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Customer Relationships

Discuss about the Business Model Renewal and Ambidexterity.

Entrepreneurship defines the capacity of designing, developing and running new and innovative business venture along with its risks towards earning high level of business profit (Bae et al. 2012). This study will develop such an innovative business idea and entrepreneurship for developing a brand new business venture. The study will also assess the feasibility analysis of the new business. Moreover, the study will develop a Trendy Clothing Company in Australia, which will operate under textile industry, which will provide trendy and uniquely designed clothing to the customers. The business model of this business venture will be completely innovative from other clothing companies in Australian market. This new business venture will source design of the clothing from the community users over the internet. After sourcing adequate clothing design from the community users, the organization will allow the staffs and customers to score over the design through internet. In this way, the organization will choose the best and most innovative design based of high score provided on the best design. Such business model will facilitate the new business venture towards offering most trendy and innovative clothing design based on customized preferences of the customers. Furthermore, the customers will be able to purchase the clothing of this organization both through online channels and retail sectors.

According to DaSilva and Trkman (2014), customer segmentation is the practice, which divides customer base into groups of individuals based on their similar attributes like gender, age, spending, preferences, interest and others. On the other hand, Casadesus?Masanell and Zhu (2013) opined that customer segmentation defines the division of potential customers in a particular market into discrete groups. The new trendy clothing company will target mostly teenage and young customers for offering highly fashionable clothing. Moreover, the business venture will serve the customers having highly sophisticated life. The innovative design of the clothing will give the customers a feeling of uniqueness in their daily life and fashion life.

Kastalli and Van Looy (2013) pointed out that value proposition defines the unique attributes within products and services which differentiate an organization from its other rival organization in the market. On the other hand, Martins, Rindova and Greenbaum (2015) opined that the unique value of value proposition facilitates an organization to stand out unique in the market, which adds to its competitive advantage. The new retail clothing company will mostly focus on qualitative value proposition for providing unique customer value. Moreover, the organization will provide unique and innovative design in their clothing products. It will provide unique value to the customers, which will facilitate it in gaining competitive edge. Moreover, the custom generated design of the clothing will make the organization able towards differentiate itself from other rival companies. Furthermore, the organization will also offer attractive discounts and offerings to the customers for encouraging them in purchasing their products.

Distribution Channel

Khanagha, Volberda and Oshri (2014) pointed out that customer relationship is the approach of managing the interaction of an organization with its current or potential customers. This approach always cares for the concern and issues of the customers towards keeping their satisfied over the time. In case of the new retail clothing business venture, the organization will maintain community relationship with the customers. In such customer relationship, the organization will formulate a community with the customers through allowing them in inputting their clothing deigns in the business process and even scoring the designs of the clothing. In this way, the organization will maintain direct interaction with the customers, which facilitates in better customer relationship. On the other hand, the new business venture will also maintain co-creation customer relationship with the customers. In such relationship, the organization will maintain personal relationship with the customers through allowing them in inputting their unique clothing design in the ultimate clothing products. It enhances the value of the customers through direct communication with them.

According to Markides (2013), distribution channel defines the chain of intermediaries through which goods and services of an organization reach to the end customers. Effective interconnection between the intermediaries ensures timely delivery of the products to the customers. In case of new retail business venture, the clothing will be provided to the customers both though e-commerce channels and retail stores. In case of e-commerce, the organization will use e-commerce distribution centres for reaching the products to the customers. On the other hand, in case of retail stores, the clothing products of the organization will reach to the customers through producers to wholesalers to retailers and finally to customers.

As per Zott and Amit (2013), key activities in an organization define some significant activities, which facilitate the organization in achieving high level of value proposition. In case of new clothing venture, the organization will effectively maintain supply chain network for efficiently producing innovative designed clothing. Moreover, the designs of the organization will be supplied from the community users for providing custom generated value to the customer through their final clothing products. On the other hand, the organization will also effectively maintain customer relationship through allowing them in inputting their design ideas in the production process of clothing. It will actually enhance the value of the customers, which will keep them satisfied through getting custom generated value from the clothing products.

Key Activities

Schneider and Spieth (2013) opined that key resources define the significant assets of an organization, which facilitate the organization in executing high level of value proposition. Moreover, the key resources are extremely important for an organization toward sustaining and supporting the business process. In case of new clothing business venture, the key resources of the organization are the community users, who sources innovative clothing design to the ultimate clothing products. The organizational staffs and customers are also significant for choosing the best design received from the community users. On the other hand, Maglio and Spohrer (2013) opined that key partners are extremely important for optimizing the business operation and reducing the risk of business model. In case of new clothing business venture, the organization will choose community users as their suppliers of clothing design. Moreover, the organization will keep such users satisfied with sharing organization profit with them handsomely. In will encourage the users towards repeatedly providing unique clothing design in the production process. In this way, the organization will be able to provide user-generated value to the customers, which will reduce risk of business model. Moreover, the organization will also be able to focus on its core business activities through sourcing clothing designs from the community users.

According to Carayannis, Sindakis and Walter (2015), revenue stream defines the building block, which represents the ways of cash generation of an organization from each of its customer segment. In case of new clothing business venture, the organization will select asset sales revenue stream for generating huge cash from the customers. In such asset sale revenue stream, the customers will purchase clothing from the business venture. Moreover, the organization will transfer the ownership rights of the clothing it produces to the customers after their purchase. The more customers will purchase the clothing of new business venture, the more it will generate cash from the customers.

Amit and Zott (2015) cost structure defines the types and relative portion of fixed and variable cost, which are incurred by an organization during business process. In case of new clothing business venture, the organization will be less concerned about the cost. Moreover, the organization will be more concerned about creating values for the clothing products to the customers. It will facilitate the organization towards being unique in the market. However, such structure will lead to economies of scale for the organization. The unique value of clothing products will encourage the customers towards repeatedly purchasing them. It will actually enhance the sales volume of the organization. In this way, the organizational cost will go down with increasing production and purchase order from the customers.

Key Resources and Key Partners

According to Osiyevskyy and Dewald (2015), minimum viable product defines a development technique in which organizations develop new products and websites with just sufficient features for satisfying the customers. The products have enough value towards encouraging the customers in taking purchasing decision. Moreover, such development technique includes just enough features in the products for satisfying the customers and do not include any extra less necessary products. Likewise, the new business venture will adopt MVP technique, where it will add high quality just for the clothing products. On the other hand, Ritala and Sainio (2014) opined that MVP technique ask for suggestion from the customers towards improving the products. Likewise, the new business venture ask for the customers towards providing innovative clothing design for providing uniquely designed and custom generated clothing to them.

Key Partners

·       Community users will provide clothing design

·       Maintain effective relationship through profit sharing

·       Get supplying of raw materials from unique sources

·       Effective relationship with the suppliers will keep them engaged in providing quality materials

Key Activities

·       Effective maintain supply chain networks

·       Customer generated clothing design will be supplied from users

·       Effectively marinating customer relationship

·       Increase customer value through allowing them in inputting their unique clothing design

Value Proposition

·       Use both qualitative and quantitative value proposition

·       Majorly focus on qualitative value proposition

·       Provide unique customer value though innovative and most trendy clothing

·       Offer attractive discounts and offerings to the customers

·       Value proposition will add to competitive advantage

Customer Relationship

·       Maintain community relationship for building  collaborative relationship with customers

·       Allow community customers to input their unique clothing design and even allow to score over the sourced designs

·       Such practice will enhance customer value by valuing their unique designs

Customer Segment

·       Mostly target young and teenage customers having high needs of trendy and fashionable clothing

·       Serve the customers having highly sophisticated life

·       Unique design will provide feel of uniqueness to the customers

Key Resources

·       Community users are significant for providing  unique clothing design

·       Organizational staffs are important for selecting the best design from the sourced designs

·       Keep strong financial backup for effective managing innovative business model

Channels

·       Use both online and retail stores for providing clothing to the customers

·       Distribution centers will be used for e-commerce channels

·       Retail sectors will use the channels from producers to wholesalers to retail stores and finally to customers

Cost Structure

·       Mostly use value driven cost structure

·       Focus of providing unique quality and value to the customers

·       Gain economies of scale through increasing purchasing order and production

Revenue Stream

·       Use asset sale revenue stream

·       Generate huge cash through transferring ownership right of clothing to the customers after their purchase

Table 1: Business Canvas Model

(Source: Created by Author)

Australia has huge market of textile market for garments, apparel, fabric and clothing. As per the industry survey of 2014-2015, the industry added value of Australian textile industry is precisely 2,517$m. Furthermore, textile imports are also to rise by 4.9% in the current year. The sales and service of the industry for the year 2015-2016 is almost 7,814$m (Industry.gov.au 2017). Moreover, there is tough competition among the clothing companies of Australia. Moreover, the competitor companies are providing almost equal value in their products. Furthermore, textile industry also gains huge support from Australian government. The tariff rate of textile industry have steady been reduced from 17.5% to 10% (Nossar et al. 2015). Therefore, it would be possible to new clothing company to start over its business easily with the support of Australian government. Apart from that, Australian customers are also highly inclined towards wearing trendy clothing. In such situation, the innovative design of the new clothing company would be highly demanding for the customers.

Australia is now one of the most technically advanced countries in the world. Moreover, the textile industry of Australia takes adequate advantage of its technological advancement. Therefore, the new clothing company can get adequate supply of technically advanced machineries and equipments towards producing innovative clothing. Apart from that, technical advancement of the country can also facilitate the new organization in making highly interactive website for directly interacting with the customers. Furthermore, the advancement in digitalization and social median platform will also help the organization towards better promotion of the products.

The new business venture can have the advantage of flexible labour market of Australia. Therefore, the organization has to face less stringent rule and regulations in terms of managing human resources. Apart from that, the unemployment rate of Australia has steadily remained at 5.6% (Mavromaras, Sloane and Wei 2015). Therefore, the new business organizations can easily hire employees at lowest cost. On the other hand, the organization can also get highly skilled and talented employees from Australian labour market even at best prices. Such talented and skilled employees can better add their talents and skills in the success of the organization.

Revenue Stream

The innovative business model of the new business venture will be highly cost effective. Moreover, the organization does not much have to spend money for its marketing and advertisement activities. The customers will themselves provide their custom generated designs and purchase them after approval of best design. Therefore, such business model would ultimately reduce the overall organizational cost. On the other hand, the economic development of Australia had enhanced the spending power of the consumers. It can indirectly enhance the sales volume of the organization and its return on investment.

Conclusion

While concluding the study, it can be said that the new Australian based business venture will offer trendy clothing to the customers. The organization will have an innovative business model, where the organization will source unique clothing designs from the community users. After collection of several designs from the users, the organization will ask the staffs and customers to score over the designs. In this way, the organization will choose the best design based of the high score provided on the collection of designs and produce clothing based on best design. While considering the business model of new clothing business, it will select the people having high needs of trendy clothing. The organization will most target young and teenage people having high fashion trends. The innovative designs of the clothing will provide a feeling of uniqueness to the customers. The organization will maintain continuous relationship with the customers through continuous interaction with them. Furthermore, the organization will provide enhanced customer value through allowing them in inputting their ideas for clothing design. The organization will use both e-commerce as well as retail stores towards reaching their clothing to the customers. Among the key activities, the organization will primarily maintain effective supply chain network for smooth business operation. The community users are highly important for providing unique clothing design towards bringing competitive edge to the organization. The organization will use value based cost structure through providing innovatively designed clothing to the customers.

Reference List

Amit, R. and Zott, C., 2015. Crafting business architecture: The antecedents of business model design. Strategic Entrepreneurship Journal, 9(4), pp.331-350.

Bae, T.J., Qian, S., Miao, C. and Fiet, J.O., 2014. The relationship between entrepreneurship education and entrepreneurial intentions: A meta?analytic review. Entrepreneurship theory and practice, 38(2), pp.217-254.

Carayannis, E.G., Sindakis, S. and Walter, C., 2015. Business model innovation as lever of organizational sustainability. The Journal of Technology Transfer, 40(1), pp.85-104.

Casadesus?Masanell, R. and Zhu, F., 2013. Business model innovation and competitive imitation: The case of sponsor?based business models. Strategic management journal, 34(4), pp.464-482.

DaSilva, C.M. and Trkman, P., 2014. Business model: what it is and what it is not. Long range planning, 47(6), pp.379-389.

Industry.gov.au. 2017. Textiles, Clothing and Footwear (TCF). [online] Available at: https://industry.gov.au/industry/IndustrySectors/TextilesClothingandFootwear/Pages/default.aspx [Accessed 14 Oct. 2017].

Kapelko, M. and Oude Lansink, A., 2014. Examining the relation between intangible assets and technical efficiency in the international textile and clothing industry. The Journal of the Textile Institute, 105(5), pp.491-501.

Kastalli, I.V. and Van Looy, B., 2013. Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance. Journal of Operations Management, 31(4), pp.169-180.

Khanagha, S., Volberda, H. and Oshri, I., 2014. Business model renewal and ambidexterity: structural alteration and strategy formation process during transition to a Cloud business model. R&D Management, 44(3), pp.322-340.

Maglio, P.P. and Spohrer, J., 2013. A service science perspective on business model innovation. Industrial Marketing Management, 42(5), pp.665-670.

Markides, C.C., 2013. Business model innovation: What can the ambidexterity literature teach us?. The Academy of Management Perspectives, 27(4), pp.313-323.

Martins, L.L., Rindova, V.P. and Greenbaum, B.E., 2015. Unlocking the hidden value of concepts: a cognitive approach to business model innovation. Strategic Entrepreneurship Journal, 9(1), pp.99-117.

Mavromaras, K., Sloane, P. and Wei, Z., 2015. The scarring effects of unemployment, low pay and skills under-utilization in Australia compared. Applied economics, 47(23), pp.2413-2429.

Nossar, I., Johnstone, R., Macklin, A. and Rawling, M., 2015. Protective legal regulation for home-based workers in Australian textile, clothing and footwear supply chains. Journal of Industrial Relations, 57(4), pp.585-603.

Osiyevskyy, O. and Dewald, J., 2015. Explorative versus exploitative business model change: the cognitive antecedents of firm?level responses to disruptive innovation. Strategic Entrepreneurship Journal, 9(1), pp.58-78.

Ritala, P. and Sainio, L.M., 2014. Coopetition for radical innovation: technology, market and business-model perspectives. Technology Analysis & Strategic Management, 26(2), pp.155-169.

Schneider, S. and Spieth, P., 2013. Business model innovation: Towards an integrated future research agenda. International Journal of Innovation Management, 17(01), p.1340001.

Zott, C. and Amit, R., 2013. The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), pp.403-411.

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