Management Assignment Sample
INNOVATION MANAGEMENT IN A DIGITAL AND GLOBALIZED WORLD
Introduction
The following study is based on an Electric bicycle developed as a technological innovation through a new start-up company Zernike. The following thereby aims to develop a business model canvas for the company that would reflect upon the various components and building blocks of the business model. The innovation comes as a part of delivering a sustainable solution to regular commuters in a cost and resource-friendly manner.
Business model canvas
| Key
partners
1. TEC bike parts Bikeparts 2. Trekbikes Volo Sport Pedal heaven |
Key
activities
1. Manufacturing R&D 2. Assembly Repair 3. Customer service |
Value propositions
1. Cost efficiency 2. Sustainable Durability 3. Accessibility Economy |
Customer relationships
1. Social media interaction 2. Issue resolution 3. Customer Engagement 4. Loyalty programs and rewards
|
Customer segment
1. Customers with more focus towards sustainability and environmental wellbeing 2. Important customer being in the age range 18-55 3. Rapid increase in consumer behaviour towards e-bike acceptance |
| Key resources
1. Human resources 2. IT 3. Assembly unit 4. R&D department
|
Channels
1. Customer willing to be reached both by online and traditional mediums 2. Emphasis on traditional channelling medium 3. Online medium being the most cost-effective |
|||
| Cost structure
· Cost of structure · Fixed costs · Salaries · Insurance |
Revenue streams
· E-bicycle sales · Spare parts · Services · Repairs |
|||
Table 1: Business model canvas
The aim of the business following the business canvas model is to shed light upon the value proposition of the product and reflect upon its USP which would play a vital role in achieving market recognition and sales in the initial phase of the market launch.
Value propositions
The electric bicycle is being developed keeping the benefits and value that can be generated at the consumer’s end which would not only add value to customers but would also play a major role in achieving sales. The first aspect that generated value at the consumer’s end is the cost efficiency that can be derived from these cycles (Salmeron-Manzano and Manzano-Agugliaro, 2018). This bicycle has been designed and made for daily commuters who travel to work or students who travel to their school college or university; Thus, the bicycle can help them in cutting costs which are usually required for availing public transport or for even buying gas and fuel for their personal vehicles.
Figure 1: The average cost of commuting in the UK
(Source: Statista, 2020)
The monthly average commuting cost for people under the age of 30 in the UK is approximately £27.9, however with the use of this cycle this cost can be totally cut short from their monthly expenditure. Thus, this aspect of the bicycle is more viable for students and teenagers (Statista, 2020). Another value that it generates for teenagers is that anyone beyond the age of 14 can travel using this bicycle and they do not need a driving license for this. The bike offers 245-watt power and a maximum speed of 15 mph thereby following all the regulations of ‘electrically assisted pedal cycles’ (EAPCs) (Gov, 2022). Thus, teenagers below the age of 18 can experience the ease of commuting without having to pedal strenuously. The design has been kept minimalistic so that it appeals to all the age groups equally. The cycle also comes with a dynamo which charges the battery when the cyclist pedals instead of using the motor. Therefore, this adds value in terms of the economy. The majority of the bicycle has been designed using carbon fibre therefore it is not only ultra-lightweight but also durable at the same time. The parts are modular and can be easily fitted by the customers if they want to avoid repair servicing charges (Bhosekar and Ierapetritou, 2020).
Furthermore, cyclists would not have two pedal the cycle for commuting; they can even go uphill without any physical stress. This aspect of the bicycle makes it quite appealing for people beyond the age of 40. Apart from that one of the most important factors that set the bicycle apart from other products in the same category is its sustainability. The bicycle does not have any plastic components and is totally out of metal and carbon fibre. Both these materials are recyclable while using carbon fibre reduces the manufacturing cost by 30% (Access science, 2018). The tires are tubeless therefore this reduces the basal of refilling the tyres and reduces the chances of leakage. The tyres of this bicycle are also recyclable hence the entire cycle can be recyclable thereby helping to achieve a circular economy (Dantas et al. 2021). If a bicycle is returned to the ZenEbike in exchange for a new bicycle the customers can also receive a discount based on the condition of the old bicycle. This again helps the company to maintain the circular economy while a value is generated at the customers and which helps them to reduce the cost of a new bicycle.
Key partners
The key partners of the ZenEbike are essential stakeholders who ensure that the company can continue its manufacturing and sales of bicycles in the markets of the UK. In this regard, the two major suppliers of the organisation are TEC bike parts Bikeparts. These two organisations would be the primary suppliers of the company who would not only help in supplying spare parts but also a large proportion of other modular body that has been proposed for the bicycle. Moreover, the organisation would also develop a better relationship with these suppliers to ensure that spare parts and buffer stocks can be managed in the inventory (Tejesh and Neeraja, 2018). The organisation can also commence agreements with these suppliers where carbon fibre can be recycled thereby helping ZenEbike to achieve a circular economy where old bicycles and their scrap metal and parts can be recycled and, in its exchange, the company can avail discounts or save on operations and manufacturing costs.
Apart from that investor are another key partner for the company whose initial investments would help in starting the business from scratch. These and investors would be gathered from crowdfunding as well as a few Angel investors would also be approached (Crick and Crick, 2018). Adding to that a substantial amount of starting the business would be gathered from Banks as debt. This would help the organisation to ensure that the majority of the company’s equity is held by the founding member thereby allowing it to have better leverage over the decision-making process in the future.
Adding to that, the distributors of the company would also be a part of the key partners responsible for distributing the products to various retailers in the markets of the UK. These distributors include Trekbikes, Volo Sport and Pedal heaven. These partners are essential for achieving better visibility in the market and another advantage of having them as the key partners is that they have Omnichannel Marketing which increases the company’s online as well as offline visibility to their target customers (Berman and Thelen, 2018).
Key activities
The key activities refer to the various activities initiated by ZenEbike to generate the value proposition. This also reflects the distribution channel customer relationship as well as the different revenue streams that are generated as a part of the company’s operations. In this regard, the activities of the company include the manufacturing of electric bicycles. Research and development over the existing and new models of the bicycle greatly depend upon feedback received from customers (Wang et al. 2018). Research and development are one of the main activities of the organisation as this allows to utilise continuous innovation helping to resolve issues faced by the target customers. Apart from that, assembling the vehicle in the manufacturing plant is another key activity. The company would also offer to repair damaged bicycles and this would be done for free as a one-year warranty would be provided on the bicycles for any kind of physical damage. Apart from that customer service is another key activity that ZenEbike would utilise to achieve a better engagement as well as to develop a loyal consumer base in the long run. All these activities would help in generating the overall value that has been discussed above by allowing ZenEbike to competitively enter the market.
Key resources
Key resources refer to the resources that ZenEbike utilizers for generating value for the customers. In this regard, the key resources of the company include human resources which are the most important resource which is essential for every other operation dealt by the company (Barnes and Adam, 2018). Apart from that, the organisation would also have an extensive IT infrastructure that would support the research and development of better bicycles. The IT department is also essential for engaging customers on online platforms as well as with the help of the internet therefore it as a resource helps in both internal and external matters. The Assembly unit of ZenEbike is another essential resource that ensures all the bicycles are perfectly assembled without any quality issues (Azizoğlu and Imat, 2018). The assembly unit of the company also regularly quality checks each bicycle that has been assembled. Thereafter the research and development department are also an important resource of the organisation that helps in achieving continuous development by incorporating innovative ideas to the existing products as well as in the development of new products.
Customer relationships
Customer relationship is an essential part of running the business and this includes the maintenance of customer engagement using different channels. In this regard, social media would turn out to be the most important channel for developing I trust were the relationship with customers which would not only help in serving as a communication channel but would also help ZenEbike to conduct its marketing operations (Libai et al. 2020). Adding to that, in terms of customer relationship the organisation would also focus upon resolving all issue customers have regarding their product which would again help in generating a better value as well a stable relation check in the long run. Consumer engagement via different channels would be another part of developing a better relationship with customers and in this regard loyalty programs and rewards can be offered to the customers (Amer and Abdulwahhab, 2020). Rewards on repeat purchases would be a prime strategy for achieving better consumer engagement and loyalty.
Channels
E-bikes are the new introduction with the use of advanced technologies, which customers are extensively getting attracted to eventually with the rising concern of sustainability (Van Cauwenberg et al. 2019). Therefore, various companies are introducing e-bikes to get a hold of a larger customer segment. In recent times, with the increase in digitalisation, customers are wanting to be reached through online as well as traditional channels. Previously, traditionally, demonstration of products and services could be procured from retail or offline stores only. However, with the advent of time and technological or digitalisation, customers are willing to access the products through online mediums as well. Other companies significantly reach potential customers both online as well as through retail stores, both privately-owned retail stores and distributors. However, as ZenEbike are new in the market, therefore, the company is only able to procure customers through the traditional methods.
Furthermore, in comparison with online and traditional methods, it can be stated that traditional methods of channelling work best for increasing sales. Through traditional methods, customers would be able to physically witness the e-bikes and can decide for themselves, whether to purchase or not. Additionally, the demand for e-bikes has also been witnessed to be increasing in Europe, which has increased the sales of e-bikes to 3 million (Statista, 2021). However, in terms of cost-effectiveness, channelling products through online mediums would be the most cost-effective as electric costs, maintenance of e-bikes in stores can be extensively minimised.
Customer segment
Zen automobiles are significantly attempting to create value for such consumers that have a high sense of sustainability for enhancing and improving the environment. Furthermore, the prices of fuel are extensively rising over time. In 2022, crude oil prices stood at $89.82 per barrel, which was $69.77 in the previous years (Statista, 2022). Thus, the significant rise in the prices is a major factor due to which customers are shifting from traditional bikes to e-bikes. Furthermore, there are a potential number of customers that are concerned about the well-being of the planet and therefore, want to reduce environmental impacts through the reduction of pollution and others extensively.
Additionally, the most significant customers that ZenEbike considers as important are the consumers belonging in the age group of 18-55. From this age range, students would be requiring the most of the e-bike, due to frequent travelling and inclination towards cost-saving on refilling gases on bikes. Additionally, in this age range, there are certain customers as well that travel short distances, however, not so short in the distance that can be covered on foot. Furthermore, getting a traditional bike would be much more expensive in this case. Thus, these segments of customers are the most important to get a hold on by the company. On the other hand, perceptions of the consumers on e-bikes are rapidly changing, especially after the emergence of the Covid-19 pandemic. As per a survey, 27% of Europeans said that they are more likely to use an e-bike now than they were before the pandemic (Bike Europe, 2021).
Cost structure
The cost structure is an essential part of the business model and this determines all the various sources of the cost incurred by ZenEbike in running the business. The major costs include the cost of structure fixed cost salaries of the employees as well as the insurance. Among all these, the fixed cost and the salaries provided to the employees would be a significant cost of operation and would also change from time to time depending upon the number of human resources working in ZenEbike (Safar et al. 2018). It can be estimated that with time the overall cost structure of the organisation would expand.
Revenue streams
Revenue streams refer to the various channels and sources that would allow ZenEbike to derive profits. In this regard, the primary revenue would be the sale of the electric bicycles through the company’s website as well as through the distributors that have been identified above among key partners. Another significant revenue stream would be through the sale of spare parts. Spare parts can be purchased by consumers from the company directly and since these are modular, a customer can easily replace old or damaged parts at the east of their home by following a set of few instructions. The services offered by ZenEbike for keeping the bicycles running is another source of revenue. Repairing broken bicycles or damaged bicycles turn up to be another source of revenue nearby Islamic all the major revenue sources. It is essential for ZenEbike to maintain a balance between all these revenue sources to ensure that the company’s revenue structure remains steady in the long run. Moreover, the sales of the bicycle are the mean revenue stream upon which the other revenue streams are dependent (Nezami et al. 2018).
Conclusion
Based on the above study it can be stated that the business model Canvas developed for ZenEbike shades light upon the major value proposition offered by the company. All the key components of the business model Canvas have been discussed which has helped in identifying how these various activities would work in tandem to generate value for the customers. Adding to the business model Canvas also helps in understanding the unique value proposition of the electric bicycle by helping to understand the problems this e bicycle would be resolving.
References
Access science, 2018. Recycling carbon fiber. [Online]. Available at: https://www.accessscience.com/content/recycling-carbon-fiber/BR0711181#:~:text=Recycling%20carbon%2Dfiber%20composites%20offers,compared%20to%20new%20carbon%20fiber. [Accessed on 19 March 2022]
Amer, R.S. and Abdulwahhab, F.L., 2020. Achieving the competitive advantage by using Customer Relationships Management (CRM). Polish Journal of Management Studies, 21.
Azizoğlu, M. and Imat, S., 2018. Workload smoothing in simple assembly line balancing. Computers & Operations Research, 89, pp.51-57.
Barnes, E. and Adam, C., 2018. The importance of human resources in a globalised economy: A conceptual framework. Canadian Journal of Applied Science and Technology, 5(2).
Berman, B. and Thelen, S., 2018. Planning and implementing an effective omnichannel marketing program. International Journal of Retail & Distribution Management.
Bhosekar, A. and Ierapetritou, M., 2020. Modular design optimization using machine learning-based flexibility analysis. Journal of Process Control, 90, pp.18-34.
Bike Europe, 2021. Shimano study shows city e-bikes are the most popular option for Europeans. [Online]. Available at: https://www.bike-eu.com/market/nieuws/2021/10/shimano-study-shows-city-e-bikes-are-the-most-popular-option-for-europeans-10141527 [Accessed on 18 March 2022]
Crick, J.M. and Crick, D., 2018. Angel investors’ predictive and control funding criteria: the importance of evolving business models. Journal of Research in Marketing and Entrepreneurship.
Dantas, T.E., De-Souza, E.D., Destro, I.R., Hammes, G., Rodriguez, C.M.T. and Soares, S.R., 2021. How the combination of Circular Economy and Industry 4.0 can contribute towards achieving the Sustainable Development Goals. Sustainable Production and Consumption, 26, pp.213-227.
Gov, 2022. Electric bikes: licensing, tax, and insurance. [Online]. Available at: https://www.gov.uk/electric-bike-rules#:~:text=You%20can%20ride%20an%20electric,be%20registered%2C%20taxed%20or%20insured [Accessed on 19 March 2022]
Libai, B., Bart, Y., Gensler, S., Hofacker, C.F., Kaplan, A., Kötterheinrich, K. and Kroll, E.B., 2020. Brave new world? On AI and the management of customer relationships. Journal of Interactive Marketing, 51, pp.44-56.
Nezami, M., Worm, S. and Palmatier, R.W., 2018. Disentangling the effect of services on B2B firm value: Trade-offs of sales, profits, and earnings volatility. International Journal of Research in Marketing, 35(2), pp.205-223.
Safar, L., Sopko, J., Bednar, S. and Poklemba, R., 2018. Concept of SME business model for industry 4.0 environment. Tem Journal, 7(3), p.626.
Salmeron-Manzano, E. and Manzano-Agugliaro, F., 2018. The electric bicycle: Worldwide research trends. Energies, 11(7), p.1894.
Statista, 2020. Average weekly household expenditure on transport services in the United Kingdom (UK) in 2020, by age of household reference person*(in GBP). [Online]. Available at: https://www.statista.com/statistics/285660/transport-services-weekly-household-expenditure-in-the-united-kingdom-uk-by-age/ [Accessed on 19 March 2022]
Statista, 2021. Number of e-bikes sold in Europe 2009-2019. [Online]. Available at: <https://www.statista.com/statistics/276036/unit-sales-e-bikes-europe/> [Accessed on 18 March 2022]
Statista, 2022. OPEC oil price annually 1960-2022. [Online]. Available at: https://www.statista.com/statistics/262858/change-in-opec-crude-oil-prices-since-1960/ [Accessed on 18 March 2022]
Tejesh, B.S.S. and Neeraja, S.J.A.E.J., 2018. Warehouse inventory management system using IoT and open source framework. Alexandria engineering journal, 57(4), pp.3817-3823.
Van Cauwenberg, J., De Bourdeaudhuij, I., Clarys, P., De Geus, B. and Deforche, B., 2019. E-bikes among older adults: benefits, disadvantages, usage and crash characteristics. Transportation, 46(6), pp.2151-2172.
Wang, H., Du, R. and Olsen, T., 2018. Feedback mechanisms and consumer satisfaction, trust and repurchase intention in online retail. Information Systems Management, 35(3), pp.201-219.
………………………………………………………………………………………………………………………..
Know more about UniqueSubmission’s other writing services:
