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Business Model Canvas Approach

Discuss about the Procter and Gamble Business Model.

Business Model Canvas is a strategic tool that helps organizations in developing a template with the help of which they can initiate success for the company in the target market. The purpose of this task is to provide a detailed literature of the business model canvas and its relation with the disruption present in the environment. It also talks about the external environment analysis (opportunities and threat) that are attained to the company P&G with the use of smart connected products. The latter part of the essay talks about the business model canvas of P&G along with its relation with value creation and resource and capabilities. More details about the essay are discussed below:

The business model canvas approach is defined by Osteerwalder and Pigneur in the Business model generation book (2010). Further, according Teece (2010), the business model pronounces the information and provides valuable data and evidence that helps the company in identifying the values that the company can provide to the customers. Further, it should be noted that the model is a tool that includes different aspects and their relation with various activities of the company (Chesbrough, 2010) . The business model canvas is a tool that innate all the process of the organization and provides ways in which an organization can create value in the target market.

Further, Zott et. al. (2011), in their literature stated that the business model canvas refers to a statement , description, representation, an architecture, a conceptual tool or a model that represents value of different departments of the company. The business model should of an organization should expressive the value proposition of the company by creating value in the products and services offered. It should identify the market segment (the users of products), the model should also define the value chain structure in the organization that should be used to supply the products. The model should also estimate the cost structure and profits that are to be earned using company’ value proposition.  It should also describe the position of the company with the network linking the key people of the company; and lastly, it should formulate the competitive strategy to earn success in the target market Morris et al. (2005).

A business model canvas in the current environment can only attain success by using technology and innovation in their process. With the changing environment it has become important to use disruption in the model to capture the value of the company and provide it to the customers present in the market (Osterwalder, & Pigneur, 2010). It should be noted that disruption has become a buzzword in the competitive environment; with the use of such disruption, an organization can easily transform their business activities to efficiently provide its services in the target market. The companies that include disruptive innovation in their business activities tend to earn more benefit in the market (de Jong, & van Dijk, 2015). This disruption in technology and innovation changes the complex and costly products in simple and easy affordable products that can be used by people. It should be noted that the companies now days are shifting their focus on the needs and requirements of the customers present in the market. AirBnB has become one of the examples in this case by becoming disruptor in the environment by improving their hospitality services and providing better conditions to the customers to live in. Thus, it increases the customer satisfaction and sales for the company accordingly (Johnson, Christensen, & Kagermann, 2008).

Disruption in Business Model Canvas

Further talking about the company P&G, it should be noted that the organization is an American multinational organization that was founded in the year 1837 by British American William Procter and Irish American James Gamble. The company provides a wide range of personal care, cleaning agent and healthcare products in the market (P & G, 2018). The company has attained various opportunities in the market with the use of efficient and effective smart connected tools. These tools refer to a technological innovation that assists the organization in expanding their business activities to achieving the success in the market. These are the tools that are related to the IoT (internet of things) and helps in connecting, transferring and sharing the information from one department of the organization to another. These products add functionalities in the activities of the company P&G that helps them in growing the profits in the market. The smart connected tools are developed with the software, processors and sensors that allow the company to share data to different departments (Zott, Amit, & Massa, 2011).

The company P&G is regarded as one of the biggest company initiating its activities in the external environment. So, these tools provide opportunities to the company in effectively operating its business in the international market. With the help of such tools the company can shares data with the branches of the company in different parts of the world in seconds which increases the effectiveness of the system. Also, the company connected its various products with the software that helped in increasing the efficiency of the product as well (França, et. al., 2017). Like, in the case of Oral-B brush, the connected created an application and connected with the brush that helped them in customers in knowing the areas where they have hygiene issues in their mouth. Further, these tools also helped the company in managing the supply chain management system by easily monitoring the supply of products in different parts of the world (Al-Debei, & Avison, 2010).

Along with many benefits, these tools also provide various threats to the company in the market. The major threat that the company face is the reduction in the privacy of the organization. If these tools are hacked or used by some other person then it might leak the price sensitive information of the company and information of their customers as well. Thus, it can hamper the image of the company present in the market. Also, these tools are complex in their usage so the employees might face difficulty in managing the operation along with managing these tools. It can act as an additional work for the employees that can reduce their concentration towards main motive of the company (Porter, & Heppelmann, 2014). Thus, these are the opportunities and threats related to the use of smart connected products in P&G Company.

Key Partners

·       Product offered under different brands (Bounty, Pantene, Venus, Olay etc.)

·       Contact manufacturers

·       Media

·       Suppliers

·       Advertisement agencies

·       Retailers and distributors

·       Sponsorships

·       Acquisitions

Key Activities

·       Manufacturing the consumer products under different brands.

·       Advertisement

·       Distribution

·       Marketing

·       Research and development

·       Branding

·       Quality check

·       International expansion

Value Proposition

·       Includes diversified range of personal care and health care products

·       Products with optimum quality

·       Vast presence in retail stores.

·       Massive brand image

·       Different market segments worldwide.

Customer Relationships

·       Brand awareness

·       Word of mouth

·       After sales response from customers

·       Direct communications with customers

·       Recommendations

·       Discounted coupons and offers

·       Online availability of products.

·       Coupon and gift vouchers.

Customer Segments

·       Mass Population

·       House hold products  

·       Different targeted audiences for different product segment i.e. men, women and kids.

·       People from all income levels.

Key Resources

·       20 manufacturing sites in 20 parts of the world.

·       Distribution network

·       Huge brand portfolio

·       Human Resources

·       Extensive distribution network

·       Facilities

·       Connect with different people to enhance productivity

·       Retail stores  

Channels

·       Grocery Stores

·       Retailers

·       E-commerce

·       Baby shops

·       Trade partners

·       Shopping malls

·       Drug stores

·       Promotion and advertisement.

Cost Structure

·       Supply chain and logistics

·       raw materials

·       Taxes

·       Marketing

·       Production costs

·       Staff salaries

Revenue Streams

·       Sales of good from retail stores

·       Online stores

·       Cash on delivery of products

·       Payment by debit and credit cards

·       Licensing

Smart Connected Tools for Procter and Gamble


The two selected aspects of the business model canvas are resource and capabilities and value proposition. These are the two most important aspects of the business model canvas that have a major role in influence the growth of the company in the external environment. The company P&G has many resource and capabilities due to which they are easily operating their business in different parts of the world. The company has 20 manufacturing plants in 20 cities of US where products are being produced and sold (P & G, 2018). Further, the organization has also developed a qualified distribution channel that helps them in delivering the products and services to customers on time. P&G has a leading brand portfolio that helps them in earning good returns in the external market. The company has 65 main brands that produces 95% of profits for the company (Vizlogi, 2018).

Talking about value proposition, the biggest value of the company is added in its personal care and hygiene products. The company provides a diversified range of hygiene products under different brand names with efficient quality. Quality is the main aim of the organization due to which the company is able to manage its growth in the external market. This feature helps the management in initiating repeated sales of their products (Porter, & Heppelmann, 2015).

Thus, considering the above facts, it should be noted that the company P&G is progressively initiating its activities in the external environment. The organization is satisfying the requirements of the customers present in the market due to which they are gaining successful brand image as well. The company earns competitive advantage in the market by properly using their resource and capabilities. Further, the above mention essay explained the meaning of business model and disruption and its use in an organization.

References

Al-Debei, M. M., & Avison, D. (2010). Developing a unified framework of the business model concept. European Journal of Information Systems, 19(3), 359-376.

Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2–3), 354-363.

de Jong, M., & van Dijk, M. (2015). Disrupting beliefs: A new approach to business-model innovation. McKinsey Quarterly.

França, C. L., Broman, G., Robèrt, K. H., Basile, G., & Trygg, L. (2017). An approach to business model innovation and design for strategic sustainable development. Journal of Cleaner Production, 140, 155-166.

Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86(12), 50.

Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation. New Jersey: Wiley (the unit textbook). The textbook is available from the CQUniversity library for free.

P & G. (2018). Our brands. Retrieved from https://www.pg.co.uk/our_brands

P&G. (2018), Caring About Your Look & Beauty. Retrieved from https://www.pg.com/en_EG/products/look.shtml.

Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(11), 64-88.

Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming companies. Harvard Business Review, 93(10), 96-114.

Vizlogi, (2018). Procter & Gamble business model canvas. Retrieved from <https://vizologi.com/business-strategy-canvas/procter-gamble-business-model-canvas/>

Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research. Journal of Management : JOM, 37(4), 1019-1042.

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