Strengths and weaknesses of Charles Tyrwhitt’s business model
Pastel Holdings Pty Limited is a general insurance company registered with Australian Securities and Investment Commission having its registered office in North Sydney, New South Wales, Australia (abr.business.gov.au, 2018). The mother company of Pastel Holdings is Arthur J Gallagher & Company and functions under the leadership of Mr Peter Searson, its present chairman and Ms sarah Lyons, its present chief executive. The strength of the company lies in the able leadership of its chairman and present chief executive.
The second strength of the insurance company lies in its product line which allow it to cater to the needs of the both domestic consumers and business consumers. As far as business customers are concerned, it provides services like business solution, insurance products, insurance of liabilities of companies and management of risks faced by its business clients. The personal insurance products comprise of travel insurance, property insurance and financial advice (connectonline.asic.gov.au), Founded in 2014, the financial statements of the general insurance company shows a steady growth in revenue till 2017
II: Description of business model canvas of Pastel Holdings Pty Limited:
The business model of Pastel Holdings Pty Limited stand on the nine black business model (Osterwalder & Pigneur, 2010). The business model consists of nine blacks which are being explained in the subsequent sections.
A. Building blocks
The following is the business model canvas For Pastel Holdings Pty Limited:
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Key Partners: Banks, providers of online payment gateways, companies which promotes its products |
Key Activities: Provision of general insurance and risk management services |
Value proposition: Creating value for business and individual customers |
Customer relationships: Strong relationships by superior products |
Customer segments: Business customers Individual customers |
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Key Resources: Premises, trained staff members, online operation systems, product strategies |
Channels: Branches, channel partners, smaller firms selling its insurance products, banks which sell its products, its official website, agents |
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Cost structure: Fixed cost, variable costs and semi variable costs |
Revenue streams: Income from selling insurance at branch, Outsourcing general insurance products to smaller firms, Selling insurance products online, provisional coverage at extra price or top up, interests gained for late payments of premiums |
1. Customer segments:
The customers segments which the insurance company serves consists of business customers and domestic customers. The business customers comprise of firms of various sizes ranging from small firms to large multinational companies to which the insurance company provide appropriate insurance products. The customer segments which the insurance company serves also consist domestic customers both form middle and upper class (Loewe & Zaccar, 2014).
2. Key Partners
The first block of the business model canvas of Pastel Holdings consists of key partners. The key partners consists of management, employees and the firms which enable Pastel Holdings to carry on its business.
3. Value Proposition:
The official website of the insurance company and its channel partners provides appropriate advices to customers which create value for them. The business organizations can choose the most appropriate insurance packages to insure their loans and assets. The customer care provide guidance to customers like providing them information about the renewal dates and top offers they can avail. The agents and on roll staff provide doorstep advices to the customers. Thus, insurance company create value for customers by serving them efficiently through its key partners (Pang, et al., 2015).
Recommendations for future growth of Charles Tyrwhitt
4. Key Activities:
The next element of the business model canvas consist of key activities of the Pastel Holdings which involves selling of general insurance products like business insurance, liability insurance and risk management to corporate organization. The company sells transport and travel insurance, property insurance and provides financial advices to domestic customers (Murphy, Arenas & Batista, 2015). The company also provides additional insurance coverage in return of a certain amount of extra charge or top ups. It functions both as primary insurance provider and secondary insurer for its business and individual customers. This shows that the general insurance company sells products and provides advices to its customers to create value to them.
5. Customer channels:
The channels which Pastel Holdings Pyty Limited uses to market insurance products consist of its brick-and-mortar offices, its official and its sales staff members. The agents and partner banks also form important components of its value creation channel since they enable the company to sell insurance in areas where it has no branch (Melero, Sese & Verhoef, 2016).
6. Revenue generation streams:
The revenue generation stream, consists of revenue Pastel Holdings generate by selling insurance products its channel partners. Pastel Holdings also generates revenue by increasing coverage of insurance or ‘top ups’ for its customers at extra charges.
7. Cost structure:
The vast network of branches, online services and agents attracts immense costs of operations for Pastel Holdings, its next component in its business model. The company has to pay immense expenditure to run its branches and maintain well trained staff members. The insurance company also spends immense amount of money to maintain its network of agents and banking partners. The corporate taxes and GST which it pays for its revenue generation also form an immense body of expenditure (Mwangi & Murigu, 2015).
8. Key resources:
The key resources of Pastel Holdings include its trained staff teams which provide services to the customers efficiently. The resources also include the assets like the building premises where the company holds offices. The agents also form a important part of the resources of the insurance company because they enable the company to get access to customer bases where it has no office. The key resources of Pastel Holdings also include the software and the official website which enable it to operate and serve the customers (Pang, et al., 2015). The customer data bases, knowledge about the market and the entire process which allow Pastel Holdings serve customers form its key resources.
Introduction to Pastel Holdings Pty Limited’s business model
9. Customer relationships:
The superior insurance products of the insurance company enable it to serve customers and create strong relationship with them (Anderson & Dees, 2017). This also enables the insurance firm to acquire references from its existing customers and also sell more products to them. Thus, strong relationship enables the firm to generate both new and repeat businesses.
B. Interrelationships of nine blocks:
The business model of Pastel Holdings Pty Limited consists nine blocks which are interdependent on each other. They are key partners, key activities, value proposition, customer relationship, customer segments, key resources, channels, revenue streams and cost structure. The key partners consists of stakeholders like banks which enable the insurance company to conduct its business by providing payment gateways.
The key activities of selling insurance products of Pastel Holdings aim to create value for the customer segments and generate revenue (Pedersen, Gwozdz & Hvass, 2018). The business model also shows that Pastel Holdings seek to building strong relations with the customers in order to be able to generate continuous revenue and diversify its costs.
C: Critical success factors:
The critical success factors of Pastel Holdings Pty Limited lie in its strong business model consisting of nine blocks as shown above. The company offers customer intensive products which enables it to earn high revenue (Hellmann & Thiele, 2015. The next success factor lies in its extensive network of agents and channel partners which enable it to get access to a vast customer base.
D: Downsizing risk:
Pastel Holdings uses several strategies to downsize risks it encounters in the competitive market. The firm has immense product line which enables it serve huge customer bases both domestic and industrial. This customer base enables the firm to diversify its risks. For example, if it incurs loss due to fall in the sale of a particular product, it simultaneously gains by sale of other products.
Thus diversifying its market risks. Pastel Holdings in addition to its product strategies, follows an aggressive promotional strategy which enables to counteract the threats it faces from competitors (Murphy, Arenas & Batista, 2015). The insurance company keeps on releasing new insurance products which are more aligned to the needs of the customers.
These products are promoted aggressively both the official website and in print media like magazines and newspapers. This allows the insurance company to attract customers on continuous basis which generates revenue. Moreover, the company maintains strong relationship with its existing customers and serves their new business needs. This allows the insurance company to generate revenue which helps it to downside its business risks by diversifying them over this revenue base (Talonen, Holmlund-Rytkönen & Strandvik, 2018).
Key elements of Pastel Holdings Pty Limited’s business model
Moreover, the company manages its funds and invests in a wide portfolio of assets. This enables it to earn immense interests on its investments and diversify economic risks like fall in the value of AUD. This shows that the insurance company involves in large scale liquidation of funds to downside its risks in encounters both in generating revenue and capital (Andersen, Fusari & Todorov, 2017).
E: Suggested changes in the business model:
The above analysis brings out the following changes which Pastel Holdings can bring about in its business model:
Change 1: Customer segments:
Pastel Holdings should serve life insurance customer base which means it should bring about changes in its present product line which is limited to general insurance. This would enable it to serve more customers and generate higher revenue. This would increase its competitive strength in the insurance market of Australia (Marcos & Coelho, 2017).
Change 2: Channel partners:
The direct impact of inclusion of life insurance in its product line would result in extension of its channel partners. The channel partners of Pastel Holdings would also include life insurance agents and banks selling its life insurance products (Fungá?ová, Weill & Zhou, 2017).
Conclusion:
Thus, it can be concluded from the study that business models are essential weapons which companies use to sustain in the global market. One can point that all the components of the business models are directly dependent of the power of the company to create value for its customers. This has led to formation of an extensive business channel capable of penetrating deep into the markets, even the remote ones. This penetration leads to generation of immense revenue for the insurance company. It is also responsible for the leading position the company holds in the market of Australia.
IV: Recommendations:
The following are the recommendation which can be drawn on the basis of the above discussion:
The insurance company should expand its product line:
Pastel Holdings must expand its product line and expand into the life insurance market as well. This move can be justified because it would boost the revenue generation and market position if the company. Life insurance products would enable the insurance company to gain deeper acess into the domestic customer base and generate far more revenue. This would also boost the competitive position of the company compared to its competitors.
The company must expand its business into foreign market as well-
Critical success factors of Pastel Holdings Pty Limited
Pastel Holdings should expand into foreign market as well and this would be justified because that would boost its revenue generation. This is because the Australian insurance market is very profitable and already has presence of multinational financial institutions like HSBC Bank which are competing for customer base and revenue generation. Thus, in order to counteract this external attack. the insurance company should also expand overseas.
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