Business Model Analysis

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Business Model Analysis

Preferred Results is a business improvement and turnaround company.

A Business Model Analysis involves taking a high-level look at the business as a whole and then focussing on areas which are perceived to indicate significant potential for performance improvement. The starting point is the preparation of a Business Model Canvas which is an internationally recognised tool for developing and evaluating business models. 

 

The model provides a framework for analysis containing the following 9 elements:

  1. Value Propositions
  2. Key Customers
  3. Channels
  4. Communications
  5. Key Revenues
  6. Key Partners
  7. Key Activities
  8. Key Resources
  9. Key Costs

There are many tools and techniques which can be used to analyse the overall business model and/or its constituent components. These include, but are not limited to:

  • Benchmarking
  • Financial Health Analysis
  • Organisation Structure
  • Ecosystem Analysis
  • Process Review
  • Work Study
  • Skills & Competencies

Benchmarking

Benchmarking against other companies across a comprehensive range of criteria allows organisations to put their performance into context with a like-for-like comparison with similar types and/or sizes of companies and to prioritise areas for improvement. This can be a useful starting point for a company-wide performance improvement drive as it casts a wide net and promotes collaboration between individuals and groups within the organisation. It is particularly useful where a company is in danger of becoming stagnant in terms of its results and wishes to challenge itself to achieve more.

In carrying out such assignments PRL uses two different questionnaires one based primarily on a Quantitative Analysis and the other taking more of a Qualitative Approach. Both combined can be particularly useful as a prelude to a Strategic Review of an organisation.

Financial Health Analysis

A comprehensive Financial Ratio Analysis is a useful approach which allows one to evaluate the financial results of the Business Model and to shed lights on areas of the model which may need to be improved, or which show promising opportunities for performance improvement. While it is a narrower focus than Benchmarking as it does not involve a comparison with other companies, the analysis provides the Client with a comprehensive assessment through expert eyes which are experienced in challenging existing perceptions and assumptions in the search for sources of improvement.

Typically, the period of analysis is between 3 and 5 years.

Organisation Structure Analysis

How an organisation is structured and which functions are outsourced can greatly influence, for better and for worse, the results of a Business Model. Very often the structure of an organisation lags behind changes in the Business Model and in time can lower performance or, it can prevent the organisation from taking opportunities or from making the most of opportunities over time.

An analysis of the Organisation Structure provides a Client with a rigorous assessment of how good a fit a particular organisation structure is in the context of a particular Business Model, and identifies opportunities for improvement and the expected benefits.

Ecosystem Analysis

The Ecosystem Analysis is an extension of the Organisation Structure/Outsourcing Partner Analysis which looks at all of the actors interacting with the Organisation and impacting on, or with the potential to impact on the Business Model. Such Actors would include Regulators, Quality Assurance Companies, amongst others. The purpose of the analysis is to understand the relationships between the various ecosystem elements and how they might be reconfigured to facilitate improvements in the functioning of the Business Model.

Skills & Competencies

No matter how good the design of a Business Model and the Organisation Structure, if the profile of skills and competencies required to adequately perform the tasks required of resources in the defined roles, whether that is at an Operator, Staff or Management level, in house or an external resource, are below what they need to be, the performance generated through the business model cannot be at its best. A Skills and Competencies analysis involves defining tasks corresponding to the roles falling within the scope of the assignment, and scoring the performance of those tasks for each individual involved in the analysis. The analysis will highlight the tasks and the roles where deficiencies exist and options for improvement.

Process Review

A Process Review can range from a review of a specific well-defined process to an end-to-end process review such as ‘Order-to-Cash’, ‘Purchase-to-Pay’ or other such extended processes.
Depending on the processes and the context of the change, such as whether it involves a limited scope and a small number of people, or whether it is a wide scope of work involving large numbers of people will determine how the work is carried out. Where the scope is limited, it will likely be sufficient to work through an iterative process involving interviews and process flow diagrams, where the scope is more extensive, such as in the case of preparing for the implementation of an ERP System, ‘Live’ Process Flows using Live Documents on ‘Life Size’ flows can work a lot better.
Typical outputs of a Process Flow Review include:

  • A Clearly Defined and Clearly Described Process
  • User Critiques
  • User Stories
  • Evaluated User Stories
  • Prioritised Implementation Plan

Work Study

Particularly in Manufacturing and Processing environments, and very often as a ‘deep dive’ within a Process Review rather than as a standalone assignment, a Work Study analysis of an Area or a Process may be used to identify bottlenecks, to generate and evaluate change options, such as automation, addition of plant and equipment, changes to Layout and other such changes where time and cost in a process are critical.
Based on In Situ Observations and/or using Video uploaded by the Client, a comprehensive current state picture is constructed, Value Creation, Waste and Flows are analysed and Change Options are incorporated to visualise and evaluate what a Future State Picture might look like and at what cost. The sophisticated platform used by PRL to carry out Work Studies offers a wide array of options in terms of reports which can be generated