2(f) Business Model Canvas & Example

To analyze the competitive market forces and the industry landscape. It helps determine whether the particular industry or a company is attractive.

Barriers to entry

• Economies of scale • Legal or regulatory barriers • Capital requirements • Cost advantage ( i.e. unique access to raw materials) • Government policy • Strong brand identity • Access to distribution channels and shelf space • Trade Policies

Suppliers power

• Shorter supply of supplier’s product or services • Differentiation of inputs or presence of substitute inputs • Switching costs of suppliers • Cost relative to total purchases in the industry • Industry members do not account for big fraction of supplier’s sale • Suppliers concentration

Intensity of rivalry

• Industry growth • Product differentiation • Low switching cost • Fixed costs/value added • Brand identity • Excess Production Capacity • Diversity of competitors • Corporate stakes • High Exit barriers

Threat of substitutes

• Relative price performance of substitutes • Switching costs • Buyer propensity to substitute

Buyers power

• Buyer are fewer in numbers as compared to manufacturers • Buyer purchase volume • Lower switching costs • Buyer high information • Substitute products • Less differentiation among products available • Brand identity impact on quality/performance • Buyer profits • Decision maker’s incentives

To analyze the competitive market forces and the industry landscape. It helps determine whether the particular industry or a company is attractive.

Barriers to entry- High

• Market filled with brands like

HUL, P&G, ITC which have strong brand image and hence anyone coming from outside has huge disadvantage • Sector requires massive capital investments • Entry into tobacco is very difficult due to high regulations as well as raising capital is difficult to increased awareness in the sector • Industry works on distributor model and hence quality distribution channel is very difficult to achieve

Suppliers power- Low

• Less concentration of suppliers • Direct distribution has reduced bargaining power of supplier • Switching costs are low since product differentiation is low, ITC uses standardized raw materials for production • Plenty of suppliers available for the same type of materials

Intensity of rivalry- High

• Enough varieties and production differentiation available in the market • Strong R&D, marketing strategies, adopted by the rivals

to gain market share • Substitutes available for each and every product in each category

Threat of substitutes- High

• Herbal products from Himalaya, Patanjali and even from HUL, P&G, etc. • ITC hotels – Oberoi Groups, Leela hotels, Taj hotels • Tobacco- Kothari products, Godfrey Phillips, VST industry, Golden

Tobacco company

Buyers power- Medium to High

• Easy to switch between products in

FMCG category • Strong brand image in Cigarettes,

Aashirvaad Atta, Classmate,

Savlon, etc. • Above brands run on customer loyalty and hence brand runs on premium in these segments • Market potential of the FMCG and tobacco business is higher and hence plenty of customer available