MGMT20143 Assignment 2: Idea Generation and Business Model Development

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MGMT20143 Assignment 2 Think Big
Assessment 2: Idea Generation and Business Model Development
Name-Musaddiq Ali Khan
ID-12099618
Campus-Sydney
1

Table of Contents
Introduction......................................................................................................................................3
Issues Identified in the Existing BM/ Innovation Needs.................................................................4
Benefits to Customers/Clients from New Idea................................................................................5
Key Interrelationships in the Proposed Model................................................................................8
Key Success factors of Proposal......................................................................................................9
Assumptions and Critical Risks for New Business Model............................................................10
Overall Feasibility of Idea.............................................................................................................11
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
2

Introduction
The business model provides a foundation to the business by weighing the crucial business
aspects such as customer segments, key partners, resources, revenue streams and financial
information and so on. It has been identified that the existing business model of Black Cat
Syndicate possesses some key issues that require a quick solution for the sake of business. This
report will help in depicting a new business model considering the identified issues for the Black
Cat Syndicate. The proposed changes will ensure the inter-relationship with other building block
elements of the new business model.
3

Issues Identified in the Existing BM/ Innovation Needs
Based on the existing business model of Black Cat Syndicate, there are different issues identified
for developing an improved business model. In the current business model, it observed that the
critical activities of the company involve mining and other activities related to gold only. The
global mining industry has become intensively competitive where the companies engaged
require attainment of competitive advantage for survival in the long run. The critical issue here
identified is the mining of one commodity only. It has been realised that the target market of the
company comprises of government agencies and private companies which imply the limited
growth potential of the target market (Giannetti, Risso, & Cinquini, 2016). This issue can
develop a barrier to business growth. It is affecting the market position of the company to some
extent.
Also, the company is not much engaged in marketing activities due to which the sales of the
company are affecting. The company is somewhere failing to maintain a continuous and robust
client relationship. With social media customer service, the company can communicate regularly
with the customers using social media platforms. It has been identified that the company revenue
streams requires expansion considering the existing market competition and the increasing cost
structure. As compared to the cost structure, the revenue streams are inadequate for the company
(Nevius, 2013). It is also realised from the business canvas model that the company requires
consideration of the purchasing power of customers.
4

Benefits to Customers/Clients from New Idea
New/Proposed Business Model
As per the critical issues identified in the current business model, specific changes require
implementation for the growth of Black Cat Syndicate. The changes would be beneficial for the
company as well as the investors and customers. The changes would improve the financial
performance of the company, and moreover, it would help in maintaining a large customer base.
The company would be able to expand its business overseas when the profitability would
enhance due to the expansion of revenue streams. The customers would get more product
choices in terms of other commodities as well (Del Baldo, & Baldarelli, 2017). With marketing
activities, the customers would be able to remain updated with the Black Cat Syndicate
concerning the investments, products and services, expansion plans and other vital aspects.
Following changes would be implemented in the existing business model for deriving the
proposed business model:
5

Key Partners
 Suppliers of
components
 Regulators
 Providers of electric
vehicles
 Department of mines
and petroleum
 Machinery and
suppliers
 Employees and
management
 Government Local communities
Key
Activities
 Resource
allocation and
assessment
 Identification
and
exploration of
gold
 Extraction
and mining
 Gold
purification
 Processing of
gold
 Mining of
copper and
silver
Value
proposition
 Management
of legal
regulations
 Administration
of mining
facilities
 Cost-effective
management
of the
resources
 Enlarging the
gold base
 Ethical
identification
of gold mines
Customer
Relationships
 Ethical and
sustainable
mining policies
 Evolving
communities
 Engaging
customers in
decision-making
processes
 Social media
customer
support (Soltani,
& Navimipour,
2016)
Customer
segments
 Private
companies
 Government
agencies
 Jewellery
businesses
 Central banks
6

Key Resources
 Human
Resources
 Latest
technologies
 Laboratory
 Technical
know-how
 Machinery
Capabilities
and skills of
human
resources
Channels
 Annual reports
 Client Services
 Research
collaboration
 Public relations
Cost Structure
 Chemicals
 Machinery
 Data centre operations
 Research and development
 Mining cost
 Exploration cost
 Processing and Purification cost
 Marketing cost
Revenue Streams
 Intermediate sales
 Gold sales
 Company reserves
 Export of physical commodities
 Selling of mines
7

Key Interrelationships in the Proposed Model
The proposed changes develop an inter-relationship with other building block elements of the
business canvas model. These changes would implement with an integrated approach to the
business canvas model. The business of other physical commodities of silver and copper would
assist in enhancing cost but also provide new customer base and revenue streams as well.
Expanded customer segments would support in strengthening the sales of Black Cat Syndicate
and profitability as well. The additional key partners of government and local communities
would assist in conducting business operations smoothly and without any complications. It
would also contribute to providing opportunities for business expansion (Joyce, & Paquin, 2016).
With social media customer support, the company would be able to maintain healthy customer
relationships, and this would enhance the marketing effectiveness of the company.
The value proposition of the company would enhance with productive marketing activities.
Although, it cannot be avoided that the marketing activities would add marketing and other
related costs to the cost structure. On the other hand, marketing activities provide opportunities
for the company in reaching to more customers. The additional revenue streams would
underestimate the cost structure and encourage profitability. It would further attract more
investors as investors prefer to invest their efforts and finance in a profitable business since no
investor desires to bear loss willingly. In a gold mining company, machinery and capabilities of
human resources play a significant role in undertaking smooth business operations. These
resources would strengthen the value proposition segment of Black Cat Syndicate. All these
proposed changes would be beneficial from the company’s point of view (Onken, & Campeau,
2016).
8

Critical Success factors of the Proposal
Black Cat Syndicate considers an innovative business idea of Australia. The mining industry of
Australia and other global economies is versatile where new changes emerge quickly. Rapid
adaptation aids the company in quick implementation of industrial changes so that the market
impact on the business operations can reduce. Cost efficiency helps the company in managing
the supply and demand conditions of the mining product. With cost-efficiency, the company can
fight against the price fluctuations and other economic conditions.
Diversification enables Black Cat Syndicate to manage the diversification in the customers,
outputs, processes, and mining locations as well. The company can even attain competitive
advantage with the product and operational diversification. Black Cat Syndicate possesses the
potential to compete effectively in the Australian mining industry with the other critical success
factors (Du Randt, Van Waveren, & Chan, 2014). Stock optimisation supports in making
improvements in the product delivery schedules. The company holds an excellent infrastructure
involving the roads, electricity, rails, communications and ports. This infrastructure constitutes a
significant part of critical success factors that ensures the availability as well as the smooth
functioning of the mining and other activities.
9

Assumptions and Critical Risks for New Business Model
Assumptions of New Business Model
 Non-resistance of change by the employees and other stakeholders along with the active
participation
 The industry would be characterised with the market and price stability
 Availability of requisite infrastructure and resources
 New target segment would attract with the new business model
 Implementation of the new business model within the estimated time, cost, resources and
finance
 Government and stakeholders’ approval and possession of a license
Critical Risks for the new business model
 The risk concerning whether the idea can contribute towards the value added to the
customers or end users
 Risk whether the idea can depict solution to the identified problems
 Increase in the number of competitors
 Risk related to the significance of industrial products and services for the customers
 Risk whether the selected target market possesses growth potential
 The low purchasing power of the customers due to economic conditions
 The new idea comes with the risk of the founder's experience within the same industry
(Lhannaoui, Kabbaj, & Bakkoury, 2015)
 Risk whether there are inadequate revenue sources for the company
 With competition, a risk arises concerning the financial performance of other or similar
companies engaged in the same industry
10

Overall Feasibility of Idea
The feasibility of the proposed mainly on the ratings provided to every risks or issue. Following
the attached table shows the feasibility rating of the proposed idea for Black Cat Syndicate:
Risks/Issues Overall potential Score (-5 to +5) Suggestions for
improvement
Part 1: Strength of
the idea
The extent to which
the idea would lead to
value addition for the
customers or end
users
High potential +1 Identifying better
innovative ideas by
investing highly on
research and
development
Part 2: Industry-
related issues
The extent to which
the idea can increase
the number of
competitors
Many (Low
Potential)
-1 Attaining competitive
advantage through a
high focus on
technological
advancements
Industrial growth rate Strong growth rate +1
The extent to which
the industrial
products or services
places significance
for the customers
(Peterka, & Saric,
2015)
“Must have” (High
potential)
+1
Part 3: Target
market and
11

customer-related
issues
The extent to which
the target market
possesses growth
potential
High potential +1
Capability for
becoming a strong
barrier for the
potential business
firms
May or May not
create (Moderate
Potential)
0 Creation of brands,
possession of licenses
and patents; and
developing high
distribution networks
Degree of the
customers’
purchasing power
Moderate potential +1
Part 4: Founder-
related issues
0
The extent to what
the founder's
experience within the
same or similar
industry
Moderate
Experienced
(Moderate Potential)
0
Part 5: Financial
issues
0
Financial
performance of other
or similar companies
within the same
industry
Low potential -1 Undertaking sound
financial management
practices with the
development of a new
financial team
The extent to which
revenue sources
expand
Many +1
12