Developing Sprout Stack Business Model Canvas

Question

Task: To be completed individually, you are required to prepare a business report that deconstructs an organisation's business model and identifies the critical success factors that make the business sustainable. Your analysis will demonstrate your critical thinking skills and your ability to professionally articulate your findings.

Before commencing, you must seek your lecturer's approval to undertake an analysis of the business you have chosen. The type of organisation that should be identified for study is one that is relatively new, innovative in how they operate, and have most likely been established in the last five years.

To achieve a result that meets your study objectives, please ensure the business report addresses each of the assessment criteria detailed below and which is elaborated in the marking rubric. 

Answer

Introduction
Sprout Stack business model Canvas Development is important to an enterprise for enhancing organisational performance. This is because the business canvas helps to identify value proposition, customer segmentation and other critical success factors of a business (Osterwalder & Pigneur, 2010). The current study has focused on the development of Sprout Stack business model for enhancing business development of the company. Subsequently critical success factors of business of Sprout Stack have been identified for evaluating comprehensive organisational environment of the business successfully.

1. Description of the Business, Industry in which the company Operates, the market, products and services
Sprout Stack Pty Ltd. is a popular business enterprise in the Consumer Staples sector in Australia that produces organic sprout products. The sub industry of this company is agricultural production and the company has huge customers in the agricultural industry. Main products that are offered by the company include medley, tendrils, wheatgrass and salad lettuce. The company has recently focused on the market expansion and they have contributed to the urban and sustainable farming process. The core market of the Sydney based company was indoor farming and now they have target to develop their market based on effective revenue base. The company is newly established and the revenue base reveals that the performance of the business in the agro sub industry is good.

2. Deconstructing Sprout Stack business model
Sprout Stack business model Canvas of Osterwalder: Building Blocks
A) Customer Segment
The company focuses on the behavioural and demographic customer segmentation process and it includes age group and behaviour of customers. The age group in this case is 25-35 years in the agricultural industry as they are having strong engagement to the business. The company has currently focused on the niche market and the company wants to change their segmentation process. At the current stage, the company wants to consider mass marketing strategy as it would help increase the market easily. The company wants to focus on the customer segmentation process properly as it would help to identify the market effectively.

B) Value Proposition
Wheatgrass and Medley are two key products of Sprout Stack Company and their value proposition has been given below.

Table 1: Value Proposition of the Company
(Source: Created by Author)

C) Key Partners
Key partners in case of business development of Sprout Stack Pty. Ltd are suppliers and the government. The company considers supply chain management system from the very beginning stage and currently the company wants to focus on trusted suppliers for enhancing their business.

D) Channels
As mentioned by Breuer, Fichter, Lüdeke-Freund & Tiemann (2018), consideration of business channels is important to a company to reach value proposition to the target customers effectively. The company focuses on both store channel and partner’s channel to reach the customers.

Table 2: Channels of the Company
(Source: Developed by Author)

E) Revenue Streams
As mentioned by Viswanadham (2018), revenue stream analysis is important to a business enterprise for enhancing organisational performance. Revenue streams of previous years’ of the company Sprout Stack Pty Ltd are given below

Table 3: Revenue Stream of Sprout Stack Company
(Source: Sprout Stack, 2020)

Based on the overall analysis in the above it is identified that the revenue base of the Sprout Stack Company has increasing trend.

F) Cost Structure
As asserted by Osterwalder & Euchner (2019), cost structure development is essential to a business entity to develop activities in the competitive market successfully. The cost estimation and budgeting strategy has been followed by Sprout Stack Company effectively and it is essential to consider cost plus pricing strategy effectively.

G) Key Resources
As depicted by Voigt, Buliga & Michl (2017), focusing on the financial and material resources is important to a business enterprise for ensuring sustainable development of a business entity. In case of the Sprout Stack Company, it has been found that the company focuses on the fund management process for allocating materials and human resources successfully. Materials include plant and machinery, building and other products. On the other side, based on the estimated fund for a particular time period, resource allocation process has been considered.

H) Customer Relationships
Based on the view of Osterwalder & Pigneur, (2010), customer relationship development is essential to a business enterprise as it enhances organisational performance in the competitive market. The customer relationship management technique of Sprout Stack Company is not good and hence, the organisation wants to focus on the development of customer relationship.

I) Key Activities
The core focus of Sprout is to enhance organisational performance in the agricultural industry in Australia. The company has started their activities considering technological development and in future the successful implementation of Sprout Stack business model canvas would help to develop innovation process.

3. Interrelationships among Nine Building Blocks
As depicted by Groesser & Jovy (2016), Osterwalder’s business model canvas helps to enhance sustainable business development of a company. The primary factor in the building block is customer segment and that has been developed if the value proposition has been properly made by the organisation. This is because the key motive of market segmentation is to deliver value proposition to the target market customers. In order to deliver proposed value to the customers, the company has to focus on the key activities, cost structures, channels and key partners. Hence, the value proposition depends on the core activities of the business and it has been delivered through effective channels. Sprout stack has aim to produce highest quality vegetables based on effective technologies for ensuring customer satisfaction level in the market. Based on successful customer satisfaction, the revenue stream of the company can be developed and the company would be grown in the market. In this context, it is essential to consider the process of resource allocation as it would help to develop the performance of a business. Hence, the overall discussion depicts that Sprout Stack business model canvas of Osterwalder is ideal in case of enhancing market expansion process of a business.

4. Identifying Critical Success Factor
In case of implementing Sprout Stack business model canvas, it is identified that fund management is important to a business entity. This is why it is considered as a critical success factor in case of implementing any business model. The Sprout Stack Company always focuses on the technological development process and hence, the effective fund management would help to enhance innovation of the business. On the other hand, budgeting and cost structure technique is another critical success factor in case of business development process. This is because the effective budget estimation can help to enhance organisational performance and fund can be managed easily. Hence, the overall analysis says that strategic focus is the key element of the business development in case of Sprout Stack.

5. What are the factors impacting the success of Sprout Stack business model including downside risk?
As mentioned by Cuc & Miina (2018), in order to implement a business model successfully, it is essential to focus on the effective planning process as it ensures that organisational performance has been done successfully. Furthermore, human resource management and organisational cultural development can help to implement a Sprout Stack business model successfully. In this context, Groesser & Jovy (2016), have stated that downside risk analysis is important to an entity for identifying that whether all factors are considered properly or not. It actually helps to identify possible risk of a business model implementation and organisational effectiveness is increased. Hence, planning, human resource management, cultural development and downside risk analysis can help the company to implement new Sprout Stack business model successfully. Based on the downside risk evaluation, the company can estimate loss or profit of the future due to change in the market condition.

6. Necessary Changes in the Sprout Stack business model /Recommended Changes
As asserted by Ranta, Aarikka-Stenroos & Mäkinen (2018), business model implementation is an important process in case of a new business or market expansion. If changes are essential in case of Sprout Stack business model canvas development, according to my point of view it is essential to emphasize the key changes. Change may be required in case of cost structure as cost estimation is a comprehensive work in the international market. The review of budget and allocated resource verification is important for implementing the Sprout Stack business model successfully. It is essential to evaluate budget materials effectively to estimate the revues properly. Furthermore, based on the vision and budget planning, it is important to change value proposition. This is because the development of the quality of value proposition is important for enhancing customer base of the business. Among different types of changes, cost structure development is essential to the business of Sprout Stack Company as it would help to achieve actual business objectives.

Conclusion
Based on the above discussion, it has been identified that the implementation of Osterwalder’s Sprout Stack business model canvas might improve organisational performance of Sprout Stack Company. In order to implement the project successfully, it is important to review budget and resource allocation process properly. This is because it would helps to deliver value proposition of the business to the customers successfully.

References
Breuer, H., Fichter, K., Lüdeke-Freund, F., & Tiemann, I. (2018). Sustainability-oriented business model development: Principles, criteria, and tools. International Journal of Entrepreneurial Venturing, 10(2), 256-286.

Cuc, J. E., & Miina, A. (2018). Classifying the Business Model from a Strategic and Innovation Perspective. Sprout Stack business model Journal of Business Models, 6(2).

Groesser, S. N., & Jovy, N. (2016). Business model analysis using computational modeling: A strategy tool for exploration and decision-making. Journal of Management Control, 27(1), 61-88.

Home | Sproutstack. (2020). Retrieved 30 March 2020, from http://sproutstack.co/

Osterwalder, A., & Euchner, J. (2019). Business model innovation: An interview with Alex Osterwalder. Research-Technology Management, 62(4), 12-18.

Osterwalder, A., & Pigneur, Y. (2010). Business model canvas. Self published. Last.

Ranta, V., Aarikka-Stenroos, L., & Mäkinen, S. J. (2018). Creating value in the circular economy: A structured multiple-case analysis of business models. Journal of cleaner production, 201, 988-1000.

Viswanadham, N. (2018). Performance analysis and design of competitive business models. International Journal of Production Research, 56(1-2), 983-999.

Voigt, K. I., Buliga, O., & Michl, K. (2017). The Business Model Concept. In Business Model Pioneers (pp. 7-10). Sprout Stack business model Springer, Cham.

Appendix 1: Pigneur and Osterwalder’s Canvas