Business Model Deconstruction Assignment Sample

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Business Model Deconstruction

Executive Summary

The following report elaborated the business model of Power Ledger that comprised nine building blocks explaining the business operations in short. The business model revealed that the primary customers of the company consist of government agencies, private individuals, and Business Corporations. The company is focusing on providing clean energy to every community at an affordable price. The report also highlighted some critical success factors and downside risks. The major risk is the legal obligation and regulatory risks due to the complex procedure. Based on the determined risk, some recommendations have also been provided, such as:-

  • To resolve the security issues associated with the blockchain technology, it is suggested that the network for distributing the tokens should be made decentralised such that a buyer need not go through a prolonged process to track the transaction amount.
  • In order to cater to the rapidly changing demands of the customers, it should be focusing on innovation. This would strengthen the market position of the company in the market and can help in gaining a competitive advantage over others.

Introduction

A business model is an elaborated and well-conceptualised structuresupporting an organisation and elucidating the modus operandi of the company, how it operates, its values, key partners, and much more. The following report is on the business model deconstruction of "Power Ledger.”It discusses the business model canvas, key relationships, critical success factors, and risks associated with the company. In addition to this, some recommendations have also been provided in the end.

Company’s Overview

Power Ledger is a blockchain-based energy trading organisation that has a decentralised process for selling and purchasing renewable energy. The company came into existence on August 11, 2016, and very soon became a leading organisation that utilizes Eco-chain technology for storing energy reading. It helps the energy retailer to manage their daily demand and supply. In addition to this, its platform serves a mode for the retail investors to invest in large scale renewable energy projects, such as solar farms and batteries. In 2017, the company opened its sale and within three days over 100 million tokens out of which 25% were sold in the first hour. The company raised $17 million AUD. In the same year, the company was awarded two research project of value over $ 2.5 million AUD. In addition to this, seven partners also contributed $8 million AUD for the project making it the second largest funded program. The Australian government also provided $50 million grant for innovative research and project.

Token Info

Token

POWR

Platform

Ethereum

Type

ERC20

Investment Raised

$13,232, 290

ROI

36.36%

Business Model Description

Power Ledger's management is focusing on empowering communities and individuals to co-create the future's energy underpinning the development of resilient, carbon-free, and personalised power system for the people. Based on this mission, the company's business model is based which is explained below.

Key Partners

· National Lifestyle Villages

· Ocean Energy

· Vector Energy

· Ocean Energy

· Tech Mahindra

· DigitalX

· Bancor

· Murdoch University

· Curtin Energy

· Greenwood Solutions

Key Activities

· Peer-to-peer trading of regulated electricity for individual users.

· Electricity trading across a grid and manage the demand and supply of electricity.

· Monetising carbon and renewable energy.

Value Proposition

· To provide world community a tool to explore a new world for energy

· To provide clean energy available to all at a very affordable price.

Customer Relationships

· Personal assistance

· Client Eccentricity

· Customer Service

· Advisory and assistance

Customer Segments

Government Agencies

Retail Corporations

Individuals

Energy Companies

EV-Automobiles

Key Resources

· Large investment sources

· Innovative team and ideas.

· Government Grants and subsidise services

Channels

· PowePort and Grid Platforms

· Social Networks

· Call Centers

Cost Structure

· Charge, Fee, and Taxes

· Material and types of machinery

· licensing fees

· Operational Cost

· Salaries

· Marketing and sales

Revenue Streams

· Grants

· Investments

· Token Sales

· Interests

The above diagrammatic representation comprises nine building blocks representing some sort of business aspects of Power Ledger. The above building block helps in understanding the overall functioning of the company. In addition to this, it also focuses on earning high returns by putting fewer efforts. Furthermore, the major projects of the company are timed for high values and returns. The onshore projects are characterised by a bit of flexibility and value generating. There are nine building blocks of the business plan that have interrelationships with one another (Sikorski et.al, 2017).

Key interrelationships

Power Ledger has numerous key partners that are mostly investors and providing the required funds to the company to carry out innovation and research and development. These partners are helping in maintaining internal and external relationships. These are also a part of the board of the directors that decides the strategies for the company (Tarhini, et.al, 2015). In addition to this, the government agencies are also having some sort of relationships with the company as they have invested $50 million AUD for the development of clean energy devices and renewable energy project like solar farms. These interrelationships are linked to the revenue stream of the company (Agarwaland Ansell, 2016).

Critical Success Factors

These are the factors that are leading the organisation's growth. These factors help in achieving organisation goals. Power Ledger is a newly-formed start-up. However, in a very short time, it has achieved huge growth (Pilkington, 2016). The factors that lead to its success are:-

Innovation: Being a startup, it is making huge success on the basis of its innovating ideas of providing affordable clean energy to everyone. In addition to this, the company is not only catering to individual buyers but also to the government and business corporation. By making use of innovation, the company is achieving its goals and objectives.

Unique Selling Prepositions:the research and development is the success factor for Power Ledger. It provides a competitive advantage to the organisation as the products are well-differentiated and are one of their kinds. In addition to this, the blockchain transaction method is another unique selling quality of the company.

Branding and Marketing: the company is completely focused on branding and marketing via word-of-mouth and social media. However, much of such efforts are focused on social media. Other marketing media should also be considered for more growth (Pilkington, 2016).

Downside Risks

  • As the company is based on the blockchain technology, there are many risks from the government in the field of supply chain management, customer compliance, digital identity, device authentication, customs, and provenance of products. Government agencies are evaluating the whole blockchain-based industry in order to understand the working. Many regulations have been imposed on the industry and some of them are modified (Biswas&Muthukkumarasamy, 2016).
  • Another risk is associated with the offering of the products and pay for them. Other companies are indulged in the bogus offering with some fake whitepaper, business plan, false advertisement, and promises of high value for the money. This has increased the legal risks in the field.
  • There are many security, regulatory, and market risks associated with blockchain companies. The customers should be made aware of them and other illicit practices taking place in the sector.
  • Apart from the aforementioned specific risks, there are some product and financial risks too. The company should be aware of the demand and preference for the type of products. The preferences keep changing and even the advance products might not be successful.

Recommended Changes

  • To resolve the security issues associated with the blockchain technology, it is suggested that the network for distributing the tokens should be made decentralised such that a buyer need not go through a prolonged process to track the transaction amount (Agarwaland Ansell, 2016).
  • In order to cater to the rapidly changing demands of the customers, it should be focusing on innovation. This would strengthen the market position of the company in the market and can help in gaining a competitive advantage over others.
  • The company should invest in the marketing activities for creating awareness among the local communities as they are not aware of the company and its services much. At present, large corporations are buying the products. The company needs to increase individual buyers too for better sustainability and profits (Fleming, 2016).
  • Social media platforms should be used for creating a large social awareness of its products and services. In addition to this, it can also be used to handle the complaints regarding any product.
  • More efforts should be made to narrow down the supply chain of the company by collaborating with all the teams in the organisation (Sikorski et.al, 2017).

Conclusion

For a better understanding of the business model, Power Ledger had been taken. On the basis of the whole study, it was determined that business organisations have numerous key relationships and partners. Each has its own importance. For the newly formed startups, such relationships are very crucial. Power Ledger is one such example and is doing pretty much well in its field as large investments are coming for the company from private as well as government agencies. In addition to this, all the success factors and associated downside risks had been studied and recommendations had also been enlisted.

References

  • Agarwal, R. and Ansell, J., 2016. Strategic change in enterprise risk management.  Strategic Change,  25(4), pp.427-439.
  • Biswas, K., &Muthukkumarasamy, V. (2016). Securing smart cities using blockchain technology. In  2016 IEEE 18th international conference on high-performance computing and communications; IEEE 14th international conference on the smart city; IEEE 2nd international conference on data science and systems (HPCC/SmartCity/DSS)(pp. 1392-1393). IEEE.
  • Fleming, L. (2016). Financing by and for the masses: An introduction to the special issue on crowdfunding. California Management Review, Winter: 5-19.
  • Pätäri, S., &Sinkkonen, K. (2014). Energy Service Companies and Energy Performance Contracting: is there a need to renew the business model? Insights from a Delphi study.  Journal of Cleaner Production,  66, 264-271.
  • Pilkington, M. (2016). 11 Blockchain technology: principles and applications.  Research handbook on digital transformations,  225.
  • Sikorski, J. J., Haughton, J., & Kraft, M. (2017). Blockchain technology in the chemical industry: Machine-to-machine electricity market.  Applied Energy,  195, 234-246.
  • Tarhini, A., Ammar, H., Tarhini, T. and Masa’deh, R.E., 2015. Analysis of the critical success factors for enterprise resource planning implementation from the stakeholders' perspective: A systematic review. International Business Research,  8(4), pp.25-40.
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