BMC case study Entrepreneur ENT530 PDF

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1.3. Problem Statement
Expensive product at others shop
There are numerous stores, particularly in malls, that sell branded clothing at exorbitant prices. This is due to the fact that high-end stores such as Sole What and Crossover sell their products in excellent quality at a premium pr...

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5. COMPANY ANALYSIS 5.2

Business Model Canvas (BMC)

The business model canvas was proposed by Alexander Osterwalder. This BMC reflects systematically on your business model, so you can focus on your business model segment by segment. It is a visual chart with elements describing a firm’s or product’s value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential trade-offs. The Business Model Canvas can be printed out on a large surface so groups of people can jointly start sketching and discussing business model elements with post-it-note notes or board makers. It is a hands-on tool that fosters understanding, discussion, creativity and analysis. There are 9 building blocks in this BMC that we analyze. The different types of building blocks roughly show the importance parts that plays roles of the business. So, we already created the Business Model Canvas (BMC) for the shop that we analysed which is Baker’s Market.

5.2.1 KEY PARTNERS

Key partnerships are the network of suppliers and partners that make the business model work. Companies forge partnerships to optimize their business models, reduce risk, and acquire resources. These partnerships that you will undoubtedly create will be forces that help your business succeed in areas that would be inefficient for you to do yourself. In order to optimize operations and reduce risks of a business model, organizations usually cultivate buyer-supplier relationship so they can focus on their activity. Complementary business alliances also can be considered through joint ventures or strategic alliances between competitors and noncompetitors. For this business, the key partners are suppliers and retailers. Supplier is a person or organization that provides something needed such as a product or service while retailer is a person or business that sells goods to public in relatively small quantities for use or consumption rather than for resale. Baker’s Market is a small shop that located at a residential area at Alam Suria. This business only has an owner with two workers which one them is her husband. The supplier of the business is important because they provide the products to the Baker’s Market, then Baker’s Market will sell the products to the customer. Baker’s Market buys their stocks from Chinese suppliers because they can get cheaper price than the other suppliers. They usually buy their stocks in bulks to get cheaper price. Baker’s Market often stock up their stocks from retailers such as Tesco and Econsave if their Chinese suppliers cannot provide stock for Baker’s Market. In this case, Baker’s Market cannot get cheaper price for their stocks as usual. Thus, they have to sell higher price from usual to their customers.

5.2.2 KEY ACTIVITIES

Key activities are the most important actions your company must perform to operate successfully. It also represents what the company must do to make the business model work. These activities can produce a product or providing a service, or a mix of both. For example, if your business focuses on production of a product, your activities may include learning more about customers and new production techniques to improve the product. Thus, the key activities are the activities that the company did when run the business. In this block, the key activities of the Baker’s Market are answering customer inquiries through social media and follow-up on question and problems. Baker’s Market will answer customer inquiries through social media and phone. Customer can ask questions and get updated info about the shop from the Facebook page which is Baker’s Market. Customer also can direct message to the Baker’s Market’ Twitter for convenience and more questions or directly contact at 03-33938845. Next, Baker’s Market will follow-up on questions and problems from the customers. To ensure good relationship with customer, Baker’s Market ready to hear a complaint if the customer is not satisfied with their service and will immediately improve their service. The customer can ask questions or complaint the problems on their Facebook page or directly contact the shop.

5.2.3 KEY RESOURCES

Key resources describe the most important assets required to make a business model work. Every business model requires them, and it is only through them that companies generate value propositions and revenues. Key resources can be physical, financial, intellectual or human. The key resources of this business are high quality product and employees. As we know, Baker’s Market is a business that sells ingredients for baking. In this situation, they do not need raw material because they just sell the product that already done to their customers. In order to deal with the suppliers, it is easy because all of them are local suppliers. Baker’s Market will provide high quality product to the customer to ensure that they are known as a shop that sells high quality products. They will not sell damaged or expired products to the customers. Next, the key resource of this shop is their employees. As we know, Baker’s Market has two workers. Even though there are only 2 workers, an organization must at least have a worker to run their business. Employee is an important resource of an organization in order to smooth their business processes. Baker’s Market needs workers to work in their shop. If there is no worker, then there is no business will running.

5.2.4 VALUE PROPOSOTION

In simple terms, a value proposition makes a case for why customer should pick one product over another, citing the unique value the product provides over its contenders. This provides a unique combination of products and services which provide value to the customer by resulting in the solution of a problem the customer is facing or providing value to the customer. It is important for a product to solve a problem in a unique way. The problem could be unworkable, unavoidable, urgent or undeserved. The value propositions of Baker’s Market are deliver customer service and support to their satisfaction and fast response. Baker’s Market provides quality products to their customers. They acquire their products from suppliers that can provide good quality product. In order to ensure their customer come back to their shop, they also provide cheaper price than the other shops. By selling cheaper price, they can gain more and more customers day by day. Next, the other value proposition is fast response towards customer. Baker’s Market has many social media such as Facebook, Instagram and Twitter. They also have their website which is www.bakersmarket.com.my. Customers can use these mediums to be more easily connected with Baker’s Market. Thus, Baker’s Market would response to the questions and ordering goods from the customers.

5.2.5 CUSTOMER RELATIONSHIP

A customer relationship describes the type of relationship a company establishes with its specific customer segments. Customer relationship are driven by customer acquisition, customer retention, and boosting sales. In other words, you need to get, keep and grow your customer relationships. The business must let the customer know what the company will do, what kinds of products and services by the business. The shop needs to have a good relationship with customers. For example, when customers asking where the goods located, we must heard clearly and speak politely during communicate with customers. Baker’s Market already trained their workers to speak politely, always smile and using concept “Customer Always Right”. For this business, the customer relationships are social media, promotion during festive seasons. Baker’s Market is actively in contact with their customers via Facebook and Instagram. They can receive feedback from the customer anytime and anywhere thus they can improve their quality of products based on customer’s demands. Baker’s Market also can promote their business via social media in order to attract more customers. Next, Baker’s Market also conducts promotion during festive seasons such as Hari Raya Aidilfitri. Usually, many customers will search for baking ingredients during fasting month. Thus, they will take this opportunity to attract customers by conducting Raya promotion to increase their sales. For example, they will give a packet of cornflakes if they purchase above RM60. This can increase close relationship with customers.

5.2.6 CHANNELS

Channels building block describes how a company communicates with and reaches its customer segments to deliver its value proposition. It is important to understand which pathway (or channel) is best for your company to reach your customers. Distribution channels help us move our products from an idea to the customer. These channels could be physical channels, such as a store needed to sell clothes or a local market, or they could be virtual channels, such as e-commerce website selling clothes online. Baker’s Market use social media to make people buy their products. The customers can reach them and make orders through their social media such as Facebook and their website. All the information that the customers needed are on Baker’s Market’s social media. The customer just needs to choose and purchase the product. They also can contact them via phone number which is more efficient and help saving their time. Next, Baker’s Market also used flyers as their advertisement to attract the customers. The business is very strategically located at residential area which can attract more customers. So, the worker of Baker’s Market will distributes the flyers around their residential area. Even though Baker’s Market flyers are outdated, they still using older information since the business opened. The flyers also have colorful and beautiful design. So, it can attract more customers to their shop. Thus, the customers can reach the information through this advertising activity. Baker’s Market also using direct channel to interact with their customers for any business matters. They using that kind of method because they think it are friendlier. As for the example, when the customer wants to order ingredients for baking, the owner itself will deliver the stocks to the customer’s house. From there, the customer and the owner will get to know each other and it is one of the ways to make the customers to repeat to buy the products. So, these are the ways that makes Baker’s Market still exists these days.

5.2.7 CUSTOMER SEGMENTS

Customer segments define the groups of people of organizations you aim to reach or serve. Every company needs profitable customers in order to survive. A good way to think about this block is to treat it as demographic information from your customers. Information you may want to predict and test for this section could include age, gender, time spent working and so on. Something to keep in mind here is that if your customer is going to use your product, they are going to have to give up something else such as time to use product and switch from current product. The customer segment for Baker’s Market is women that have desire to bake cake and cookies. As we know, women are so related with cooking and baking. They are willing to bake their own cake or cookies rather than buy at the bakery. When we bake the cakes or cookies ourselves, unfortunately we can reduce cost and the cakes and cookies that we bake can satisfy our taste. We also can make many types of cakes and cookies when we buy the ingredients ourselves. Next, the customer segment for Baker’s Market is “kuih” seller. Usually during festive season which is Hari Raya Aidilfitri, “kuih” seller will buy ingredients from Baker’s Market because the ingredients that available there are cheaper than the other shops. In addition, Baker’s Market has all the baking ingredients that “kuih” seller needs such as flour, colouring, cheese, chocolate paste, chocolate chips and so on. Besides, “kuih” sellers love to purchase ingredients here because Baker’s Market always do promotion during fasting month. Baker’s Market will give a packet of cornflakes if customer purchase above RM60. With this promotion, it can attract many customers to shop at Baker’s Market.

5.2.8 COST STRUCTURE

This building block represents all the cost that a business can will incur if it opts for a particular business model. At least three other building blocks are contributors to the cost structure block. One must evaluate the cost of creating and delivering the value proposition, creating revenue streams and focus on long-term customer relationships all three of these blocks represent a financial investment into the business. The cost structures for Baker’s Market are logistics and worker’s salaries. The logistics of the products consist of van and car. If the business needs to buy or deliver small quantities of ingredients, they will use their car to buy or deliver them and use van for big quantities. When Baker’s Market buys or delivers the ingredients, cost of fuel, tolls and maintenance incurred. It cost a lot of money because it includes the insurance of the vehicles which it could be claimed if there is an accident happened. Workers of the Baker’s Market are the backbone of the company. In order to take care of the workers, the owner of this shop will give some food allowance for lunch to their workers. In spite of worker’s salaries, the insurance for every worker is important just in case if there an accident happened towards the workers during working. Besides, the employee of the employee would feel less burden because they receive the compensate from the Baker’s Market.

5.2.9 REVENUE STREAMS One of the building blocks of Business Model Canvas is revenue streams. In this building block, we explore what revenue streams represent for the entrepreneur and how to ensure that this building block is adequately addressed. Revenue streams elaborates the earnings of a business gets by subtracting the costs from the revenue generated from each customer segment. Where customers are generally considered the heart of the business, revenues are automatically likened to the arteries. For Baker’s Market, the main profit is from the sales of the products, the customer would buy the ingredients whenever they would like to bake. Sometimes, the customer would buy in bulk purchase to get discount. Also, the customer purchased products during seasonal promotion because they could buy it at lower price....