Trends and Challenges toward Asean Economic Community, December 5th, 2015
di Auditorium Prof. Slamet Dajono, Gedung D1, Lt.3, FMIPA
Utilizing Business Model Canvas (BMC) to Develop Innovative Analysis in
Culinary Business
Clarashinta Canggih, S.E, CIFP1, R.A. Sista Paramita2, S.E., M.Si, Tias A. Indarwati, S.E., MM3
ABSTRACT
This research aims to identify outline scheme of
culinary business using SWOT analysis and Business Model Canvas (BMC)
approach. UD. Dede Satoe is one of thrive culinary business in Surabaya which
offers varieties of sambals as well as other foods. Based on the SWOT analysis,
the business needs to create new product and promote aggressively to sustain
and maintain its customer loyalty. The result of SWOT analysis afterward is
mapped into BMC with nine factors that have to be observed. First, offering practical and
portable spicy main dish. Second, the customer segment arepeople who like spicy food
and following the current trend. Third, the additional discount and
bonus. Fourth, distribution through direct
selling. Fifth, incomes are from
sales of spicy rice-balls and sambals as well as franchising fee. Sixth, key
resources of the development are the raw material, product
package, and attractive food stall. Seventh, main activity is
added with producing spicy rice-balls, establishing the
requirement of franchising, and developing website. Eighth,
partnership withraw material and product package supplier, food stall producer, web
developer, and courier. Ninth, necessary costs are promotion cost, operational cost, production cost, labor
cost, and taxes.
Keywords:SWOT Anaysis, Business Model Canvas, Business Plan,Company
Strategy
1.
Introduction
ASEAN Economic Community (AEC) is envisioned to be the realization of ASEAN
economic integration by 2015. It has four vision namely ASEAN as a single
market and production base, highly competitive economic region, inclusive and
equitable development that focuses in supporting small and medium enterprises,
and coherent approach towards external economic relations as well as
enhancement of participation in global supply networks [1]. Facing forward the AEC by
the end of 2015 and anticipating global competition in business sector, SMEs in
Indonesia have to strengthen their operational, improve its quality, and
provide unique business to compete in global condition.
Culinary business is one of the potential businesses in Indonesia. It can
be seen from the consumption level of Indonesian people, as seen in Table 1,
which is increasing every year. Increasing consumption level means increasing
demand of the product along with the economic growth hence the industry has
potency to growth more.
|
2011
|
2012
|
2013
|
2014
|
|
|
Food
|
293.556
|
323.478
|
356.435
|
388.350
|
|
Non-Food
|
300.108
|
309.791
|
347.126
|
387.682
|
The increasing demand of food among Indonesian drivesthe development of
culinary business, both in small-medium scale and large scale.However the
development of culinary business in small-medium scale shows more development
rather than the large-scale in several years back, as seen in Table 2.
|
|
2012
|
2013
|
2014
|
|
Culinary Business -SMEs
|
942.610
|
1.167.541
|
1.198.491
|
|
Total SMEs
|
3.218.043
|
3.418.366
|
3.505.064
|
|
Culinary Business – Large
|
5.662
|
5.795
|
5.793
|
|
Total Large Industry
|
2.867.422
|
3.289.204
|
3.483.930
|
Increasing in numbers
of culinary business brings on competitiveness among the local industry.
Moreover the implementation of ASEAN Economic Community in the near future will
affect the competition with the possibility of foreign business entering local
market, including culinary. Facing the tight competition the company always
demanded to running the business well. Particularly in culinary business, the
company must maintain the product and services quality and improve it at the
same time, since the core values of culinary business are about taste of the
product and services provided by the company. Innovation is a must to conform
the change in environment and customer demand.It is important step when the
company has to maintain its loyal customer as well as to attract the new
customer to try out the products and services provided by the company.
Besides running the business well, the
company must pay attention on its business model to decipher innovation
strategy; hence it could bring competitive advantage in the competition.
Planning the appropriate business model is the first step. However, to determine
the success of implementation, the company must ensure that its business model
is in line with the customer and the company value. One of the widely use
business model is Business Model Canvas (BMC), developed by Alexander
Osterwalder dan Yves Pigneur. It assists the company to identify its existing
or planning business accurately in general picture but complete and detail in
business key element. It facilitates the company to establish,
evaluate, and manage its business through canvas approach[4].
UD. Dede Satoe is one of thrive culinary
business in Surabaya which offers varieties of sambal as well as other foods. In order to manage its
sustainability facing dynamic change in culinary business, the company needs
continuous evaluation on its existing business as well as feasibility study
toward its innovative plan. This study is
aims to develop a
draft of business model innovation for spicy rice-ball product as
the elaboration of existing product offeredusing Business Model Canvas.
2.
Basic Theory
2.1. SWOT Analysis
SWOT analysis identifiesseveral factors inside and
outside the company systematically to formulate business strategies. It
consists of four quadrants namely strengths, weaknesses, opportunities, and
threats. The basic for SWOT analysis is logic
to optimize strengths and opportunities as well as minimize weakness and
threats at the same time. Strengths illustrate items owned by the analyzed
company at higher level compared with business in the same field that assures
certain advantage to them. Weaknesses describe the characteristics of the
company which are either in lower performance or are needed but does not
possessed. Opportunities are favorable opportunities from the external side
available to the company which provide positive influence towards business.
Threats are obstacles from external side which may affect the business capacity
to fully achieve the target and there is chance to reduce business
performance. SWOT analysis can be
established through identification of internal and external business environment.
Table 3. Internal and External Business Factor
|
|
Positive Impact
|
Negative Impact
|
|
Internal Origin
|
Strengths (S)
|
Weaknesses (W)
|
|
External Origin
|
Opportunities (O)
|
Threats (T)
|
The
results of internal and external factor identification afterward are formulated
into SWOT matrix. SWOT matrix mapping interactions between internal factors and
internal factors to identify the important links between internal strengths,
weakness and external opportunities, threats [5]. It arranges company
strategic factors and describes how to adjust external opportunities and
threats faced by the company with the strengths and weakness possessed by the
company. It delivers four set of possible strategic alternatives: SO strategy,
ST strategy, WO strategy, and WT strategy [6].
|
|
Strengths
|
Weaknesses
|
|
Opportunities
|
SO
Utilizingstrengths
to obtain opportunities
|
WO
Utilizing
opportunities by minimizing weaknesses
|
|
Threats
|
ST
Utilizing
strength to overcome threats
|
WT
Defensive
activity, minimizing weaknesses and avoiding threats
|
2.2. Business Model Canvas (BMC)
Business model is the logic on how the organization
earns money. It highlighted two fundamental questions related the value
provided to the customer and organization’ ability to capture value in the
process of serving customers[7]. Business model also
defines as tools allowing entrepreneurs and managers toimagine and craft organizations adept at drawing value from new
technologies[8].
Business Model Canvas (BMC) is one of business model
innovation used worldwide. It is describing the rationale of how an
organization creates, delivers, and captures values [9]. BMC using the same
language to develops, visualizes, appraises and alternates the existing
business model. It divides business model into nine major components namely Customer Segments, Value
propositions, Channel, Customer Relationships, Revenue Streams, Key Resources,
Key Activities, Key Partners, and Cost
Structure (sorted from right to left)[9].
The right side of the canvas represents the innovation
and relatesdirectly to the customer. It consists of Customer Segments, Value
propositions, Channels,
Customer Relationships, and Revenue
Streams. Customer segments describe the variety of group of people or
organization who the company wants to provide. Value propositions describe combinations
of products and services which create value for customer segments. Channels
explain about the way company communicates with the customer and provide the
value propositions. Various
types of relationships are built together between the company and specific customer
segments are described in customer relationships. Revenue streams are about cash
inflow generated from value propositions offered to the customer segments.
The left side of the canvas represents the logical
part related to business operational. It consists of Key Resources, Key Activities,
Key Partners, and Cost
Structure. The most important and necessary assets in functioning the business
model is described in Key Resources. Key activities illustrate the most
important things that must be done by the company so the business model can
work. Key partners describe the networking of supplier and partners who support
the business model. Cost structure is about all expenses occurred to operate
the business model.
Business Model Canvas also can be used to established projections of financial
analysis. It compares revenue stream and cost structure. Revenue stream consist
of main income and other income, whereas cost structure consist of production
cost, marketing expenses, research and development cost, administrative expenses,
and taxes[11][12].
3.1. Object
Research
UD. Dede Satoe was founded in 2011 by Dra.
Susilaningsih. It is SMEs in food and non-food products. It provides food
products such as variety of sambal (spicy
condiment using chili peppers), cheese stick, cooking spices, crispy shrimp,
fried sambal crispy tempeas well as non-food products such as lerak.
3.2. Data
collection
The data was collected by
interviewing the owners about the existing product and operational business, what is consumer’s
desired, and secondary data from BPS-Statistics Indonesia
3.3. Data
Processing
This research is divided into two sub studies, SWOT
analysis and BMC. First, based on the identification of company strategic
factors, SWOT analysis is conducted and provided SWOT matrix withfour set of
possible strategic alternativesfrom the existing business operation.
Alternatives provided from SWOT matrix then mapped into general scheme of
company development, BMC.
4. Result and Analysis
4.1 SWOT Analysis
SWOT analysis of UD DedeSatoe from internal and
external environment is as following
Table 5. SWOT
matriks of UD DedeSatoe
|
|
Strength
1. Offer
varieties of food and non-food products
2. Offer
3 sambal taste: extra hot sambal, sambaljambal roti, and sambalikanpeda
3. Trademark
already registered
4. Product
is favorable for most Indonesian
5. Have
many work relationship with galleries across Indonesia
|
Weakness
1. Production
Location is less strategic
2. Price
is relatively more expensive
3. Depends
on chili pepper price
4. Lack
of skilled and diligent human resources in finance area
|
|
Opportunities
1. The
market of food industry is still widely open
2. Food
is a basic need
3. Exhibitions
of local products conducted by government bodies
|
SO strategy
Continued relations with the galleries whose become
loyal customer through offering new product (S1O1)
|
WO strategy
Relevant price adjustment hence it can be reached by
more people (W202)
|
|
Threats
1. Many
SMEs arise offers more varied similar products
2. Competitor
from other areas offering lower price
3. Unpredictable
fluctuation of chili peppers price
|
ST strategy
1. Looking
for alternative raw material from the existing product offered when the chili
pepper price is way to harmful (S1T3)
2. Maintain
and increase the product quality hence the customer loyalty will not change
though competitor offering lower price (S3T2)
|
WT strategy
1. Promote
aggressively to attract new customer and maintain loyal customer
2. Looking
for strategic location to establish booth or food stall
|
4.2 Analysis Business Model
Canvas
4.1.1 Value propositions
Nowadays, culinary business
trend is influenced by Japanese and Korean food which has unique shape and
color, healthy and easy to eat. Since most Indonesian prefers rice,
as main dish, and
spicy food, the proposed innovative development of the
existing sambal business is create rice-ball (onigiri) with traditional touch
of sambal as an additional product offered to customer. The rice is formed into
triangular shapes and filled with the variety of Sambal DD1 which is wrapped in
food grade cardboard, hence it is easy to eat, practical, portable and
efficient for the customer who wants to eat main dish.
4.1.2 Customer Segment
The company offers its sambal product to the customer
in Surabaya and its surroundings and other big cities such as Jakarta. It
focuses on supermarket and minimarket as well as exhibitions, hence it can be
concluded that the customer focus is middle-up level customer with income not
less than Regional Minimum Income Level. In additional to elaboration of new
product and values offered, the segmentation is broaden to people within age
15-60 year who like spicy food and following the current trend not only in
Surabaya but also in others.
4.1.3
Channels
Currently the company offers its sambal product through
direct selling at its own production house as well as through product
exhibitions in several cities across Indonesia. However, to facilitate
prospective customers who demand the spicy rice-ball as well as the sambal
itself the company open food stalls in locations nearby campus or nearby
minimarket. Besides, the rice-ball can be distributed through network of
Indomaret Point which nowadays also provide main dish toward customer. The
spicy rice-balls also can be franchised to those who interested to invest,
hence the company does not have to own its own food stalls. The company also
provides website contains the entire product offered by the company with
complete specifications as well as communication channel so that customer can
communicate with the company and order the desirable products directly.
4.1.4
Customer Relationship
To maintain relationships
with consumers it is proposed to add discounts and bonuses to
maintain customer loyalty. It means give discount price for the ordered
products on condition that there are minimum purchase of products. Meanwhile
the bonus is intended to provide services such as free delivery for certain
area with certain amount of purchase.
4.1.5
Revenue Streams
Along with the elaboration of the new product, the
revenue streams are consist of main income from the sales of new products
(spicy rice-balls), and sales of sambal and other supporting products, as well
as additional income from franchising fee of spicy-balls product.
4.1.6
Key Resources
Supporting the development of the company, raw
materialsand product packageswith good
quality and affordable price are needed. The development of spicy rice-balls
means the company needed additional raw material in the form of rice. Besides
it also required unique product package particular for spicy rice-balls from food
grade cardboard. It also needed an eye catching food stall to attract customer.
4.1.7
Key Activities
For
the activities of company that have developed, the company must add activities
to support the plan. The company has to produce the spicy rice-ball in addition
to the existing production. It has to establish the design of food packages and
food stalls which can attract customers. In line with the expansion plan, the
company must establish the franchising requirement hence the investor could
determine whether the spicy rice-ball franchise feasible and affordable.
Besides the company has to update and check the website regularly to confirm
the order from customer.
4.1.8. Key Partners
The company must establish partnership particularly
with supplier, raw material and product package. Raw material is the important
element in the production process, hence utilization of raw material affect the
profitability of the company. The lower the price of raw material, obtained
from the partnership, the higher the possible profit obtained by company.
Besides the company also has to establish relations with producer of food
stall, hence it can cater the design envisioned by the company. In order to
cater the technology development and promote through the company website, the
company must establish partnership with web developer to develop and maintain
the company website. Conforming order from the customer via online as well as
provide the bonus of free delivery, the company has to relate with shipping
company and courier to perform the delivery.
4.1.9 Cost Structure
Costs
incurred to offers proposed values to the customer are promotion cost, production
cost, labor cost, operational cost such as electricity, telephone, water, and
internet, and supporting cost such as taxes.
Table 6. BMC UD. Dede Satoe
|
Key Partners
· Raw
material suppliers
· Product
package supplier
· Producer
of food stall
· Shipping
company and courier
· Web
developer
|
Key Activities
·
Production of spicy rice-balls
·
Design product package and food
stall
·
Establish franchising requirement
·
Develop and maintain website
|
Value Propositions
· Spicy
Main Dish
· Easy
to eat
· Practical
· Portable
· Efficient
|
Customer Relationship
·
Discount
·
Free Delivery
|
Customer Segments
·
Age range 15-60
·
Like spicy food
·
Following current trend
|
|
|
Key Resources
·
High quality raw material and
product packages with affordable prices
·
Attractive food stall
|
Channels
·
Food stalls
·
Indomaret Points
·
Website
|
||||
|
Cost Structure
· Promotion
· Production
· Labor
· Operational
(electricity, water, telephone, internet)
· Taxes
|
Revenue Streams
Main Income
·
Sales of spicy rice-balls
·
Sales of sambal and existing
products
Additional
Income
Spicy
rice-balls franchising fee
|
||||
5.
Conclusions
1.
SWOT
matrix is used to provide strategic alternatives from the existing business
operation
2. Designing a business model with
the support of Business Model Canvas can describe company's business model
strategy’s design hence they can find new ideas in business, especially in
value propositions.
3. SWOT matrix of UD. Dede Satoe
provided that the company should continue the relations with the galleries
whose become loyal customer through offering new product, the company must
promote aggressively to attract new customer and maintain loyal customer, and
the company must looking for strategic location to establish booth or food
stall.
4.
BMC
of UD. Dede Satoe provided that there are nine strategic factors need to be
observed.The value propositions are
offering practical and portable spicy main dish as well as efficient order via
internet. The customer segments are broadening to people who like
spicy food and following the current trend. Maintaining
customer relationship through offering discount and bonus. The product will be
distributed through direct selling. The revenue streams are from sales of spicy rice-balls and sambals as well
as franchising fee in additional. Sixth, key
resources of the development are the raw material, product package, and
attractive food stall. Seventh, main activity is added with producing spicy rice-balls,
establishingthe requirement of franchising, and developing website. Eighth, partnership with raw material and product package supplier, food
stall producer, web developer, and courier. Ninth, necessary costs are promotion
cost, operational cost, production cost, labor cost, and taxes.
5. Based on this study, Business
Model Canvas can be used to generate alternative corporate strategies on
business feasibility. However, further research needs to be conducted therefore
the output of the Business Model Canvas is more reliable to be used as decision
makers feasibility.
6.
Further
study should add several factors to conduct financial projection analysis hence
the feasibility of the existing and planning business can be assessed.
6. References
[2] BPS. "Rata‑Rata Pengeluaran per Kapita Sebulan di Daerah
Perkotaan dan Perdesaan Menurut Provinsi dan Kelompok Barang (rupiah),
2011-2014," November 13, 2015; www.bps.go.id.
