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Essay: the TO BE business model

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  • Published: 1 August 2014*
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Contents
Insight to the Company: 2
General Overview of Existing Business Model in PC- Schematic 3
As is Business Model 3
Brief Analysis of Current Business Model 4
Patterns of the Current Business Model 6
Business Model Environment 7
Brief Conclusion: 8
Swot Analysis Swot Analysis 9
STRENGTH AND WEAKNESS 9
OPPORTUNITY AND THREAT 10
BLUE OCEAN STRATAGEY 10
TO BE business model 11
Analysis of TO BE Business model 12
Conclusion 12
References 13
Insight to the Company:
The company designs and develops the concepts of the PC|SCHEMATIC AUTOMATION, POWERDISTRIBUTION, TELE and LOOP GI according to the need and demand of the industrial customers throughout the globe including more than 3o countries offering Advanced, Powerful & Affordable Electrical CAD Software. PC Schematic has more than three decades of experience in the field of Automation, PC Schematic is a technological based multinational company which is run by a group of technologically expertise people, whom are working hard to improve their software documentation solutions while putting their effort to improve the work life of people in factories through helping them to retain and develop their factories thus producing in the way of lean production and providing more efficiently and effectively higher value Proposition to their valued customers.
General Overview of Existing Business Model in PC- Schematic
Increasingly competitive, challenging and dynamic environment compelled top management to bring uniqueness in the value proposition. Highly unpredictable marketplace and innovation in products has put the business world on a fast track but also reduced the product development time and product life cycle. Globalization and current economy further increased the pressure to build a sound business model to tackle against the increasing competition. Those companies which are working in the field of technology for the technological advancement like PC Schematic are facing the threat of innovation in every single second. The fundamental function of a business model is to generate revenue by adding value and selling products/services to a larger market segment (Stevens, 1989). While going through the all process, value delivered to the customers and the information available to us we came to know the following facts which is the current business model in PC Schematic.
As is Business Model
Brief Analysis of Current Business Model
Customer Segmentation:
Customer segmentation is one of the key pillars of Business Model. PC Schematic- Automation is the one of the main product which has created the value to its users. It deals with the wide range of
project-oriented software which leads to the major developments in Electrical CAD Design for power control circuit diagrams, switchboard drawings, PLC circuits, electrical installations, documentation of burglary and fire installations. These technological products from the PC Schematic have attention toward the niche market and segmented the customers on the basis of the specific need of the customer. Specifically, following are the targeted customers for PC- Automation Product:
Electric and electronics manufacturer (Most important customer)
Machinery production/ installation /and operation industries (Most important Customer)
Mechanical and electronics Engineering College and University
System and circuit development for fire and burglary installations
Value Proposition:
PC-automation creates value for its customer by making more easier to work within an organization. This technology assists customers to manage the project from very beginning to end in an easier way by increasing the level of performance. The concept of lean production is only then effective with the use of customized product like PC automation, which is primarily targeted to specific customers by creating superior design .The product helps to increase the revenue by reducing the number of manpower involvement and the cost reduction, which is one of the great value created to their customers.
Channels of Distribution:
Channel of distribution is the way of how the targeted customers get access to the products. Regarding the specific business model that PC schematic holds, supply and sales of the product is done through the website, services and consultation regarding the problem associated with service is also performed through the online. It has own YouTube channel and updates about the regular invention and creation which assist the targeted users to access to the product. Pc Schematic have centralized distribution channel, which makes the less expenses the decentralized distribution channel. But decentralized channel has more weights than centralized distribution channel. For more effective and excellent distribution, PC schematic can adopt the decentralized distribution channel.
Key Activities:
Current activities of the PC schematic are describes the most important aspect of its Business model. Designing the software, developing the concept of the product, production activities, marketing and the solving the problem and the grievances of the individual customer in order to meet the market demands, are the current key activities. These activities obviously assist to create and offer the value proposition, reach markets and maintain the customer relationship which ultimately generates the revenue for the company at last.
Customer Relationship:
Continuous interaction, transaction and the follow up activities through different ways like Meeting, counseling, after sales service, maintenance services, dedicated individual service to the customer, user forums discussion, support services and the social media are the most emerging way of building, creating and maintaining the sound relationship with existing and potential customer. Above mentioned strategy and activity of building and maintaining the relationship is currently exists in PC Schematic with the motive of retaining customer for the long run.
Key Resources:
PC schematic is intellectual and skill based company with its dedicated and veteran and highly professional Engineers, developers and the concept designers, which are the most important assets of the company. Beside these, business premises, other tangible assets( For instance Building, Computers) are also the key components to create and offer the value to the customers.
Key Partners:
The network and partnership between PC schematic and its supplier seems to be strategic alliance with developers, and OEM( Original Equipment Management). Such an alliances assist to optimize the current business models to reduce the risk. Emerging mushrooming business world of technology and equipments, demands a simple and comprehensive value proposition to the customers need together with the strategic alliance that PC Schematic offers
Cost Structure and Revenue Stream:
In order to create and deliver the value to the customer, a company needs to bear various kinds of expenses. After the surface scratch of PC Schematic existing business Model we came to know that some of the most important cost headings are such as Support and training costs, marketing costs Developing costs, product costs, Administrative Expenses, Daily Operating Expenses are incur in order to generate the revenue.
In the same way costs are incurred in order to generate the revenue, this is one of the parameter to measure the business success in monetary terms. Pc Schematic currently generates revenue through Maintenance, Selling the product, revenue from Update of the Product system, providing the services.
Patterns of the Current Business Model
After going through the existing business model of PC Schematic, it demonstrates the ”Free as a Business Model” where high value proposition is offered only to the paying customers, though some of the free version of Automation software are provided to the customers. PC schematic offers several value proposition to different customer segments (Electric and electronics manufacturer, Machinery production/ installation /and operation industries National & International Customers , B2B) with different revenue stream.
Business Model Environment
Business model is always affected by the Environment surrounding it. In order to find out the suitable business model according to the company and market needs business model environment need to be analyzed. Continuous business environment scanning also gives the clear overview of different factors ( Key trends, Industry forces, Market Forces and macro Economic forces) to the current market situation and position
Market Forces :
Technological advancement has added more challenge in the industry of software development. PC schematic is working in the field of PC Automation for more than three decades. Rapid changes in the technology, customer’s demands, system update of the industry, upgrading the existing mechanism has added more uncertainty to the customer acquisition which might leads to higher customer churn rate. Considering the market forces, PC Schematic need to keep them up to dated. Moreover, most important customer segment for PC Schematic are Electric and electronics manufacturer, Machinery production/ installation /and operation industries. To supply the requirement of the targeted customer PC Schematic need to pay more attention to the Electric and Electronics manufacturer, Machinery Production/installation and operation industries.
Switching cost in technological field is quite higher than other production industries, that’s why the huge investment need to be made in order to replace the existing technology which create more safer situation. It prevents from losing the customer from the another perspectives as well.
Industry Forces:
There are many substitute products prevail in the market, which create the tough competition and force to create unique feature and services. Competitors are always seeking for the weakness of the rival in order to tackle and overcome them. Threats of new entrant and the substitute product made this company to make a strong competitive strategy.
Key Trends:
Rapid growth and changes in the technology has made the automation industry like PC Schematic to re think about their product. Availability of substitute products, lower price offering from competitors create the disruptive threat. It needs to be identifying the technological trend which might threat the current business model in PC schematic. It creates the pressure to enable, evolve and improve the current business model. To maintain the leading age of development PC Schematic updates its software annually, so that industries and the customers can work and comply with the latest standards.
Macro Economic Forces :
Over the past few decades automation industry went through the innovations. Broad use of automation in industries can and will generate the rapid growth with technology related inventions. Fully automated factory/industry is and the procedure for this are quite more expensive and needs huge investment to rebuilt for every modification and changes in design. Rapid growth in the automation technology has already existed in most the business. The global market of PC Automation in emerging context seems like in Bust phase. Some of the mechanical, electrics, and electronics industries in the developed countries( China, Japan, Germany, United States) are already benefiting from this. To capture the more market with the current business model around the globe it is important to seek the more opportunities in the industries of developing countries where PC Automation and its technology are in growing phase.
Brief Conclusion:
After an overall analysis of the current business model in PC schematic, we came to draw some conclusion. Increasing global competition in the automation industry has added more challenge to reform the business model. Pc schematic is able to create the value proposition to the customers but the centralized channel of distribution, less activities to seek and explore the new market might create the barriers to expand the business successfully in global arena. Above mentioned business model demonstrate that there is few targeted customers viz. Electric and electronics manufacturer Machinery production/ installation and operation industries. Customer relationship and its retention strategy done by the company seem good but it needs to be broad and precise in order to acquire more customers.
Swot Analysis Swot Analysis
Fig: SWOT ANALYSIS
STRENGTH AND WEAKNESS
From internal analysis we can observe the company has many strength as well as weakness. PC Schematic has 30 years of experience as an established company with highly professional human resources, with such team and experience PC Schematic Automation is able to produce technological advanced customized products resulting good profit margin. PS Schematic maintains good relation with its partners and distributors and its operating cost can be predicted. Company puts more effort on single specific market segment i.e. automation and continuously acquires new customers by proving free trial products and is also able to create a binding relationship with existing customer through high switching cost. As the company has strength, it has some weakness too. Pc Schematic has single revenue stream and un predictable revenue. Company key resources can easily be replaced by competitors and key activities can be easily copied which is a great challenge as there is many company dealing with automation products. Also company uses single channel for sales through internet and fails to notice other available channels to reach prospects.
OPPORTUNITY AND THREAT
From external analysis we can observe the company has opportunity and threat as well. While taking points stated in figure PC Schematic has opportunity to benit from growing market and generate recurring revenue by converting products into service. Through continuous upgrade in its product and services there is possibility to serve new customers by improving channels efficiency and effectiveness. PC Schematic partners like OEM , developers and its distributors can complement its value proposition. Also the company can outsource its technical expertise to generate revenue. As the company has opportunity, it has some threats too. Due to rapid change in technology and increasing global competition the company have to face series of threat ,as there already exists substute product in market and competitors can offer better price or value which effects revenue margin as well as market share of the company.
BLUE OCEAN STRATAGEY
Fig : Blue ocean strategy
Blue Ocean Strategy
Different companies adopt different strategy depending upon the industry and the environment they operate in, creating a unique value preposition and attaining a competitive advantage. Thus blue ocean strategy is helpful to explore the unknown market, unattained by competition. As per Blue Ocean strategy for PC Schematic automation the company should be able to eliminate substitute product by creating unique product feature and service through continuous innovation and raise its R&D to such a level that can’t be easily copied.
on the other hand the company also should be able to raise its switching cost which is helpful for PC Automation to reduce competition and create life time value as well as establish a long lasting patch with customer. Due to increase in global competition and to reduce development cost pc schematic can do outsourcing to minimize its cost.
TO BE business model
Analysis of TO BE Business model
PC Systematic main product is automation and it has wide range of customer segment including national and international paying automation user as well as free users of trial version who later on becomes prospective customer.there is a continuous need of innovation and technological upliftment in todays global competitive world so to create value for customers PC Schematic focous on personalized automation to enhancenew user experience. The product also focous on life time value as it is unique from competitors product and simple to use as well. To reach wide range of customers the company uses website , distributors, partners and outsourcing partners. Where its key activities is based on Export, R&D-build new product &improve existing, innovative platform . Through social media like facebook and YouTube company maintains its relation with existing and potential company also company uses Distributors Blog Forums for Developers Support User’s forum Discussion to maintain customers relation. The main key resources R&D, technology infrastructure, Engineers/Programmer , Experienced employees that helps company to create value. Whereas the company has strategic alliance with its key partners , developers and OEM . the cost of company are : general & administrative, research & development, outsourcing cost, Support and training costs, marketing costs. The success or failure of business depends on profit and loss so company has to generate revenue. PC Schematic generates revenue through: free, payment revenue, maintenance revenue, revenue from update, revenue from outsourcing.
Conclusion
Rapid growth and changes in the technology has made the automation industry to face the challenges and series of the threats. Current Business Model of the PC-Schematic, shows how they are generating revenue through creating and delivering the value proposition. Pc- schematic has mostly used online shop and centralized distribution, which definitely incur the lower cost but it is less effective. For the proper application of the business model can be fruitful only when the business model are designed and executed in specific business environment. Emerging global context in automation industry has huge potentials as we all the challenges. That’s why PC schematic can develop the new business model where they can adjust all the elements which works together to bring up the company. Industry and macroeconomic forces has created the more challenge to the PC schematic. Fast change in technology and automation industry might create the condition where such a business model needs to be improved or developed considering the emerging environmental forces. And the proposed business model might help to capture the wider market to boost up the company’s sales volume.
References
Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology Spinoff Companies’, Harvard Business School, 2000.
Chesbrough, H. and Rosenbloom, R.S., ‘The Role of the Business Model in
Distribution and Materials Management, Vol. 19, No. 8, 1989, pp. 3-8.
Osterwalder Alexander & P. Yves; ‘ Business Model Generation’, John Wiley and Sons inc. 2010
Stevens, G. C., ‘Integrating the supply chain’, International Journal of Physical

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