MGMT20143 Think Big Assessment 2: Idea Generation Report

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MGMT20143 THINK BIG
Assessment 2
Idea Generation
Name of Student:
Student ID
Tutor’s name:
Campus:
Due Date:
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Executive summary
It seems inadequate in the current technological and highly competitive business
environment. It develops barriers to the company in establishing strong customer
relationships from all over Australia. Therefore, the current business model possesses the
issues mainly in customer relationships, key resources, cost structure, revenue streams, and
value proposition as well. The aeroponic system is one of the best and most suitable
approaches that can be introduced and used to the farming processes to get fresh food.
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Contents
Executive summary...............................................................................................................................2
Introduction...........................................................................................................................................4
Key issues in the existing business model.............................................................................................5
New/Proposed Business Model.............................................................................................................6
Key interrelationships in the new business model.................................................................................7
Crucial success factors..........................................................................................................................8
Assumptions and Risks for the new business model..............................................................................9
Assumptions of the new business model...........................................................................................9
Risks in the new business model.......................................................................................................9
Overall feasibility of the new business model.......................................................................................9
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12
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Introduction
The new idea is engaged in the production and selling of fresh products manufactured
through indoor agriculture techniques using the aeroponic system. The existing business
model has provided a competitive advantage in the Australian food industry. However, this
report will aim at identifying the key issues in the existing business model and propose a new
business model for enhancing the company’s productivity and performance. This report will
develop the assumptions and risks associated with the new business model as well as the
critical success factors that will assist in solving the current issues.
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Key issues in the existing business model
The existing business model possesses the capability and effectiveness of the company's
success. There are some key issues identified in the existing business model. Firstly, the
company develops customer relationships through the emailing channel only. The key
resources of the company should entail other aspects also such as technology which is vital
for a farming company (Joyce, & Paquin, 2016). Moreover, the company requires expansion
of the revenue streams using an effective method of market research.
Market research is of utmost for every company for identifying the key trends, threats, and
opportunities of the business environment. In the cut-throat competition, the industry’s ideas
need to enhance its cost structure for business expansion and growth. It implies the company
to stretch the investment limit in technology and market research. There is an issue identified
in the value proposition where the effective and efficient supply chain is missing. Strong
supply chain helps in gaining a market position which is absent in the existing business
model (Jackson, Scott, & Schwagler, 2015).
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New/Proposed Business Model
The implementation of changes in the existing business model becomes crucial to gain more
opportunities in the highly competitive business market. All these changes are fruitful for the
company’s growth as well as the enlargement of the customer base. These changes would aid
in developing a more extensive customer base and providing the customers with the products
at comparatively lower prices. Not only has this, but these changes would enhance the growth
and development scope of the company. More customers would lead to more sales, and more
sales would result in more revenue (Daly, 2017). It would be a favourable situation that
would assist in transforming into a barrier to new and potential companies.
New business idea
Key Partners
Farmers,
employees,
suppliers,
management,
and government.
Key
Activities
Indoor farming,
produce selling
to customers
through the
internet, and
market research.
Value
proposition
Making people
healthy and fit
through fresh
food, effective
and efficient
supply chain,
and excellent
management of
resources and
identification of
customer needs
timely.
Customer
Relationship
s
Email, social
media, customer
relationship
management
software, and
ethical &
sustainable
business
practices (Sort &
Nielsen, 2018).
Customer
segments
It involves all
the customer
segments such
as companies,
hotels,
restaurants,
eateries, the
general public,
and
wholesalers
and so on
since it
produces fresh
produces
Key Resources
Fresh produce,
living salad,
human
resources, skills
& capabilities,
Channels
Company-owned
stores, online
sales,
wholesalers, and
partner-owned
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technology and
finance.
stores.
Cost Structure
Marketing cost, research cost, technological
cost, production cost, capital investments,
and finance costs.
Revenue Streams
Sales of produce, profit margins, value-
added products, and farming on rent.
Key interrelationships in the new business model
A successful business model characterizes by the inter-relationships shared among all the
building block elements of the model. Expansion of cost structure affects the overall revenue
but the increase in revenue sources aids in enhancing the company’s profitability. More
customer segments and strong customer relationships assist in the expansion of the customer
base. Large customer base results in more sales and high profitability. Key resources help in
the smooth functioning of the key activities. Expansion in key activities requires huge costs
and investments but also leads to the scope of customer base and high revenues. The
company becomes able to attain a strong market position in the industry. Increase in channels
would assist the company in reaching to the massive number of customers (Ojasalo, &
Ojasalo, 2018). Moreover, the changes develop in a way that can maintain an inter-
relationship among all the building block elements. The integrated approach of the business
model ensures the growth, success, development and high performance of the company. This
approach also provides the smooth operations of the company as well as increases the
potential to enter into new markets.
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Crucial success factors
There are some factors possessed by the companies that assist in ensuring long-term success
by dealing with every situation effectively. The success factors of new business idea involve
numerous factors such as the ability to quick adaptation, innovation, strategic focus,
competitive advantage, and personnel. Ability to quick adaptation makes the company less
prone to the changes emerging in the external business environment. This idea integrates
innovation in its processes and products that enable to differentiate from other similar
companies in Australia (Moreno, 2013). Not only has this, but the company become able to
reduce its costs and attain efficiency and high performance.
Moreover, strategic focus maintains is get done by making the products customer-driven,
development of SMART goals supporting the mission, strategic management system, and
sticking to the core values and ethics and so on. It is evident that these success factors help
the company in achieving a competitive advantage in the business market due to which it
maintains a good brand position. At last, it should not avoid that the personnel involved in
this model proposed model are well-trained, educated, and high-skilled that constitutes one of
the key success factors (Gholam & Mohammad, 2016). All these success factors aid the
company in dealing with mainly the negative situations so that the impact can reduce to the
minimum.
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Assumptions and Risks for the new business model
Assumptions of the new business model
Implementing a new business model requires the formulation of the key assumptions for
support. In the new business model, this model assumes that the market conditions would be
unstable since the business environment is dynamic. Next assumption implies the availability
of adequate finance and personnel for the successful implementation of the business model.
The most significant assumption states as the attainment of estimated profitability from the
business model after considering all the costs and investments. It assumes that there would be
absolute support and expertise of the personnel including employees and management
(Ganguly, & Euchner, 2018). A negative assumption arises in the business model as to the
inability to develop an adequate customer base. However, it can also assume that there would
be no or less need for additional products through key activities and resources. No or less
demand for proposed products or service would impact the feasibility of a new business
model negatively.
Risks in the new business model
Every business model comes with a certain degree and types of risks such as financial,
customer, industry, or competitiveness. Numerous risks attach to the new business model-
Financial risks involve the number of revenue streams, capital investment, the
financial performance of competitor firms, and time for achieving breakeven point
(Gennaioli, Shleifer & Vishny, 2012).
Customer-related risks of the new idea comprise of ability to develop an effective
target market, the potential of the selected target market, customers’ buying power,
and capability for forming a barrier for new companies.
Strength-related risks for new business model are the capability of a new idea for
adding value to the customers, time of entering new markets and customer satisfaction
of the competing products that are already functioning in the market.
Availability of competitors in the same industry, operating margins of the industry,
the vitality of the products or services for the customers and the growth rate of
industry constitute the industry related risks for the new business model.
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Overall feasibility of the new business model
Type of risk Score Suggestions to improve
Part 1: Industry-related risks -1 The company should focus
on its competitive
advantage and market
research for identifying
and tapping the industrial
trends and opportunities
quickly.
Part 2: Customer related risks +1
Part 3: Risks associated with
company strengths
+1
Part 4: Financial risks +1
Total score +2
Overall feasibility of the
business model
The new business model attains +2 score which shows that
this model would be feasible. It is a good score for ensuring
the feasibility of a business model.
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Conclusion
This report developed a new, improved business model by identifying the key issues and
implementing changes in the existing business model. As per the feasibility test, it has been
depicted that the new business model is averagely feasible to be undertaken. However, the
weak point in the feasibility test identified mainly as the industry related risks due to the
existence of high competitor firms, high industrial growth rate, the moderate potential of
product significance to customers and lower operating margins in the industry.
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References
 Daly, P. (2017). Business apprenticeship: A viable business model in management
education. The Journal of Management Development, 36(6), 734-742.
 Ganguly, A., & Euchner, J. (2018). Conducting Business Experiments. Research-
Technology Management, 61(2), 27-36.
 Gennaioli, N., Shleifer, A., & Vishny, R. (2012). Neglected risks, financial
innovation, and financial fragility. Journal of Financial Economics, 104(3), 452-
468.
 Gholam Hassan Pourhanifeh, & Mohammad Mahdavi Mazdeh. (2016).
Identifying the critical success factors of organization with Analytic Hierarchy
Process approach (case study – Iran Argham Company). Problems and
Perspectives in Management, 14(4), 54-60.
 Jackson, W., Scott, D., & Schwagler, N. (2015). Using the business model canvas
as a methods approach to teaching entrepreneurial finance. Journal of
Entrepreneurship Education, 18(2), 99-111.
 Joyce, & Paquin. (2016). The triple-layered business model canvas: A tool to
design more sustainable business models. Journal of Cleaner Production, 135,
1474-1486.
 Moreno, Valter de Assis Jr. (2013). CRITICAL SUCCESS FACTORS AND
BENEFITS OF ITIL ADOPTION: A CASE STUDY IN A
TELECOMMUNICATIONS COMPANY. RESI Revista Electronica De Sistemas
De Informacao, 12(1), 1.
 Ojasalo, Jukka, & Ojasalo, Katri. (2018). Service Logic Business Model
Canvas. Journal of Research in Marketing and Entrepreneurship, 20(1), 70-98.
Sort, J., & Nielsen, C. (2018). Using the business model canvas to improve
investment processes. Journal of Research in Marketing and Entrepreneurship, 20(1),
10-33.
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