include both threats and
opportunities for which the company would establish strategies at an early stage.
Overall feasibility of a new business idea
Risks/Issues Overall
potential
Score
(-5 to
+5)
Overall
assessment
Suggestions for
improvement
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Part 1: Strength of the
idea
+1 High potential This part is already
yielding high potential
Timeliness of entry to
the market
Moderatel
y timely
0
The extent to which
the idea would add
value for the customers
and other users
High +1
The extent to which
the idea solves a
problem
Weak -1
The extent to which
the customer is
satisfied by competing
products and services
already available
Moderatel
y Satisfied
0
The degree to which
the idea requires
customers to change
their basic behaviours
and practices
Small to
no
changes
required
+1
Part 2: Industry-
related issues
+2 High potential It does not require new
strategies as it already
has possessed high
potential.
The growth rate of the
industry
Strong
growth
+1
Importance of the
industry's products and
services to customers
Would
like to
have
0
Stage of the industry
life cycle
Growth
phase
0
Number of competitors Few 0
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Industry operating
margins
High +1
Part 3: Target market
and customer-related
issues
+2 High potential This part of the
feasibility test appears
to be strong enough for
dealing with target
market issues.
Ability to create
barriers to entry for
potential competitors
Identified
(high
potential)
+1
Identification of the
target market for the
proposed new business
model
Identified +1
The growth potential
of the target market
Moderate 0
Ease of making
customers aware of the
new product or service
Low -1
The purchasing power
of customers
High +1
Part 4: Founder-
related issues
-1 Low potential In this case, Advvy
requires more network
establishments for
professional and
societal networks
through social media
sites.
Founder's experience
in the industry
Moderate
experienc
e
0
Founder’s skills relate
to the proposed
business model new
changes, products or
services
Moderate
skills 0
The extent of the
founder's professional
None -1
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and social networks in
the relevant industry
The extent to which
the proposed business
model meets the
founder's personal
goals and aspirations
Strong +1
The likelihood that a
team can be put
together to launch and
grow the new business
model
Unlikely -1
Part 5: Financial
issues
+1 High potential High potential indicates
in this case that the
company can yield such
a huge amount but after
a few years.
Initial capital
investment
High -1
Number of revenue
drivers
More than
three
+1
Time to break even More than
two years
-1
Ability to fund initial
product development
and initial start-up
expenses from
personal funds or via
bootstrapping
High +1
Financial performance
of similar businesses
Strong +1
Overall feasibility +5
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Conclusion
The report provided certain changes necessary for the existing business model of Advvy. The
feasibility test helped Advvy in analyzing the potentiality of a new business model. The results
of the feasibility test of the new business model indicate that the new business model has great
potential or feasibility for Advvy. Now, the company has the responsibility to either improve or
maintain this feasibility by considering all business and strategic aspect.
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