Bus3Ent Individual Business Model And Assessment Answers

Answer:

Introduction

We would like to introduce to you all Paddles, a company providing means for eco friendly personal transportation for the Australian market. With increasing impact of global warming and surging prices of petroleum complimented with traffic jams because of increase in frequency of vehicles, Paddles aims to provide the daily commuters with an eco friendly alternative. The company will act as renters for bicycles and e-cycles for the commuters which will be both pocket friendly as well as environment friendly. We would also provide the customers with an option to modify their mechanical cycles to e-cycles for a nominal charge.

Business model Canvas

The business model canvas provides a brief outline of all aspects related to the starting of the Paddles. The model can be used as a reference for accessing information regarding the overall business strategy of the organization. While it is true that it does not provide exhaustive information but it can be indeed relevant when organizing and arranging huge information.

Refer to appendix 3

Market

Market size

The company will initiate its operations in brisbane and sydney before spreading out to rest of Australia. Brisbane has a population of 2.4 million while sydney has a population of about 5.1 million as of 2016. Both the markets have been selected due to their urban status and high demand for personal transportation. The current size of the market after neglecting the newborns and toddlers should be about half of the existing population of Brisbane and Sydney. The market is expected to undergo even more growth due to increasing influx of people from different regions and countries due to work and education related opportunities (Wirtz, Pistoia, Ullrich and Göttel, 2016). Hence it can be stated that the markets are still not at its full potential.

Industry growth rate and competition

The auto vehicle renting industry in Australia is booming because it is cheaper to rent a vehicle for personal use for a limited time period rather than buy a brand new car of motor bike. Hence it can be concluded that the industry will experience even more growth in the future, It should be kept in mind that Paddles does not cater the same products and this means that the cycle renting industry is still at nascent stage. As observed by Christensen, Bartman and Van Bever (2016), the company faces no such competition and the barriers to new entry may be summarised as low recognition, high customer expectations, costly investments in infrastructure, research and development. Since most of the consumers prefer feasible and cheaper modes of fast commute, this can considered as a major barrier to new entrants.

Market trends

The consumers in Brisbane and Sydney like most of the people of the world are having concerns on the declining environmental conditions. This growing trend of undertaking eco-friendly alternatives may become a driving force for Paddles. The harmful byproducts of using petroleum as a fuel and gowing cost of petroleum fuel is also another trend that can be effectively utilised by Paddles to capture the market. Another psychological behaviour among the urban population is the need to have a healthy lifestyle and cycling has been since a long time considered as an effective exercise that will definitely have a positive impact for a company such as Paddles (Bocken, Short, Rana and Evans, 2014). However, growing demand for faster means of communication can negatively impact the company.

Market segments

The market will be segmented on basis of demographics, psychology and behaviour. The market will be segmented on basis of demographics in order to cater to the low and middle income class groups of consumers of age group 5 and above who cannot afford personal vehicles for commuting. As noted by Massa, Tucci and Afuah (201), the psychology segment is targeted towards consumers who share the belief that it's time to change to eco-friendly as well as healthier alternatives to transportation. The behavioral segment has been considered to attract consumers who need cheap transport options for travelling short distances on a regular basis as these customers will be attracted by convenience and pocket friendliness.

Targeted customers

The company will target local as well as foreign tourists who would like a sustainable alternative for cheap transportation and local commute. The targeted age group is 10 and above and targeted population will be from the urban, semi urban and rural areas of Brisbane and Sydney. Any individual who is willing to ditch their cars and bikes for an ecofriendly means of transport is the targeted customer (França, Broman, Robèrt, Basile and Trygg, 2017). Any individual with short time transportation requirement will be targeted customer. People who study in colleges and commute to nearby workplace will also be targeted.

Major competitors

After reviewing the current market in Brisbane and Sydney it is safe to assume that there are no major competitors in the industry (Jansen, 2017). However the company faces severe challenge from bike and car renting houses.

Business location

As already mentioned the initiation of the business operations will begin systematically at Brisbane followed by Sydney and then after reviewing the overall performance, newer markets in Australia will be identified and catered to. Majority of operations will be provided to urban customers and with time the services will be proliferated to satisfy the requirements of the rural and semi-urban customers. The company will also look to expand its business overseas in future (Mezger, 2014).

Operations and Technology

Options for developing Technology

The company will engage in research and development as well as engage in contract with fabricators and designers to produce products that will enable to minimise liability to the company without compromising on customer satisfaction (Tongur and Engwall, 2014). The research and development in terms of services, products as well as operations will be done by taking customer feedback. Since the company is looking to revolutionise cycles as a mean of transport, the company has to invest in tracking, consumer data, e-cycle concepts to name a few and in order to do so the company will try to forge partnership with major producers e-vehicle and normal mechanical cycles (Velu, 2015). Australia is becoming hub for technology development due to its proximity to countries like Japan and China and this means that there are plenty of options, ideas as well as resources for developing the necessary technology.

Technological changes affecting business

The basic design of the mechanical cycle has remained same for over century. However in order to maximise the efficiency of paddle power technologies are being developed for minimising mechanical losses. The majority of technological changes that have a potential to affect the business is in e-cycle department. There is a constant requisite to develop efficient and powerful electric motors that can drive the cycles. As noted by Boyd et al. (2017), there is also a lot of technological changes in power storage units. Previously acid batteries were popular but nowadays the trend is for using Polymeric Lithium ion batteries which are not only boast of greater charge density which in turn means greater efficiency but also feasibility as these batteries are easier to carry and less heavy.

Options for producing services and products

In order to provide the services and products to the consumers, the company will undergo contractual agreement with the local government bodies to provide space for making cycle hubs from where the consumer can pick up and drop the cycles. The company will also try to partner with cycle manufacturers and use the in-house development team along with co-partners to develop e-cycles (Foss and Saebi, 2015). The company will also try undergoing a joint venture with energy companies and the government for setting up charging stations. Paddles also wishes to utilise technologies such as AI, GPS smart tracking, user profile creation by collaborating with Google.

Distribution and sales channel

The majority of distribution of services will be done by partnering with government bodies as well as NGOs which promote greener and cleaner transport alternatives. The company will also look into franchise system for generating profit for the company as well as the party which will become the franchise. However, franchising will come at later stages when Paddles establishes its business revenue model.

Resource requirement and availability

The majority of non intellectual resources are easily available in Australia. The country is rich in natural resources as well has a growing number of skilled as well as unskilled labours. These individuals can be provided necessary training for assembly, service and maintenance of the mechanical as well as the e-cycles. For customer services, the company can outsource to country like India which has a high volume of skilled labour and low employment costs.

Legal issues

Paddles need to understand the necessity of operating leases which is similar to that of car hiring providers. This will allow the company to offer the corporate clientele a large part of services which can be adjusted according to the seasonal vehicle demand. Operating leases have provision for upgrades which can be cheaper than owning an vehicle. The company has to also invest in Personal Properties Securities Register and also include the registration number of the cycle, the motors and the batteries so that they are not leased or freely sold (Rauter, Jonker and Baumgartner, 2017). The company can also not increase the fees for services without giving the consumer a right to extend or terminate the availed services. They should also not charge the consumers without prior notice or even an opportunity to discuss and dispute. Paddles must also abide by the Australian Consumer Law to minimise unfair practices as well as negligence liability avoidance. It also prohibits the company to hold the customer liable for previous damage to the vehicle or provide vehicles which are not fit for use and do not comply with consumer guarantee. According to Bohnsack, Pinkse and Kolk (2014), the company is also required to provide a detailed invoice when demanded by the customer within seven days of making the request.

Moral and ethical issues

Paddles is dedicated to help Australians commute without hassle as well as harming the environment. The company has to ensure that the practices are fair and in future they should not indulge in activities which have a profit first priority. The company will not be discriminating against the consumers as the services will be autonomous as well as abide by the Privacy and Data Protection Act so as not to leak the private customer information to third parties and outsiders.

Human resources

Required technical as well as management experience

For dealing with management aspect of Paddles, the company will require executives who are experienced as hiring providers as they will be responsible for bringing in customers and understanding their demands. In order to deal with the technological aspects, Paddles will look forward to hire engineers of mechanical and electrical background. The company will also hire individuals having degree in industrial and engineering management for optimisation of production processes so as to minimise production cost without compromising on quality.

Ownership role

Table 1: Role of ownership

(Source: Demil, Lecocq, Ricart and Zott, 2015)

Ownership structure

The company will begin as a partnership and then over time file papers for becoming a corporation or limited liability company (LLC). The ownership structure is so because the company will start small and have limited personal liability. As the company expands and the services proliferate, the ownership will look to transform into a corporation to avoid the growing liability due to increase in demand or business debts. Also, as a LLC the company will be responsible for paying the taxes and not the owners (Boons and Lüdeke-Freund, 2013).

Manpower requirement

Table 2: Estimated employee requirement

(Source: )

Finding employees

The appropriate employees will be screened on the basis of their educational qualification and previous work experience. The company will also identify youths and provide them with an opportunity to undertake internship with Paddles. Those who want to usher change in the world and showcase their talents and skills will be hired with a promise for full time jobs at end of the internship based on their performance and work ethics.

Compensation

The company will be paying the full time employees on basis of their departments. The company coordinators and customer service team will be paid on basis of their time spent, the managers will be paid for production, the technical experts will be paid for their knowledge. Initially the interns will not be paid anything i.e unpaid internship. In the third year of the company, the suitable few interns selected will be paid on basis of their time and value to production while the rest will be unpaid as they are undergoing training for full time jobs.

Employee motivation

Employees can be motivated by providing them with opportunities to collaborate with the partners in addition to the perks and benefits. For the unpaid interns to remain motivated, the company will try to foster a ‘work hard, play hard’ environment so that these young fledgelings do not get demotivated. Right work will be appreciated.

Employee training

The hierarchy within the company will develop by training the interns. They will be categorised into the different company segments and trained accordingly by the experienced staff members so as they become competent enough in future to be able to manage the responsibilities and duties of a full time employee.

Growth strategy

Quality management

To abide with the consumer policies, Paddles will implement stringent quality control and testing so that the products and services can accommodate the consumer demands. The testing will be used for formulating quality assurance report which will be audited by external investigators to identify traces of mismanagement or unfair practices if any.

Change in organisational structure with growth

The company will be initially enjoying functional organisational structure but with growth the company may adapt to matrix structure which is a complex mix of functional and divisional structure to ensure flexibility and ability to make balanced decisions.

Career paths available for employees

The employees will be mainly working as company coordinators, customer service executives and technical experts.

Finance

Projected revenue

The projections regarding the net profit of the first month and subsequent years reveal a steady flow of revenue. However, it must be remembered that the calculations are subject to certain factors that have to be taken care of by the management of Paddle. The internal organizational framework has to be set up in a manner that can ensure the maximum profitability and production capacity. A sustainable business structure has to be maintained so that Paddle can not only establish its own niche but also last in the market in the long run.

Start up cost as well as equipment cost

Reveals that Paddle has to initially incur a huge amount of startup and equipment cost. The funds shall be collected through the issuing of shares and bank loans. While the start up cost has to be incurred once, a substantial portion of the equipment cost shall be recurring when the company would start operating.

Projected profit and loss statement for three years

From the profit and loss statement one can infer that Paddle shall have a lot of potential for growth in the market. First of all there are no significant competitors in the market and the few companies that are providing substitutes do not cater to needs like changing mechanical bicycles to electronic ones. Therefore, given the current market situation, it shall not be very difficult for paddle to capture the market.

Possible sources of financing

There are a wide variety of options available for Paddle to finance itself. Issuing shares or opting for bank loans can be considered to be the most straightforward or conventional approaches towards funding. However, since Paddle is an organization is motivated by a social cause that precedes it’s profit-making objective, it can opt for a crowdfunding campaign online. Since, more and more people are becoming conscious about environmental issues, organizations that are committed to the safeguarding of the environment shall be preferred by consumers.  

Conclusion

The current report has been formulated to discuss the individual business model and plan for Paddles. The report discusses the market, operations and technology, human resources as well as finances. The presentation of the work and the business plan through the evaluation of business canvas has well accessed the way, the organization need to prepare for the preparation of future business course

References

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Bohnsack, R., Pinkse, J. and Kolk, A., (2014). Business models for sustainable technologies: Exploring business model evolution in the case of electric vehicles. Research Policy, 43(2), pp.284-300.

Boons, F. and Lüdeke-Freund, F., (2013). Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner production, 45, pp.9-19.Boyd, B., Henning, N., Reyna, E., Wang, D., Welch, M. and Hoffman, A.J., (2017). Hybrid organizations: New business models for environmental leadership. Routledge.

Christensen, C.M., Bartman, T. and Van Bever, D., (2016). The hard truth about business model innovation. MIT Sloan Management Review, 58(1), p.31.

Demil, B., Lecocq, X., Ricart, J.E. and Zott, C., (2015). Introduction to the SEJ special issue on business models: business models within the domain of strategic entrepreneurship. Strategic Entrepreneurship Journal, 9(1), pp.1-11.

Foss, N.J. and Saebi, T. eds., (2015). Business model innovation: The organizational dimension. OUP Oxford.

França, C.L., Broman, G., Robèrt, K.H., Basile, G. and Trygg, L., (2017). An approach to business model innovation and design for strategic sustainable development. Journal of Cleaner Production, 140, pp.155-166.

Jansen, W., (2017). New business models for the knowledge economy. Routledge.

Massa, L., Tucci, C.L. and Afuah, A., (2017). A critical assessment of business model research. Academy of Management Annals, 11(1), pp.73-104.

Mezger, F., (2014). Toward a capability?based conceptualization of business model innovation: insights from an explorative study. R&D Management, 44(5), pp.429-449.

Rauter, R., Jonker, J. and Baumgartner, R.J., (2017). Going one's own way: drivers in developing business models for sustainability. Journal of Cleaner Production, 140, pp.144-154.

Tongur, S. and Engwall, M., (2014). The business model dilemma of technology shifts. Technovation, 34(9), pp.525-535.

Velu, C., (2015). Business model innovation and third-party alliance on the survival of new firms. Technovation, 35, pp.1-11.

Wirtz, B.W., Pistoia, A., Ullrich, S. and Göttel, V., (2016). Business models: Origin, development and future research perspectives. Long range planning, 49(1), pp.36-54.