Business Idea Assignment: IoT For Retail Sector

Question

Task: The objective of this individual assessment submission is to learn how to develop your own business idea, complemented by research and observational insights that detail why the need is compelling. Please submit a 1500-word business report of your idea, a detailed business model (BM) canvas, discussion of the interrelationships among the BM components that are essential to success, critical risks and assumptions, and overall feasibility. The business model canvas must be discussed in the report and included as an appendix.

Assessment Criteria:

1. Effective explanation of the customer/market problem that needs solving and/or the reason the innovation is required. (15%)
2. Persuasive argument of the customer/client benefits to be generated by the idea (10%)
3. Discussion of the proposed business model (15%)
4. Identification and discussion of the key interrelationships in the BM that will support success of the idea (10%)
5. Critical success factors to be managed during execution of the idea (15%)
6. Identification of critical risks and assumptions (10%)
7. Evaluation of the overall feasibility of the idea (15%)

Quality of written submission, minimum 6 peer-reviewed journals, and APA referencing format (10%).

Answer

Introduction
The current business idea assignment talks about the disruptive innovation which relates to an innovation that develops a new value and market network and gradually disrupts the existing value and market network (Balaji, Roy, Sengupta & Chong, 2018). The lean entrepreneurship principle is based on the shortening of the product development cycles and the discovery of the proposed business model. The present business idea presented in the business idea assignment is based on a small retail store that utilizes IoT technology for destructing other businesses with a new business model.

1. Problem and reason for innovation
As a result of the globalisation, the demand for a variety of food products and other necessary items is highly increasing in the retail industry (Caro and Sadr, 2019). In small retail stores, consumers face a number of problems such as increased crowds in the shop floors. Due to congestion on the shop floor the consumers face problems in having access to the products. On the other hand lack of stock in the outlet is another major problem that the organisations face that decline the customer satisfaction rate. It has been evidenced herein business idea assignment that due to lack of knowledge of the customers regarding the location of products within the shop floor leads to the increased condition within the shop floor. Due to increased congestion, check out of the customers becomes another issue that forces the customer to leave the store without purchasing anything which results in a low profit for the companies. The reason behind the stock-outs in the retail stores is the lack of accurate tracking in the inventory. As explained by Balaji and Roy (2017), the stock-outs in the retail stores can lead to negative consumer behaviour and decrease competitive advantage in the market for the retail stores. As the existing problems in the retail industry are gradually decreasing the customer experience and customer satisfaction level to shop, it is necessary to solve the problem with specific innovations that can change the overall experience of the consumers towards the retail industry.

2. Benefits to be generated through the idea
The present idea explored in the segments of business idea assignment is to generate a small retail business that would effectively utilize the new IoT technology to transform the retail sector. The new retail business would utilize IoT for three purposes, to solve the stock-outs, increase congestion and help in easy check-outs. The IoT sensors would be used in the racks where different products would be placed and a separate code can be generated for each product on the retail stores. The availability of the products and the exact location of the products within the store then can be accessed with the help of the computer to which the sensors would be connected (Patil, 2016). Hence, whenever a customer mentions the desired items in the kiosk they can gain information about the exact rack number and position of the products within the shop. Moreover, the application of IoT would reduce the congestion within the shop as customers can easily gain their desired item and check out in the easier way with the automated checkout and payment through IoT and mobile payment system. As the availability of the products is better tracked with IoT, the company can solve issues like stock-out and enhance the performance of the inventory management.

3. Discussion of the proposed business model
Business model canvas by Osterwalder & Pigneur includes 9 elements (Masurel, 2019). The proposed business model canvas for the new retail business is attached in appendix 1. The business model canvas deconstructed in the business idea assignment depicts that manufacturers, distributors, technology providers, suppliers, advertisers, logistic companies, and channel partners are the key partners for the new business. The key activities that would be required for maintaining the business are marketing, R&D, logistics, sales, distribution, demand forecasting, managing IoT systems, automated checkout through IoT, mobile payment system, tracking of product availability, and inventory management. The major value proposition of the company is the easy tracking of products, convenient shopping, less congestion and crowds, and Zero stock-outs. Customer relationships would be managed through the IoT system via feedback collection, self-service kiosk, and provision of 24-hour customer service that ensure a long term relationship with the customers. The company would target mainly the housewives, older people, students, and young generations belonging to the middle-income group. IT infrastructure, financial resources, human resources, a strong supply chain and distribution network and innovative capability to use technology can be the key resources for the new company. As Channel the organisation would utilise its website, social media pages, advertisements, and the small retail stores. The business model canvas also includes the expenditures that the company would need to bear in developing the company and the streams from which the company can gain revenue (Felin, Gambardella, Stern & Zenger, 2019).

4. Interrelationships in BMC that will support the idea
The partnership with the technology providing companies who would provide the new business with IoT software and IoT system would help in the instalment of IoT system in the stores and warehouses would help in carrying out the key activities like warehousing and logistics distribution of products management of the IoT system automatic checkout and sales. Therefore the key partners of the company have a strong relationship with the key activities as well as the key resources that include IT infrastructure, warehousing and logistic resources (Kiel, Arnold & Voigt, 2017). On the other hand, these key resources such as the IT infrastructure and IoT software would enable the organisation to provide the value that is proposed in the value proposition and maintain a strong relationship with the customers. The value propositions and customer relationships elements of the business model considered in the present aspect of business idea assignment are also strongly related that help a company to achieve revenue through the revenue streams and gain success in the market.

5. What are the critical success factors to be managed during the execution of the idea explored in the business idea assignment?
It has been identified in the business idea assignment that security is the major issue that is faced in the implementation of IoT systems in organisations. According to Dlamini and Johnston, 2016) security and privacy issues are associated with IoT that can increase the chance of cyber-attack and threats for retail organisations. Therefore the new business must ensure the installation of proper IoT security software to ensure the successful installation of the IoT infrastructure. Financial resources are another success factor for managing the execution of any start-up business. The implementation of IoT systems can be costly for the start-up business. However, the proposed business model relates to the development of a small retail organisation. The implementation of the IoT system can be feasible as a less financial resource would be required. The knowledge and effectiveness of the employees is another critical success factor noted in this section of business idea assignment for the organisation as with the greater commitment and efforts of the employees, customers can be managed with efficiency. Moreover, the recruitment of talented and experienced staff that has knowledge of working in an IoT environment can be another critical success factor for the proposed company.

6. Identification of critical risks and assumptions
The increased rate of cyber-attacks is the major risk that the proposed company can face in the IoT environment. The cyber-attacks can lead to the leakage of confidential data and result in a huge reputational and financial loss of the company. From this situation as illustrated in the business idea assignment, it can be assumed that the organisation can implement the security system that is able to protect the IoT environment with greater efficiency. As per the explanation of Ahmadi, Rahimi & Rezaei (2018), customers can have a negative attitude to the products and services from the new organisations that can reduce the performance of the business. In this regard, the organisation would utilise the lean entrepreneurship principles in which the time of the development and implementation of the IoT system inside the shop and the warehouse would be highly decreased so that the services can be provided to the customers earlier and feedback can be collected for the improvement of the experiences (Felin, Gambardella, Stern & Zenger, 2019). For this purpose, the organisation would assume that the initial IoT system would be able to fulfil the demand of the customers in an effective way.

7. Evaluation of the overall feasibility of the idea
The potential of the new business idea has been evaluated and presented in appendix 2. On the basis of the evaluation performed in the business idea assignment, it has been identified that the new business idea has the strength to take advantage of the environmental trend that is the IoT technology and solve the customer experience related problems. The usage of lean entrepreneurship principal helps the company to enter into the market in time which has increased the strength of the business (Zhou, Alexandre-Bailly & Piramuthu, 2016). It has been identified that there is a moderate industry-related issue there are a number of competitors in the retail market and the industry is in the growth phase which has reduced the potential to some extent. Working towards the successful implementation of the value proposition and ensuring satisfaction as well as engagement of the customers would help the company to establish themselves strongly in the market and do away with the industry-related issues.

 However, the customer-related issues identified in the business idea assignment in the industry and the target market is not much strong and therefore the can gain a high potential in this aspect. The founder related issues that have been identified in this context of business idea assignment are moderate experience and moderate skills, which can be coped up through evaluation of the experiences and the practical lessons gained through operations as well as careful business planning. On the other hand the organisation is likely to face financial issues due to moderate initial capital investment, for overcoming which, it is advisable that the company attracts investors at the earliest and ensures strong customer engagement, so that the revenue generated by the company can increase significantly, with each passing year.

Conclusion
From the above study on business idea assignment, it has been identified that lean entrepreneurship principles are much important in order to implement disruptive innovations in any organisation. The business model proposed in the business idea assignment depicts how IoT technology can be utilised in solving the issues those consumers face and filling the gaps in the market.

References
Ahmadi, F., Rahimi, M., & Rezaei, A. (2018). Study of relation between business model and sensemaking decisions. Journal of Humanities Insights, 2(02), 99-108.

Balaji, M. S., & Roy, S. K. (2017). Value co-creation with Internet of things technology in the retail industry. Business idea assignment Journal of Marketing Management, 33(1-2), 7-31.

Balaji, M. S., Roy, S. K., Sengupta, A., & Chong, A. (2018). User acceptance of IoT applications in retail industry. In Technology Adoption and Social Issues: Concepts, Methodologies, Tools, and Applications (pp. 1331-1352). IGI Global.

Caro, F., & Sadr, R. (2019). The Internet of Things (IoT) in retail: Bridging supply and demand. Business Horizons, 62(1), 47-54.

Dlamini, N. N., & Johnston, K. (2016, November). The use, benefits and challenges of using the Internet of Things (IoT) in retail businesses: A literature review. In 2016 International Conference on Advances in Computing and Communication Engineering (ICACCE) (pp. 430-436). IEEE.

Felin, T., Gambardella, A., Stern, S., & Zenger, T. (2019). Lean startup and the business model: Experimentation revisited. Forthcoming in Long Range Planning (Open Access).

Kiel, D., Arnold, C., & Voigt, K. I. (2017). The influence of the Industrial Internet of Things on business models of established manufacturing companies–A business level perspective. Technovation, 68, 4-19.

Masurel, E. (2019). Appendix 3: Business Model Canvas 2018', The Entrepreneurial Dilemma in the Life Cycle of the Small Firm.

Patil, K. (2016, December). Retail adoption of Internet of Things: Applying TAM model. In 2016 International Conference on Computing, Analytics and Security Trends (CAST) (pp. 404-409). IEEE.

Zhou, W., Alexandre-Bailly, F., & Piramuthu, S. (2016, January). Dynamic organizational learning with IoT and retail social network data. Business idea assignment In 2016 49th Hawaii International Conference on System Sciences (HICSS) (pp. 3822-3828). IEEE.

Appendices
Appendix 1

Appendix 2