MGMT20143 Business Model Innovation Assignment Sample

• Subject Code : MGMT20143
• University : Central Queensland University My Assignment Services is not sponsored or endorsed by this college or university.
• Subject Name : Management

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Executive Summary of Business Model Deconstruction

The current study has conducted an analysis of the current business model if Commas with the help of business model canvas proposed by Osterwalder & Pigneur’s canvas. The interrelationships between the nine building blocks within the canvas have been analysed. The key success factors that are contributing to the growth of the organisation have been identified and discussed. Along with this, the risk factors that might harm the growth of the current organisation have also been evaluated. Based on the current position of the organisation and the effectiveness of its business model, some suggestions have been provided.

Table of Contents

Introduction.

Description of the business.

Deconstruction of the business model

Key interrelationships across nine building blocks.

Identification and discussion of critical success factors.

Factors impacting on the success of business model

Required changes.

Conclusion.

Reference.

Introduction to Business Model Deconstruction

A business model is the outline of how a company delivers values to the customers in exchange of appropriate cost. Business models can be divided into three parts; everything the business requires to develop products, every factor that are required to sale the developed product and the process and amount of paying for the product. Therefore, a business model is crucial to the success of a business. The current study will deconstruct and analyze the business model of Commas organisation operating in Australia and will identify critical success factors of the business model. Apart from that factors that are affecting the success of the current business model of Commas organisation will be discussed and required changes in the business model will be suggested.

Description of The Business

A luxury swimwear has been offered by the company in the year 2016. A promising clean aesthetic, the brand has incorporated contemporary designs for providing a muted tone that is able provide modern and masculine sensitivity. Commas offers luxury swimwear that is designed to make shopping easy for men that do not like the infrastructure of traditional mail-order business. This company operates particularly under clothing industry. This organisation has been established in the year 2016 and operating in its principle markets in Australia. The products offered by this organisation include quality materials sourced from Europe. The design and development of the products is conducted in Australia and UK (Commas, 2020). The collection of this organisation expanded from restore wear to swimwear along with casual men’s wear and others. Apart from that in order to encourage the customers this business also offered discounted prices and holds sales. Moreover, this company adds value to the money of the customers. It is mainly conducting online services to serve the customers.

Deconstruction of The Business Model

The business model of Commas has been deconstructed in the current section with the help of Osterwalder & Pigneur’s (2010) nine building blocks approach.

1. Customer segments

Commas mainly indulge in advertising through web-page where they target customers with an interest in buying designer clothes at the lowest possible prices. The company target males that are aged between 30 and 50 in the Australia. Characteristics of the target customers include credit card users, home owners, married, frequent travelers. The income level of the target customers are more than 30,000 AUD (Matchesfashion, 2020).

2. Key partners

The key partners of the organization include Australia online shopping platform shopstyle and matches fashion that help in delivering newly offered clothes, men’s wear, customer’s orders and returned products. Along with these, European manufacturers are consistent partners in providing quality materials at a lower price. This is the main reason due to which the company is being able to offer quality clothing at a lower price.

3. Value Proposition

• Making it clean aesthetic for men to dress well
• Through cutting out the middle men and direct selling, making designer clothes, quality and style and affordable to every customers

4. Key activities

Courier and mail delivery of the finished and ordered products are accepted over the internet. Unlike many other organizations, Commas provide hand printed clothes, light weight silk shirts and maintains the beachside lifestyle of Australia.

5. Channels

 The shopping procedures are operated through online platform. With the partnership with different e-tailers such as MATCHESFASHION.COM and MyTheresa, the company could make its presence in the Australian clothing industry. Courier and mail delivery of the finished and ordered products are accepted over the internet

6. Revenue streams

The approximate Australian turnover has increased jumping from £1 million to £10 million within 2 years since 2016 to 2018. The long term operating profit of the organisation is 9.6%. In the year 2016, The Australian turnover was $100, 000 (mytheresa.com. 2020). Most importantly, business advisory and financial planning services have reflected a value of $120, 000.

7. Cost Structure

The stock costs 20% of the sales price along with approximately 10% revenue from the distribution and selling. As compared to this, the administration costs results in approximately 15% of the total cost (Shopstyle, 2020).

8. Key resources

The key resources that Commas includes website developed for accepting orders, partnership with Australian Fashion Council and mailing lists for direct mail advertisements to connect the Australians.

9. Customer relationships

Customers of the organizations are attracted through regular direct mailing and mailing about current offers. Past customers are provided with promotions and catalogues and future prospects are is embedded in online order platform (Euchner, 2016).

Key Interrelationships Across Nine Building Blocks

In order to achieve higher sales Commas mails more than 20 million catalogues for new and past customers per year so that the prospective customers can be identified through the emails. Appropriate linkage is maintained among the mailing houses, key partners and others in order to segment the customers effectively and identifying the potential customers (Schaffer, Weking & Stähler, 2020). The value proposition of the current organization to increase easiness in shopping has been attached to the quality and affordability of the products. This has helped the suppliers offshore of the company through profit margins.

Commas’ effective relationship with the suppliers helps in keeping adequate stock for every customer segment’s demand which allows in customization and holding various stocks increasing revenue opportunities (Wrigley & Straker, 2016). Slow moving stocks are attached with intelligent discounting through which the customers are attracted and stock can be cleared. The lost revenue is revived through some exciting collaborations and a collection representing Autumn/Winter 2020’s fashion that’s markedly prominent mean the brand’s presence is set to inflate here regardless.

Identification and Discussion of Critical Success Factors

Better purchase outcome is achieved through linking the customer characteristics and their buying tendency with the product features. In this activity, reliance in the Australian fashion statement process is used which is the fundamental factor to the success of the company.

Commas applies high range of capital investments to the process and tries to improve the overall process eventually which enables the company to fulfill the demands of the customers with high efficiency and fewer errors (Metallo et al., 2018). The company is recently focusing in designing clothes based on the aim of becoming the Sydney-born brand by incorporating the authentic Australian styling in clothing. Commas was declared a finalist in the “National Designer Award” as a competitor in fashion branding among the other emerging brand and was entitled an award which is worth $120,000 (GQ, 2020). The products are mainly focused on providing the customers a holiday state-of-mind which can be considered as the act of taking a pause. This innovating outlook towards shopping has made it successful to grab the attention of the customers it targets. Therefore, these are the key factors that are crucial to the success of the business.

Technical constraints may include lack of effective project management model incorporation to the business model which interaction between cross-functional teams may get affected. Financial constraints that impact negatively on the innovation of the organization might include lack of investments through partnerships or others (Täuscher & Abdelkafi, 2017). This might harm the innovation process by reducing budget for to be allocated into a project. Apart from the technical and financial constraints, organizational constraints also may include lack of leadership, lack of enthusiasm among the human resource of the organization and others.

Factors Impacting on The Success of Business Model

In spite of several supporting factors working behind the success of the company, some factors also works as potential barrier to the success of the current business. These days the fashioned clothes offerings has shifted from casual resort wears more to linen and wool pants for attracting the customers which, Commas is unable to identify. Therefore, there is a high tendency for the stock to lose its mobility (Kühne & Böhmann, 2018). These stocks are difficult to move to market which may create issues such as increased cost. Focusing only on the beach style clothing might create issues in increasing reach of the current organisation to its customers.

After the foreign exchange movement has taken place higher costs can get associated to the every business globally. This may force the company to increase their product price based on the increased operating cost.

Required Changes

It will be more effective to move from the propensity to causality from the effective understanding of the buying behavior of the customers. As per the views of Crane et al., (2018), customer satisfaction changes the behavior of the customers towards the brand. Therefore, if the customers are satisfied with the offerings of the current organization, it is required to be understood. In order to incorporate this, a feedback process is required to be included in the business model based on which the customer satisfaction level can be judged and proper service can be provided.

The current organization can adopt disruptive innovation to the business model along with a total quality management approach (Čirjevskis, 2017). Through the disruptive innovation the business can increase its scalability and through total quality management the customers will be kept satisfied and attracted to the products offered by the current organization. Web-based marketing is highly appreciated in the modern business era. However, it has only impacts on the people using internet for shopping purpose (Maassen, 2018). However, Commas requires providing emphasis upon email-based promotion which will allow the company to get in touch with the elder customers also. The company is required to focus on the other markets and need to establish stores for acquiring new customers that prefer shopping visiting the stores.

Conclusion on Business Model Deconstruction

In conclusion, it can be stated that the current organization Commas has effectively maintained inter relationships among the key factors within their business model. This has provided opportunity to improve its business outcomes and make further progress. However, the company requires focusing more on understanding the buying behaviors of the customers so that sales can be predicted well in case of any product. It also requires halting the UK growth and focusing more on the growth of the Australian market as this holds potential for scalability.

Reference for Business Model Deconstruction

Čirjevskis, A. (2017). Acquisition based dynamic capabilities and reinvention of business models: bridging two perspectives together. Entrepreneurship and Sustainability Issues, 4(4), 516-525.

Commas, (2020). Luxury Swim & Resortwear. Retrieved 2 August 2020, from https://commas.cc/

Crane, A., LeBaron, G., Phung, K., Behbahani, L., & Allain, J. (2018, July). Innovations in the business models of modern slavery: The dark side of business model innovation. In Academy of management proceedings (Vol. 2018, No. 1, p. 13381). Briarcliff Manor, NY 10510: Academy of Management.

Euchner, J. (2016). Business model innovation. Research Technology Management, 59(3), 10-11.

GQ, (2020). Why The World Can't Get Enough Of Sydney Brand Commas. Retrieved 2 August 2020, from https://www.gq.com.au/style/news/why-the-world-cant-get-enough-of-sydney-brand-commas/image-gallery/853ad53a4935ebe4ce278c58971d9bed?pos=6

Kühne, B., & Böhmann, T. (2018). Requirements for Representing Data-Driven Business Models-Towards Extending the Business Model Canvas.

Maassen, M. A. (2018). Sustainable Business Models: An Imperative in the Strategic Management of Companies and Organizations. Management Dynamics in the Knowledge Economy, 6(2), 323-335.

Matchesfashion, (2020), Sales Commas. Retieved on: 29 July 2020 from: https://www.matchesfashion.com/au/mens/designers/commas?cta=search%7cCommas

Metallo, C., Agrifoglio, R., Schiavone, F., & Mueller, J. (2018). Understanding business model in the Internet of Things industry. Technological Forecasting and Social Change, 136, 298-306.

mytheresa.com. (2020). MyTheresa. Retrieved 2 August 2020, from https://www.mytheresa.com/en-au/men/designers/commas.html

Schaffer, N., Weking, J., & Stähler, O. (2020). Requirements and Design Principles for Business Model Tools.

Shopstyle, (2020), COMMAS Clothing For Men - Up to 40% off at ShopStyle Australia. Retrieved 2 August 2020, from https://www.shopstyle.com.au/browse/mens-clothes/commas

Täuscher, K., & Abdelkafi, N. (2017). Visual tools for business model innovation: Recommendations from a cognitive perspective. Creativity and Innovation Management, 26(2), 160-174.

Wrigley, C., & Straker, K. (2016). Designing innovative business models with a framework that promotes experimentation. Strategy & Leadership.

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