MGMT20143: Business Model Deconstruction of Power Ledger

Desklib provides past papers and solved assignments for students. This report analyzes Power Ledger's business model.

MGMT20143: Think Big
Assessment 1: Business Model Deconstruction
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Executive Summary
Power Ledger is an Australian block chain based energy and trading platform that allows to buy
and sell renewable energy. Their platform provides consumer options to purchase and sell
powers all around the globe. Their primary objective is to bring more and more people in the
trading business. It has been concluded that there is nothing terrible in trying the new form of
currency that is Crypto currencies. Government notifies that if a person sells and buys this
currency for at least a year, then the only capital gain will be taxed at a lower rate
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Table of Contents
Introduction......................................................................................................................................4
Business Model................................................................................................................................5
Building Blocks...........................................................................................................................5
Interrelationships.........................................................................................................................7
Critical success factors................................................................................................................7
Downside risks.............................................................................................................................8
Business model changes..............................................................................................................8
Conclusion.......................................................................................................................................9
Recommendations............................................................................................................................9
References:....................................................................................................................................10
Appendices....................................................................................................................................11
Appendix 1.................................................................................................................................11
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Introduction
Power Ledger is an Australian energy trading platform and block-chain based crypto currency
that gives the opportunity for selling and buying of renewable energy. This platform provides
traders a choice to access any kinds of energy market all over the world. Power Ledger is based
in Perth, Australia by Chair Jemma Green on 11th August 2016. In the white paper of the
company, management revealed an ERC-20 Ethereum based token called POWR. In the history
of the Power Ledger, they make partnership in New Zealand, Urban regions of India, Europe and
Australia.
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Business Model
xGrid, uGrid, and Power Port are the business model of Power Ledger. Grid is a tool specially
made for clients in an embedded network to establish low-cost electricity, fast micro-
transactions, etc (Power Ledger, 2019). Power Port created for the charging stations of the
vehicle that allows the consumer for cheap and secure electricity metering. It supports the Open
Charge Protocol (OCPP). xGrid is the platform where excess energy can be sold to others. These
3 are business model for the Power Ledger. It is system software that transfer information to the
existing grid through application host and smart meters. The holdings of POWER gives an
opportunity for the business and the ongoing development to trade. They also charge a price for
per kilowatt hour sold on their platform; the purpose of this company is to give trading a global
reach to many people (Apte and Petrovsky, 2014).
Building Blocks
Power Ledgers uses nine building blocks approach.
Key partners
Key partners of Power Ledger are Bitconnect, Bitcoin, Coinye, Gridcoin, Auroracoin, Potcoin,
and Litecoin. All the major cryptocurrency industries are the partner of this organisation.
Channels
They have their distribution and advertising partners. Like print media, crypto currencies
platform, distribution channels, etc.
Key activities
Power Ledger is the marketplace for renewable energy that uses the blockchain technology. This
organisation is a trading platform that takes the transactions of great suits of energy-focused
application. Power Ledger also provides more cleanly, reliable and affordable energy system
(Crosby, et al., 2016).
Key resources
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Cryptocurrency price prediction tools and indicators are the critical resources for the Power
Ledger Company, as this company itself is in the trading platform of crypto currency. The most
prominent indicator for the crypto currency is Moving Averages and Moving average
convergence Divergence (Ellabban, et. al., 2014).
Customer relationships
By updating traders and investors with daily tips regarding the crypto currency prices, Power
Ledger can maintain a good relationship with their clients. They send a regular notification to
their customers via email, news, messages, etc. (Erdinc and Uzunoglu, 2012).
Cost Structure
0.6 cents is the estimated cost of making electricity energy. The company makes billions of units
of power for some time. Cost estimation includes fixed and variable cost, minimum cost,
workers cost, machinery, technological cost, etc.
Revenue streams
Power Ledger was recently recorded at 27 million dollars in October 2018. The company made a
profit state when Bit coin hit $18,000 and more. The rating of the company on IOC is 3.5/5 in the
year 2018. On November 2017, the company announced $2.57 million of profit. They also got
$50 million grant from the government of Australia for succour the innovative of smart city
projects (Evans, et al., 2012).
Customer segments
Below is the classification of the customer segment of the Power Ledger:
Sex 64% male and 36% female
Age 30-54
Average transactions spend $150 million
Other characteristics Credit card users, travellers, majority married,
home owners, etc
Source: Diplomo, (2017)
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Value proposition
They provide the platform for trading in exchange they charge the breakage amount. Their
breakage chares are very minimal. So, they can reach out to many people within the period. The
primary objective of the company is to accomplish the target of involving the people in the
trading platform (Gandal and Halaburda, 2014).
Interrelationships
Power Ledger has maintained the relationship with all their customers, potential customers,
banks, financial institutions, stockbrokers, service providers, vendors sales leads, governmental
agencies. Power Ledger understands the importance of keeping and maintaining business
relations in all the areas so they can accomplish their goals. Sign of good business relationship
indicates the employee satisfaction, customer satisfaction, trust, loyalty and innovation. Like
devotion helps the company informing strong and lasting relationships. Power Ledger also
connected and provides great after sales services to their clients for renewable energy and trading
help also. Providing great after sales services enhance the image of the company in the eye of the
clients. If one client is satisfied, then he/she will bring four other clients (Inman et al., 2013).
Critical success factors
Power Ledger is a new form of crowdfunding that raises money through a blockchain by selling
coins in exchange for legal tenders or cryptocurrencies. Power Ledger also focuses on
fascinating new customers and sustain a successful relationship with the suppliers. They keep
their employees satisfied and always allot them training on how to interact with the clients. They
manage any disruption of their business, and the objective of any business cannot be fulfilled
without having funds to invest in expanding ways. Major success factor of this company is the
growth of crypto currency and the growth of renewable energy. When more and more people
agree to choose the platform of Power Ledger for trading in crypto currency, then they will earn
the breakage from that money. Second, the critical success factor is the consumption, utilisation,
and distribution of renewable energy (Zhang, et al., 2017).
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Downside risks
In 2017, a statement was made that states according to the future predication and forecast
system, POWER is a bad long term investment as due to the low market cap, POWER prices can
be easily manipulated. POWER prices equal to $0.132 on 5/4/19, but the current investment may
be got devalued in the future. This kind of downside risks is involved in this business, as this
business is also connected with the crypto trading. Risk involves like there is a wide entrance and
narrow exit because crypto currencies have democratised many aspects of finance situation.
Crypto currencies are also prone to social engineering and misinformation risks. They can be
easier prey for market manipulation, fraud, cyber extortion, etc. Apart from this, human error as
password amnesia can also be calculated the total loss of crypto fortune (Apte and Petrovsky,
2014).
Business model changes
Power Ledger should change its production location factors. They should operate more in remote
areas and should help village people also by giving them the benefits of electricity. By working
in remote areas, their production cost will be low because the government will provide those
subsidies with and this will also create job opportunities for remote area people. Government
provide relaxation in the form of taxes to the big industries if they operate in remote areas. Now,
the market volatility of crypto currency also affects the Power Ledger. So, they should make
changes to controlling the market volatility. By managing the market volatility, the investor’s
money will be in safer hands that will increase loyalty (Crosby, et al., 2016).
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Conclusion
Power Ledger has developed the ecosystem of world-leading energy blockchain application that
supports a low-cost renewable future. It is an Australian blockchain that gives the platform for
trading of renewable energy. Their primary objective is to provide a platform which enables
more and more people to engage in the trading platform for renewable energy. Power Ledger
also uses many management techniques for keeping their employee motivated and satisfies, they
use many reward and recognition seminars for giving awards to the employees, and they also
provide excellent after sales services to their clients. Keeping employee motivated and customer
satisfied will eventually help the Power ledger in accomplishing their long term objectives.
Recommendations
The cryptocurrency has vast intrinsic value as a self-regulating frictionless payment apart from
the central bank. So, the market is volatile for this currency, for keeping the market in the
profitable state is very important to improve the awareness of technical analysis. Although, there
no problem in upgrading the payment system and accept the new form of currency that is crypto
currency. It is worth for especially those business industries that have a significant internet
presence and has big e-commerce market. Companies should make more regulations in securing
the crypto payment like wallet software should be installed on a bootable USB or a live CD to
ensure that the operating system is virus free. Companies should also make ways to keep the bit
coin wallet protect against computer failure, human error and theft. They should be encrypted,
and bit coin is a digital currency so it can be kept secure in analogue form.
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References:
 Apte, S., & Petrovsky, N. (2016). Will blockchain technology revolutionize excipient
supply chain management?. Journal of Excipients and Food Chemicals, 7(3), 910.
 Crosby, M., Pattanayak, P., Verma, S., & Kalyanaraman, V. (2016). Blockchain
technology: Beyond bitcoin. Applied Innovation, 2(6-10), 71.
 Ellabban, O., Abu-Rub, H., & Blaabjerg, F. (2014). Renewable energy resources: Current
status, future prospects and their enabling technology. Renewable and Sustainable
Energy Reviews, 39, 748-764.
 Erdinc, O., & Uzunoglu, M. (2012). Optimum design of hybrid renewable energy
systems: Overview of different approaches. Renewable and Sustainable Energy
Reviews, 16(3), 1412-1425.
 Evans, A., Strezov, V., & Evans, T. J. (2012). Assessment of utility energy storage
options for increased renewable energy penetration. Renewable and Sustainable Energy
Reviews, 16(6), 4141-4147.
 Gandal, N., & Halaburda, H. (2014). Competition in the cryptocurrency market.
 Inman, R. H., Pedro, H. T., & Coimbra, C. F. (2013). Solar forecasting methods for
renewable energy integration. Progress in energy and combustion science, 39(6), 535-
576.
 Power Ledger, (2018). About us [Online] Available at: https://www.powerledger.io/about
[Accessed on 6 April 2019].
 Zhang, C., Wu, J., Long, C., & Cheng, M. (2017). Review of existing peer-to-peer energy
trading projects. Energy Procedia, 105, 2563-2568.
 Zyskind, G., & Nathan, O. (2015, May). Decentralizing privacy: Using blockchain to
protect personal data. In 2015 IEEE Security and Privacy Workshops (pp. 180-184).
IEEE.
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Appendices
Appendix 1
Key
Partners:
Bitconnect
Bitcoin
Litecoin
PotCoin
Auroracoin
Coinye
Dogecoin
Key activities:
-Blockchain
technology.
-Trading
platform.
-Providing
renewable
energy.
Value
proposition:
-Power Ledger
charges the
commission
amount.
-Commission
amount is very
minimal.
Customer relationship:
-Making a relationship by
providing trading tips.
- Send regular notifications
-Give after sales services
Customer
Segment
Sex : 36%
female and
64% male
Age – 30 to
54 years
Average
spend - $150
million
Key resources:
-Cryptocurrency
price prediction
tools.
-Indicators
-Trading study
-Renewable
energy
Channels –
- Print Media
- Cryptocurrencies
platform
- Distribution
channels
COST STRUCTURE
-.06 cents in making 1 unit electricity.
- Cost includes fixed and variable cost,
minimum cost, workers cost, machinery,
technological cost, etc.
REVENUE STREAMS
- Commission from trading.
- Selling of renewable energy
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