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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.