Idea Generation and Business Model Innovation for Jet: A CQU Report

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Central Queensland University, Australia
Term – 2019
MGMT20143 ASSIGNMENT 2 IDEA GENERATION
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Executive summary
The report selected Jet, an Australian company engaged in e-commerce retailing industry. The
report aimed at developing “Idea generation” for Jet by analyzing the current business model.
After analysis, certain issues such as lack of technological investment, social media usage and
lack of market research have identified. A new business model was developed for integrating
these issues within the business model after analyzing their benefits. The key inter-relationships
of the business model building blocks have been described along with the identification of key
success factors that should be considered by the company. It further discussed the critical risks
and assumptions prevalent in the new business model. At last, the overall feasibility of the new
business model has been analyzed. As per the feasibility test, it has been identified that this new
business model should implement.
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Table of Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Issues in the existing business model...........................................................................................................5
Persuasive argument of the customer/client benefits to be generated by the idea........................................5
Proposed business model.............................................................................................................................6
Key inter-relationships in the proposed business model..............................................................................6
Critical success factors managed during idea execution..............................................................................7
Critical risks and assumptions in the proposed business model...................................................................8
Critical risks of proposed business model................................................................................................8
Critical assumptions of the proposed business model..............................................................................9
Overall feasibility of an idea........................................................................................................................9
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13
Appendix...................................................................................................................................................15
Appendices 1: the Proposed business model of Jet................................................................................15
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Introduction
Innovation has become the core focus of organizations these days while operating in a
competitive business environment. Innovation refers to the process of developing more effective
and creative solutions to the given problem. The report will analyze the current business canvas
model of “Jet” organization of Australia. Companies primarily start-ups need to conduct regular
analysis of their business canvas model for identifying and solving key issues. This report will
propose a new business model for Jet considering the identified issues and making it more
effective for the company.
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Issues in the existing business model
The existing business model of Jet requires revision for identifying the key issues that can
prevent the company from attaining success in future. Different issues have identified in different
building blocks of this canvas model. One of the key issues identified is that the company lacks
technological integrations in its key activities and other aspects despite being an e-commerce
company. Customers face difficulties while shopping online such as product size and product
quality. It implies that the company needs to invest in technological advancements for bringing
efficiency in business operations as well as enhancing the customer shopping experience. Apart
from this, the company lacks in market research and development which is essential for gaining
key insights about the current and future market trends (Matko, et. al., 2014). The customer
relationship channels of the company seem inadequate for Jet for being an e-commerce
company. It should use social media sites for marketing the brand and products along with
maintaining customer relationships. The social media sites are necessary for widening the social
reach of the company.
Persuasive argument of the customer/client benefits to be generated by the idea
The key issues identified in the existing business model of Jet are lack of technological
investment, absence of market research and ignorance of social media sites. For technological
investment, the company may use technologies such as augmented and virtual reality. It would
resolve the customer issues of online shopping. The customers would be able to view the desired
products and services in a virtualized manner. This real-life experience would help them in
undertaking purchase decision-making. The market research would assist the company in
understanding the customer needs and wants. The customers may become able to fulfil their
requirements and needs when Jet uses this research for developing products and services as per
customer requirements. Millions of people are actively using social media sites such as
Instagram, Facebook and Twitter for social interactions (Morales, et. al., 2017). Through these
sites, it would be more convenient for customers to access the company and its products and
services.
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Proposed business model
A new business model was developed for resolving the key issues identified in the existing
business model. It would help Jet in analyzing what aspects would be affected by these issues
and how these issues would be resolved.
1. Key activities: Web designing, research & development, retailing, technology designing
and technology management
2. Key partners: Brands, suppliers, manufactures and various organizations
3. Key resources: Inventory management, attractive website design, well-administration of
website, IT infrastructure, social media management and human resource
4. Customer relationship: Self-service, wide range of products & services, customer
experience, social media, technological advancements and lower prices (Ying, et. al.,
2018)
5. Customer segments: Mass market, social media users, online shoppers and men &
Women
6. Value propositions: Selections form a range of products, prices of the products, fast
Services, ease use of the website and great customer experience
7. Channels: Website, Online Application, and distributors
8. Cost structure: Manufacturing, marketing, research and development, technical costs, IT
infrastructure costs, legal, fulfilment costs and human resource
9. Revenue streams: Online sales
Key inter-relationships in the proposed business model
 Key activities & cost structure: The activities of technological designing and research &
development require huge cost and therefore, it will enhance the cost structure of Jet.
 Key activities & Value propositions: Using technological advancements such as
augmented and virtual reality, the company would become able to provide better value to
customers. These technologies would lead to improved customer satisfaction and
experience. With research, the company would be able to understand the customer needs
and wants in a better manner.
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 Customer relationship & revenue stream: With social media, the company would enjoy
the benefits of strengthening customer relationships. It would help in boosting sales for
the company and ultimately revenue would enhance (Trainor, et. al., 2014).
 Key activities & revenue streams: The technological designing of augmented and virtual
reality would enhance customer satisfaction and provide them with better customer
experience. It would attract several customers which would help in increasing sales for
the company.
 Key activities & key resources: technological designing would enable the company to
possess a key resource in the form of augmented and virtual reality or other technologies.
Research would be used by the company as a resource since it would help in gaining
meaningful insights into customer needs and requirements.
 Key resources & customer relationships: The key resources of IT infrastructure and
social media management, Jet would be able to strengthen customer relationship and it
would also provide sources through which the company would maintain a relationship
with existing as well as potential customers.
 Key resources & cost structure: The possession of key resources such as the
development of IT infrastructure and social media management is not an easy task. It
would require a huge investment that would expand costs for the company (Varini &
Sirsi, 2012).
 Cost structure & revenue streams: The cost structure is necessary for Jet to possess key
resources and conducting key activities such as retailing and technical designing. These
costs constitute a significant part of the investment and expect adequate returns on these
investments. These investments would help in attracting a large number of customers and
also the company would become able to invest more in other activities.
Critical success factors managed during idea execution
The major issues identified in the current existing model are ignorance of social media,
technological advancements and research & development. These issues have been fixed
using a new business model, but it would be required by Jet to consider some factors that can
lead to success attainment.
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 Focus on current customer base: While implementing a new business model, the
company should never ignore the significance of the existing customer base. Existing
customer base helps in enhancing customer loyalty which is a positive situation for
the company. Jet should use its existing customer base for enhancing market share in
Australian and other markets.
 Multi-channel marketing: Implementation of social media should never enable the
company to distract from other marketing channels. Jet should never underestimate
the concept of multi-channel marketing and it should focus equally on traditional as
well as new marketing channels (Chang & Zhang, 2016). It would help in reaching to
a large number of customers with more ease and would enhance the chances of quick
customer responses in the form of sales.
 Acquisition cost: Here, the acquisition costs are the costs of acquiring customers,
human resources, technologies and other resources. The company should focus on the
fact that technological designing and IT infrastructure should incur lower costs. It is
because higher costs will be transferred to customers which would make the products
and services more expensive. It would adversely affect company sales.
Critical risks and assumptions in the proposed business model
Critical risks of proposed business model
o The implementation of technology such as augmented and virtual reality raises a big
question on data privacy and data security. This data would be of customers and other users
such as employees.
o The social media management, technology designing and implementation and conducting
market research would incur huge costs that would lead to an increase in product pricing. It
would decrease the company attractiveness and would ultimately reduce the sales level.
o The customers may find it troublesome to understand how to use a new feature of
augmented and virtual reality while online shopping (Zhao, et. al., 2014).
o The company may not have effective human resource, skills and capabilities that would be
unable to reap fruits from these changes.
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Critical assumptions of the proposed business model
o The customers would like the new technology augmented and virtual reality and would
undertake efforts to use it.
o The online retailing business environment is versatile due to which the company would
require the implementation of changes frequently.
o Competition in online retailing would enhance as many companies are racing for attaining
competitive advantage through technological advancements (Qin, et. al., 2017).
o The company would estimate correctly the costs incurred in conducting new key activities
and attaining new key resources.
Overall feasibility of an idea
Risks/Issues Overall potential Score (-5 to +5) Suggestions for
improvement
Part 1: Strength of
the idea
+2
The ability of an idea
to enhance value for
the customers or other
end users
High potential +1
Degree of an idea
requires changing of
customer practices or
behaviours
Substantial changes
required
+1
Part 2: Industry-
related issues
0
Number of
competitors
Many (Low Potential) -1 The company should
use the latest
technologies and
market trends for
keeping a pace with
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the industry.
The growth rate of the
industry
Strong growth (high
Potential)
+1
Part 3: Target market
and customer-related
issues
+1
Degree of difficulty in
target market
identification for
proposed business
model
Identified (high
potential)
+1
Potential of target
market growth
Moderate (Moderate
potential)
0 It should expand the
customer segment.
Part 4: Founder-
related issues
0
Company experience
in the industry
Moderate experience
(Moderate potential) 0 Jet should use market
research for
identifying best
practices for a new
business model.
Degree of
professional and
social networks of the
company in the
industry
Moderate (Moderate
potential) 0 It should use social
media widely for
interactively
enhancing its social
networks.
Part 5: Financial
issues
0
Initial capital
investment
High (High potential) -1 The company needs to
acquire cost-effective
resources and
technologies
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Financial performance
of similar businesses
Strong (High
potential)
+1
Overall feasibility +3
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Conclusion
The report aims at identifying the key issues in the business model of Jet, an Australian e-
commerce retail company. The key issues were social media, technological advancements and
research & development. These issues when resolved would help the company in widening
customer segments and boost sales performance. The business model should be constructed in a
way that changes can be infused conveniently without many efforts. Changes are necessary for
Jet as it operates in a flexible business environment. It has been identified that the existing
business model of Jet has been developed with high flexibility since changes have implemented
in this model without major impacts. The overall feasibility of the idea achieved the score of +3
which shows the effectiveness of the new business model.
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