A Digital Business Startup’s Critical Evaluation

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Proposed Digital Business Venture

Summary

As part of technological and economic progress, new transportation services emerged in Canada in recent years. Ride-sharing service is dedicated to passengers who want to travel using a private vehicle for a specific fee (Canada Revenue Agency 2019). The communication and service are facilitated through a mobile application or a website (Cutean 2018). The idea of the service is to provide a fast and comfortable ride at an affordable cost. This type of service has become increasingly popular in Canadian cities located in the south and central parts of the country, such as Toronto, Vancouver, Delta, and Laval (Cutean 2018).

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The absence of this type of service in the northern part of the country makes it a good niche to consider. This service corresponds to the key elements of enterprise theory mentioned by Blaschke et al. (2017) and integrates the digital transformation necessary for business. The aspects of digital transformation, such as enterprise view, digital value drivers, and strategic focus areas essential for a successful enterprise, are covered in the project.

Objectives

This report aims to provide detailed information about the business model using the Value Proposition Canvas. Using the given method of presentation, this paper will show a complete vision of the future service, its growth perspectives, benefits, and limitations, as well as alternative options. Moreover, the report indicates possible outcomes associated with financial development. Additionally, the effectiveness and convenience of the Value Proposition Canvas method in creating a business model will be discussed in the report.

Problem

As one of the biggest countries in the world, Canada has enormous distances between cities and towns that can only be traveled by car. According to Cutean (2018), Toronto spans include about 630 square kilometers. Although taxi services are developed in the city, the cost of transportation could be unreasonably high. In the northern regions, the situation is even worse. As highlighted by Canada Revenue Agency (2019), taxi services could be two times higher due to the low concentration of the Canadian population in the north. Moreover, the region’s limited number of taxi services allows local transportation companies to speculate prices for their service. Considerable distances between cities (on average 25-30 km) require commuting by car.

Service

The ride-sharing service introduces a cost-effective and comfortable alternative to taxi services. Cutean (2018) mentions that ride-sharing services create a practical competition for taxi services. The principle of ride-sharing services is the following: using a mobile application or website, the customers define their travel route. Depending on the situation, the transportation fee could be fixed or assigned by the customer or driver based on the time and distance.

After finding the driver who follows this traveling route, the customer and driver contact each other. Next, if both customer and driver are satisfied with the time, price, and path of the ride, the driver picks up the customer and delivers to the place. Canada Revenue Agency (2019) states that most of the drivers in the system are gig workers who own their vehicles. This kind of service adapted for the northern part of Canada would be beneficial in eliminating the problem.

Value Proposition Canvas

Value Proposition Canvas Application

Value Proposition Canvas
Figure 1. Value Proposition Canvas (Neos Chronos 2021).

Presented in Figure 1 Value Proposition Canvas of the ride-sharing service consists of several sections. The Value Proposition Canvas is a system that analysis customers’ problems by indicating the service or the product that could solve these problems (Digital Natives, 2020). This model allows planning a better way of approaching and presenting the product to the customer. The Value Proposition Canvas consists of two main profiles: product and customer profiles (Scowron 2020). The product section covers the benefits, experience, and features of the product relevant to the customer. In contrast, the customer profile includes the customer’s wants, needs, and fears related to the service or product.

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In the customer profile, desire sectors are directed to eliminate the customer’s problems. Neos Chronos (2020) mentioned that a customer profile is the primary tool in indicating and eliminating fears or pains of the customer related to service. For example, Figure 1 shows fears associated with the safety and reliability of the service that helps to work on this problem by providing the best quality service.

As previously mentioned, ride-sharing services facilitate cheap and convenient traveling between cities, making transportation more accessible and eliminating customers’ worries. As its main tool, the product section represents the customer’s benefits, experience, and features using our service (Neos Chronos 2020). The main feature of the map is its cost-effectiveness and safety, as every driver passes personal verification before being accepted to the service (Canada Revenue Agency 2019). Moreover, the service is available at any time and uses digital technologies implying the enterprise theory. Therefore, customer profiles should correspond to all requirements to provide a complete picture.

Talking about the importance of the canvas helps to connect and analyze its entities. Finding the balance between the customer’s requirements and the offered service creates a competitive and structured product (Digital Natives 2020). Our ride-sharing start-up could be accessed using the mobile application. Moreover, in some extensions, the customers could select the vehicle they require according to their purpose. The customer’s fear could be resolved by showing the quality of the service. A successful advertising company could help to handle this problem. Gain creators in a start-up are used to design updates and new benefits for the clients. It could be more profound information about the driver, including name, rating, and the vehicle’s characteristics.

The usefulness of the Value Proposition Canvas

The ride-sharing service is not a new idea; however, not been previously implemented in the selected region. Careful analysis of possible strategies related to the ride-sharing service and its application for the customer using the Value Proposition Canvas could be helpful, as the model has many advantages. Starting from its primary function, the structure perfectly illustrates customer needs and expectations regarding the service (Pereira 2021).

From the client profile, the start-up could observe problems faced by the customer and positive outcomes in using the service. Furthermore, the client profile allows the service adaptation according to the customer’s needs and preferences (Pereira 2021). For example, some features could be added to mobile applications after launching them regarding their wants. Comparing value proposition and client profile, the start-up has an opportunity to transform the service or the product based on the market’s requirements (Skowron 2021). Most importantly, this system regulates the use of resources by choosing a more beneficial path both for the company and customers.

What Worked Well Using the Value Proposition Canvas?

The Value Proposition Canvas presented an extensive view and planning strategy regarding customers’ behavior and needs. This model perfectly performs in delivering the image of the customer to the company. At the beginning of the strategic planning, the model of the digital start-up was based only on our understanding and vision of the service. However, implementation of the Value Proposition Canvas helped to understand the needs of the client, suggesting an alteration in the design and functions of the ride-sharing platform. Moreover, the Value Proposition Canvas presented the basic requirements for the vehicles and drivers that should be conducted.

Limitations of the Value Proposition Canvas

Although the Value Proposition Canvas is a structured and effective method of understanding customers’ needs and business planning, it has considerable limitations. The main restriction related to the model is that it could be complicated to interpret the two slides (Erikson, 2018) correctly. The canvas provides extensive data about the customers’ behavior, needs, and desires. Nevertheless, the absence of clear differentiation and the mix of its elements could create chaos. Another limitation of the model is that it takes the customer as the central figure ignoring other factors influencing the start-up (Eriksen, 2018).

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Economic, political, cultural, and technological factors also play an essential role in introducing new services. It does not present a considerable threat to ride-sharing services in the northern part of Canada. The factors mentioned earlier are similar to those in the south, where service is already used. Nevertheless, in some cases, the situation of one part of the country considerably differs from the situation in another. Data collection could also be problematic, as this comprehensive process requires a long time and resources.

Alternative Frameworks or Models

Evaluating all the pros and cons of the Value Proposition Canvas, another business analysis method should be introduced to present the ride-sharing service. The Business Model Canvas is a strategic developing structure that covers various business planning areas in more detail. The Business Model Canvas consists of nine sections, including value propositions, customer segments, channels, customer relationships, revenue streams, cost structure, essential resources, key activities, and partnerships that conduct the service’s feasibility, desirability, and viability (Strategyzer 2021).

The comprehensive system of the model allows for comparison and examine the company’s previous actions, providing a bigger picture of the overall business framework. Moreover, it helps to visualize and plan the company’s further development. The Business Model Canvas has many benefits that make this method a perfect solution for strategic business planning. It emphasizes a shared language providing a practical and straightforward framework (Skowron 2020). In addition, it simplifies the picture by showing new growth opportunities.

The model’s value proposition and customer segments cover the same options as the Value Proposition Canvas. The only difference is that sections are connected to other entities responsible for the finance and production of the product or service. The content of the Value Proposition Canvas could be included in a more complicated Business Model Canvas. It identifies the channels and the customer relationships that could promote service, support customers, and achieve feedback and evaluation (Strategyzer 2021). Moreover, in revenue streams and cost structure, the model collects information about financial operations such as transactions and payments, calculating the cost of other elements.

The application of this model could help identify new opportunities and develop a more detailed strategy. Our digital start-up requires creating and developing a mobile application or website that will operate the whole system. Nevertheless, it would be mistaken to see application development as the only step needed to launch the start-up (Canada Revenue Agency 2019).

Using the Business Model Canvas, it could be seen that ride-sharing companies must analyze the possibilities to introduce promotion channels and client support that will correspond to their needs. Furthermore, examining the financial market and its perspectives would benefit the further development of ride-sharing services. Sticking to the Value Proposition Model at the early stages of the start-up development is possible, as the primary goal could vary according to the client’s wants. Nevertheless, as the service would be established and enter the market, it is critical to obtain a more profound strategy in the ride-sharing service development.

Recommended Models

Despite having some drawbacks associated with strategic planning, both the Value Proposition Canvas and the Business Model Canvas are applicable in developing the business structure of ride-sharing services. Both models could be applied to the project but at different periods. Nevertheless, other methods of business planning could be implemented to improve the already existing model. For example, Strategyzer (2021) offers Business Model Patterns used by different commercial and IT companies such as Tesla, IKEA, Dollar Shave Club, Apple, and Amazon to link with the existing pattern of ride-sharing services.

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Strategic planning related to this start-up demands careful investigations of the local population’s local market and cultural and behavioral features. As the service is adapted for the northern region of Canada, climatic and environmental factors should be considered as well. In presenting the operational structure and customer-orientated program, the stories and strategies of successful ride-sharing companies such as Uber or Lyft should be revised. Moreover, advanced research related to the market and its opportunities could lead to ultimate success.

Bibliography

Blaschke, M; Riss, U. V; Shoshan, I (2017): “Designing business models for the digital economy”. In: Cigaina, M (ed.) Shaping the Digital Enterprise. o.V., pp. 121–136.

Canada Revenue Agency. 2019. “Government of Canada.” Ride Sharing – Canada.ca. / Gouvernement du Canada. Web.

Cutean, A. 2018. “What Ride-Sharing Means for Canada’s Cities.Policy Options. Web.

How to use value proposition canvas: The definitive guide,” Digital Natives, 2020. Web.

Neos Chronos. 2021. Neos Chronos template library: Value Proposition Canvas template. Web.

Pereira, Daniel. 2021. “What Is the Value Proposition Canvas?” Business Model Analyst. Web.

Skowron, Marta (2020): “Lean canvas vs business model canvas: which should you choose?”. UIG Studio. Web.

Strategyzer. 2021. “Business Models: Toolkit to Design a Disruptive Company.Strategyzer. Web.

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