business model mail 12

8/6/2019 Business Model Mail 12

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How to Design a Winning Business Model

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Multinational Management

Submitted By:Omer Shabab L1S08BBAM2050

Hassan Ali Syed L1S08BBAM2047

Talha Muhammad Ali L1F07BBAM2258

Section: A

Submitted To:

Prof. Farooq Hussain


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ICI PAINTS PAKISTAN LIMITED


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1.Choosing a subjectHowto Design a Winning BusinessModel

Introduction:

The success of a company depends upon thebusiness model, if the business

modelisgoodthenthecompanywillenjoysuccessbutifthereis a poorbusinessmodel

thenthecompanywillfacelosses. Ifanycompanywantssucceedithastoplan according

totheneeds andwantsofthecustomer,especiallymultinationalcompanieshastobe very

careful while making plans to start business in another country. They have to plan

according to theculture andnormsof that region. Otherwise theywillhave to face the

consequences,which Dominos isnow facing. Theydidntpaidproperattention totheir

businessplanwhentheystartedgoingmultinational.

Thebusinessofmodel is the life line for anybusiness. Thebasic things to look

fora successfulbusinessmodelistolookintocustomerneeds andwants.

Following arethe keypointswhichmake a goodbusinessmodel:

y Whoisyourcustomer?y Whatprovidesthe valuetoyourcustomer?y Howyoudeliveringthe valuetoyourcustomeratpropercost.y Customervalueplan.y What are keyresources?y Knowinghowto applythe Profitformula.y Customersegmenty Valuepropositiony Key activitiesy Channely Keypartnersy Coststructurey Customerrelationshipy Revenuestreams.


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Value Proposition:

There are mainly ten different types of value proportion like for example

accessibility,performance,connivance, newness, customization,etc and this is the key

elementusedinthebusinessmodel.

Revenues Stream:

Lower the costsof thebusinesswill help in increasing the revenues, how you

convertsthefixedcostwith variable,howyoubetter analyzingthesituationtodecrease

thecost andgeneratesgoodprofit.

Strategies:

Strategyistheoverallplanthathowtocreate a superiorvalueofthepositionwhichis

differentiateyou andyourcompetitor.

SuccessorFailure:

Successorfailureof anybusinesstotallydependsupontheproper analyzingthe

businessplan;ifthebusinessplancovers allthe aspectis accordinglythanthereis a more

chancetosuccessotherwisethebusinesswillhavetofaceloss.

DistributionChannel:

A gooddistributionchannelis veryimportantforthesuccessofa business. Butits

variesbusiness tobusiness, you directly dealswith the customer and you appoint the

dealers, wholesaler or retailer. Through proper distribution product can be easily

availabletothecustomers.

Vision & Mission:

Vision andMission are veryimportantforeverycompanyssuccess,thatswhyit

ison topof a goodbusinessplan. Itprovides awareness to the customer and its help

internally aswellexternallyfortheorganization.


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Partners:

Detailsofthepartners are veryimportant;they areusedtoregisterthebusinessso

thatthetrust andgoodwillofthebusinesscanbecreated. Wellreputedpartnercanbeof

bighelp andcanmainlyhelpinlending.

CustomerRelations:

Relationwithcustomeris anotherveryimportant aspectofgoodbusinessplan. It

is alsoimportanttostayintouchwiththedemands,needs andwantsofthecustomers,so

thatthecompanycanfulfillthedemandofcustomerontime andsatisfiesthem.

Capabilities:

Tocalculatethecapabilityofa businessis veryimportant,itistomakesurethatthe company is utilizing its maximum potential for production, which increases the

efficiencyofthebusiness.

Supply Chain:

Another key factorof a successfulbusinessmodel ishaving a stable andgood

supplychainwhichhelpsin keepingthecostlow andhelpstomaintainthequalityofthe

product.

2.Outlining the paperAbusinessmodelencompassesdifferentchoices andconsequences.

Usuallythecompanyfocusesonthreebasicchoices are

Whatisthepolicyofthebusiness?

Whatcompanyhas already assettoworkingin a competitiveenvironment?

Whatisthegovernancechoiceofthecompanyset?


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Result aremainlytwotypeofdiscuss inthebusinessmodelwhichthey aremattervery

seriously

Flexible

Shares the culture Shares the technology Risk taker

Rigidity

Do not change the culture Hard and fast policies Risk adverse Difficult for copy when required

Whenwedesign a businessmodelthere arethreemaincharacteristicswhichwethinkin

ourmindwhenwecreating a BusinessModel.

Our Business Model is aligned with your goals and objectives. The different choices you create like in the form of policies, governance, is balance with

each other.

After time by time you seeing the threats which might be happen like that your businessmodel is copied easily or you changing to sustain in the business effectiveness.


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3.EditingthepaperImplementationofthe BusinessModelon ICI Dulux

CustomerSegment` MassMarket` SegmentedMarket` NicheMarket

Value Proposition

o Customizationo Newness

KeyResources Whattodeliver howtodeliver

Key Activities Problemsolving New valuecreation

Channel Directly Indirectly

Key Partners


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Coststructure Variablecost Fixedcost

Revenue Stream Contract Onetimeonly Continuous

CustomerRelationshipPROPOSE BUSINESS MODEL FOR ICI DULUX PAINTS


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Tounderstandthebusinessmodelmoreclearlywe visited ICI Paints.

VISION STATEMENT

Thecompany vision is tocompete in the industrybyemphasizingoncustomer

needs andtobuild andpromote a cultureofcontinuousimprovement.

MISSION STATEMENT

The ICI Paintsteam intendstoremainmarket leaders inthe Paints Business. We

wishtoberecognizedforofferingthebestproducts andexcellentcustomerservice. We

Revenue

stream

Customersegment

Valueproposition

KeyResources

KeyActivities

Channel

KeyPartners

Coststructure

Customerrelationship


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will run a highquality,profitable andgrowthorientedbusiness in anexciting andsafe

environment.

ImperialChemical Industries (ICI)Thisis Britishchemicalsubordinateofa Dutchcompany andbiggestchemicalproducers

in world. It is base in marsh, UK. Its produces paints & specialty products (which

including ingredients in foods, specialtypolymers, electronicmaterials, fragrances and

flavors). Itemploys around 27,000people and annualturnoverofjustover4.8 billionin

2006.

ICI PAKISTAN LIMITED

ICI Pakistan Limited (Imperial Chemical Industries) is located in, Lahore

Islamabad and the head office is located inKarachi Pakistan. Itwas association as a

publiclimitedcompanyin Pakistanin 1952.

ICI Pakistan Limited is diverse in a number of businesses in different categories

including:

PolyesterFibers Soda Ash Paints Chemicals Pharmaceuticals

GOALS AND OBJECTIVES:

y Total adherenceto SHE.y Improving thequalityofevery thingwedo, to thecomplete satisfactionofourinternal andexternalcustomers.

y Constantemphasison doingitrightthefirsttime andeverytime.y Dedicated involvementofeveryemployee at all levelsoftheorganizationtothetotalqualitymanagementconcepts.

y Tocontribute atleast 50%inoverall ICI Pakistanprofits.


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The ICI Paintbusinesscanbedividedintodifferentcategories:

Decorative Industrial Automotive Interior Exterior

Allthethreebusinesseshavegoonboardonprogramswhichfocusontheconsumerand

customerneeds. Thefocusistounderstandtheneedsofthemajorstakeholders. Pursuing

research,marketunderstanding anddelivering highqualityproduct and services forms

the nucleus of creating a competitive advantage in the market place for the paints

business.

The Industry & Automotivescoatingsbusinessof ICI paintsbesidesgainingstrength in

the localmarket also aspires tobecome a regionalplayer. Self leveling epoxy floor

coatingshavebeenthenew additionintheproductportfolio andhavebeenwellreceived

by major customers. After the initial success of the Turn-Key project management

conceptwithoneoftheleadingcustomerswhere a oneshopsolutionintermsofdesign,

fabrication andcommissioningof automotivepaints isdoneby ICI,thebusiness isnow

offeringittoothercustomers also.

The Decorative segment of the business is driving a strategy of providing a super

premiumrangeofproductswith a widecolorrangeunderthe Duluxbrandthatfulfillthe

growingneedsof themarket. PentaliteClassiswas the first launch in thiscategory. A

superpremiumplastic emulsionwith fiveproperties of resisting hairline cracks, high

scrubresistance, andbetterflow, antifungal andluxuriousfinishwas verywellreceived

bytheconsumers, architects andpaintingprofessionals.


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After the great success of the first color studio inKarachi a second color studiowas

openedin

Islamabad. Now consumers in Islamabad also have theplatform to experiment with

colors, come up with new contrasts and combinations that reflect theirpersona and

lifestyleprojectingtheircoloraspirationsintotheirlivingenvironments. Thehousing and

thecolorconsultancyteamhasbeenre-structuredwithmorefeetonthestreet andproper

trainingtohelpconsumerswithnewcolortrends andinteriordesignsolutions.

Decorative paints:

According tothe latestsurveyconductedby ICI Paints theentiremarket fordecorative

paintsis

210 MillionLiters. Thismarketcanbe subdivided into twocategories theorganized

market and theun-organizedmarket. Theorganizedmarketrefersmainly tothemarket

thatpurchasesdecorativepaints frompaintmanufacturers andequals 73 MillionLiters.

Theunorganizedmarketon the otherhand constitutesof themarketwhichusespaint

substitutes fordecorations andequals 137 MillionLiters. Theorganizedmarketcanbe

further divided into three categories based upon the various qualities ofpaint being

manufactured. Thesecategoriesinclude:

Premium Mid-Tier Low-Tier

CORPORATECULTURE

Cultureplays animportantrolein anyorganization. Itincludestheshared valuesheldby

membersthatdistinguishtheorganizationfromothers. Thecorporatecultureof ICI is a

strongculture inwhich the core values are intensely heldby themanagement and the

employees. Itplays animportantroleinunderstandingtheenvironment andtheworking


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proceduresof the organization and helps the employees toperform in a betterway to

achievethegoals andobjectives. ThecomponentsofICI culture are:

1. INTERACTIVEThe culture of ICI is interactive in a sense that theymotivate their employees tobe

responsive, sociable, open, welcoming, affable and friendly with each other. The

interactiveculturepromotestheemployeestoshareinformationwithothers.

2. DYNAMICAnotheraspectofICI cultureisthatithas a dynamicculture. Theemployees are

energetic, active,selfmotivated andfastmoving. They are verysensitivetowards

theindustry andgrow accordingtotheindustrynorms.

3. DIVERSE

The employeesof ICI come fromdiverse culture. They share itwithone another and

because of this the employees are inclined to respect each other. The employees are

highlyexperienced andskilledindifferentfields.

4. INNOVATIVE

Thecultureof ICI is veryinnovative. Theemployees aremotivatedtogiveuniqueideas

tothemanagement. Theyemployeessharetheirthoughtswitheachother.

5. PEOPLE ORIENTEDThe ICI ispeopleoriented. They valuetheiremployees andconsiderthem as assetofthe

organization. Theydoconsider theeffectsof theirdecisionson theemployees and take

actions accordingly.


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CORE COMPETENCIES AND KSF

ThecorecompetenciesofICI are:

Focusingonourcustomersfuturefirst. Embracingentrepreneurialthinking. Developingthetalentofourpeople. Integrity andresponsibilitiesinouraction. OfferingqualityproductbecauseofstrongR& D department Newproductdevelopment,latestmachinery andequipmentisusedinproduction. Teamwork,coordination andEffectiveCommunication New Ideas, new product are developed time to time to meet the demand ofchallengingenvironment.

The key success factor of ICI is that the team comprises ofpeople coming from

various backgrounds like from Pakistan Tobacco Company, Coke, Unilever etc. this

combinationisreallyhealthy. Theentireteamis verypassionate andcommitted. Another

keysuccessfactoristhecommunicationwiththeconsumer. Thereis a separatecustomer

communicationdepartmenttogetinteractedwiththeconsumer.

HORIZONTALDIVERSIFICATION:

ICI Pakistan is a vast group which is involved in several businesses so it is

following the strategy of Horizontal diversification as it is involved in unrelated

industries. A briefdescriptionofitsdifferentbusinessis asunder:

BUSINESS LEVEL STRATEGIES

Business strategy of ICI includes combination of differentiation and cost

leadershipwhichproves tobepretty effective for the organization. Recently ICI has

introduced master palette that offers plentitude of 6134 colours to match every

environment andmood. ICI offerspremiumqualityproduct atpremiumprices. Although


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ICI offersbrandslike Glidden, Paintex andMaxilite,which arequiteeconomicalyetthey

are comparatively expensive as far as brands of, competitors are concerned. As ICI

brands areofhigherpricesoothercompaniesgetbenefit andcapturethelowerendofthe

market. If ICI startsofferingcheaperproducts itcan increasenotonly itsmarketshare

but alsoitssales volume.

FUNCTIONALLEVEL

The strategic issues at the functional level are related to functional business

processes and value chain. The functional level strategies include strategies of the

different departments like R&D, manufacturing, marketing, finance, and human

resources. Strategies of ICI at the functional level involve the development and

coordinationofresources. It alsoinvolvesprovidinginformationoncustomerfeedbackor

onresources andcapabilitiesonwhichthehigherlevelstrategiescanbebased.

Thesuccessof ICI dependsonits abilitytomanageeachofitsproductlines and

for thispurpose itdependson its functionalunits that translate thebusiness intent into

discrete actionplansthateachdepartmentordivisionmust accomplishforthestrategyto

succeed. Thedifferent functional levelstrategies are furtherelaborated in thefollowingsection.

Decision Making:

Thedecisionmakingof ICI isdecentralized. The authorityofmaking important

decisionsiswithbothuppermanagement andlowermanagement anditisinthefavorof

company as itbringsuniformity in theworkprocess. It alsoplays an important role in

achievingconsistency,regularity,evenness andstandardizationintheongoingprocesses.

Thecompanyisbasedon a decentralizedstructurewhichgivesthe authoritytomanagers

totakedecisions.


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Motivation and incentive techniques:

All organizations use different types of motivational techniques to shape the

behavioroftheiremployees. Motivationdrivesthe individualstoexertmoreeffortwith

greater intensity,direction andpersistence to achieve thegoals. ICI alsousesdifferent

techniques to motivate their employees. It leads to higher job performance and job

satisfaction. Motivational techniques also changes the way work is structured in the

organization. Totrulymotivateemployees, a managerneedstofocushisorherattention

on restructuringjobs so that employees can derivemore satisfaction and contentment

directlyfromtheirwork. ICI usesbothqualitative andquantitativetechniquestomotivate

theiremployees andthat are:

1. Lectures

2. Counseling3. Incentiveson achievement4. Incentivesoncomplianceofrules andregulations5. Promotiontohigherlevel6. Meetings7. Developmentalprograms8. And alsoinvolvediversification,jobrotation.

Distribution Channels:

ICI paint is alsousing verticalmarketingsystem intheplacementif itsproducts.

Herecomestheoldconceptofdealership. Thatmeans,givingrightto a thirdpartyto

selltheproductontheirbehalf.

ICI Paints, likeothercompetitors,supplies thepaintproducts through the appointed

dealers in various regions and areas. The current number of ICI Paints appointed

dealers all over Pakistan is more than 2200. Dealers margin is around 5-10%

depending upon their performance in terms of volume sale. The Company also


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extendscredit facility to thedealers. The limitof thecredit available to a dealer is

alsodependentuponhispastsaleperformance.

ICI Paints, like 2 to 3 othermajorpaintmanufacturersspendsconsiderablefundson

the advertisementoftheirproducts. Boththeelectronic andprintmedia isemployed

for the salepromotion. In addition thepaintmanufacturers offer various types of

incentives/gift schemes to the high performer dealers and even to the paint

contractors. Forexample, ICI Paints and Bergereveryyear,taketheirhighperformer

dealers abroadonCompanyexpenses for tourism visits to variousnearbycountries.

Nearly allpaintmanufacturingcompaniesoffervarioustypesofmaterialgiftstothe

highperformingdealers andeventothepaintingcontractors.

UNIQUE SELLING POINT:

TheuniquesellingpointofICI isitemphasisonenvironmentcontrol andthereis

noqualitymatchwithit.

Aninnovativeglobalcommunityworkingtogetherforthepurposeoffinding and

sharingbettersolutions.

ICI Paints,itsbrands,products andserviceswillbethefirstchoiceforpeoplewho

wantthebest.TheuniquesellingpointofICI PaintsisitsResearch and Development. ICI Paints

isspendingover30millionperyearonResearch and Developmentworldwide,

whichishuge amountfora business.

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