Background of Udacity and its mission to democratize education
For a business organisation to function successfully, it is important to organisation and plans the actions in order to achieve the objectives. The business model Canvas is a tool that can be used by a number of organisations of any scale or size to improve or develop (Greenwald, 2012). The elements in the model help in developing a plan for the business. This model is developed by Alexander Osterwalder in the book that he has co-authored with Yves Pigneur, Business Model Generation (Osterwalder & Pigneur, 2010). The business model is planned while initiating the business; this model can be further organized with the help of the model.
Established in 2011, the organisation quickly gained the attention of the present stakeholders and the company achieved a number of objectives in a very less time of operation. An experiment of two individuals in offering online free courses gained momentum more than 160,000 students from more than 190 countries enrolled themselves for the course (Udacity.com, 2018). Sebastian Thrun found an opportunity in the business idea and UDACITY was founded. The company aspires to provide eager learners with opportunity to get as well as provide knowledge (Udacity.com, 2018).
The mission of the organisation was to “democratize education” (Udacity.com, 2018).
Udacity runs on the internet platform and the business model is based on the principle that everyone has right to get education. One of the major aspects of the Business model is incorporation of Innovation in the process of achieving the business objectives (Udacity.com, 2018). The leaders of the company follow transformational leadership style that drives change and encourages innovation (Udacity.com, 2018).
Following are the business model canvas elements explained refer to Appendix 1 for the framework.
These are the suppliers of the business, as the company is a technology based organisation; the company has a number of aspects of technology that are supplied by third parties (Osterwalder & Pigneur, 2013). The hiring partners are some of the significant organisation that hires people with Udacity degree in significant posts. Georgia Institute of Technology and AT&T partners with Udacity in order to offer online masters course on counter science. As the company operates on the innovation model the company has partnered with Baidu to manufacture an innovative self-driving car. Elektrobit is another partner which helps in developing a program for developing self-driving car engineering (Blog.udacity.com, 2018). The company also has developed cources with Google, Facebook, mongoDB, GitHub, Amazon etc. The flying car nanodegree with MIT faculty is oen of the new proposition of the company.
The company offers a number of degrees and also guides a student to understand a subject. The services are segmented and can be customized according to the student’s requirement thus providing an innovation to the field of online education. The company also offers courses for business organisations in order to improve the skills of the employees (Bocken et al., 2014). The company based their marketing on the digital platform from where the idea of the venture was picked up. The industry that the company operates in is massive open online courses (MOOC).
Overview of Udacity’s business model canvas and the nine building blocks
Apart from the services the company has Research and development as well as Marketing aspects as a part of the operations of the business. Manage the content and the courses on a daily basis are part of the operation (Blog.udacity.com, 2018).
The value that drives the organisation is providing high quality education to the people who aspire to learn. The values of the company are built on the aspect of encouraging an individual to create something innovative for the future (Osterwalder et al. 2014). Refer to the other values that the company stands up to in Appendix 1.
The people of Udacity consider the clients to be one of the most significant stakeholders and therefore focus on the customer services. The aim of the business is to develop valuable customer relations so that the clients can refer the services to others who are looking for similar services. The company maintains a close association with the clients and the customers with the help of e-mails and feedbacks (Udacity.com, 2018). The company is also in constant communication with the clients and potential clients with the help of the social media platforms. Clients can contact the customer service operations with the help of mail as well as telecommunication services (Udacity.com, 2018).
The consumer segment of the services offered by the company can be divided in three aspects: recruiters, students and professionals. As discussed the company has a number of organisations that has partnered with Udacity to hire students who have taken degrees from Udacity (Udacity.com, 2018). The students form the major part of the customers, they can avail the custmised services of Udacity ot choose to opt for the free services. Apart from that professional can also enroll in order to develop their skills (Udacity.com, 2018).
The most important resource of the company is the technology that runs the website and the idea of innovation (Osterwalder & Pigneur, 2011). The professional who are associated with the company who offer the course as well as the people who are responsible for running the day to day operations of the business are important resource (Bloomberg.com, 2018). The management and the owners are also important as they are responsible for the ideation and the management of the company (Udacity.com, 2018).
Social media is a large platform for the company to channelize the process of communication. Telecommunication and other digital platform like e-mails are also major channels used by the company. PR is another strategy that the companies have in order to gather attention of potential customers.
The cost of the company is mostly associated with the salaries of the employees associated with the company around 40 percent of the cost is dedicated to the HR. In order to maintain the infrastructure of the business and to further develop the business 50 percent of the cost invested furthermore 10 percent is administrative cost that is required to run the day to day business (Bloomberg.com, 2018).
The revenue by the company are sourced from that the company offers are priced from $399 to $2400. The partnership of the firm with third parties to offer services generates around 20 percent of the revenue for example; the company has 321,153 subscribers in YouTube which contributes to the revenue (YouTube.com, 2018). The turnover of the company in 2017 is $70 million which is expected to rise in the current financial year (Cnbc.com, 2018).
Key relationships across the nine building blocks
The company is built on the internet platform and revolves around the concept of innovation and change. The company uses the channel of promotion in order to reach out to the mentioned customers; the students can easily contact the company regarding their services with the help of the various social media platforms that they use. The revenue of the company is directly related to the ways the resource and capabilities of the company are associated. The company has generated $70 million in the last financial year and the people associated with the business are responsible for the effort (Cnbc.com, 2018). The value proposition of the company drives the mission and help the customers to achieve what they seek form the services. The partners are essential as they provide an accreditation for an online platform which is one of the common issues faced by the MOOC industry. The partners are responsible for generating value as well as create loyal customers (Dudin et al., 2015).
Disruptive innovation is a concept that has been used to describe an idea which is one of a kind in the market which offers an exceptional feature to the idea. Udacity started with an idea of being able to provide people with knowledge. The owners of the company viewed the opportunity the internet had in terms of offering education and setting up an educational institution which is completely based on the digital frame (Cnbc.com, 2018). The company has enrolled around 53,000 students in the nanodegrees which accounts for almost 30 percent or more of the revenue collected annually. Along with that the company has also increase the number of courses to 22, all the courses that the company offer are based on the market research that the company (Cnbc.com, 2018). The rising revenue of the company and the growing popularity is a indication of success of the business model that has been followed by the organisation. The company was listed in LinkedIn’s Top 50 Startups and MIT Technology Review’s Top 50 Smartest Companies of 2017 (Cnbc.com, 2018).
The company had faced a number of successes in the last financial year, however the year ended on a bad note when there was an accident where a number of employees were physical hurt.
The company runs on an online platform which allows the business to face a number of issues such as trust among the consumers, there are always a threat of hacking the system or infecting the infrastructure with malware.
The services of the company are priced on the higher end, though the quality of the service is not compromised but Udacity can come up with courses which are mainstream and should launch them with low price.
Another change that is required is a more personal approach from the customer service; this will help in generation of loyal and advocating customers (Dudin et al. 2016)
7. Conclusion:
From the above discussion it can be concluded that the company has a number of strengths and opportunities in terms of resource and capabilities that the company has as well as the growth opportunity that the industry have, the company can come up with more and more subjects in order to gather more customers. The hiring partners of the company are also a major strength ensuring accreditation for the organisation and its services. The price point of the degrees is the major weakness.
Reference:
Blog.udacity.com. (2018). Partnerships Archives | Udacity. Retrieved from https://blog.udacity.com/category/partnerships
Bocken, N. M., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, 42-56.
Cnbc.com. (2018). 2017 Disruptor 50: No. 10 Udacity. Retrieved from https://www.cnbc.com/2017/05/15/udacity-2017-disruptor-50.html
Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S., & Namitulina, A. (2015). The innovative business model canvas in the system of effective budgeting.
Greenwald, T. (2012). Business Model Canvas: A Simple Tool For Designing Innovative Business Models. Retrieved from https://www.forbes.com/sites/tedgreenwald/2012/01/31/business-model-canvas-a-simple-tool-for-designing-innovative-business-models/#1a38927416a7
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.
Osterwalder, A., & Pigneur, Y. (2011). Aligning profit and purpose through business model innovation. Responsible management practices for the 21st century, 61-75.
Osterwalder, A., & Pigneur, Y. (2013). Designing business models and similar strategic objects: the contribution of IS. Journal of the Association for information systems, 14(5), 237.
Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want. John Wiley & Sons.
Udacity.com. (2018). About us. Retrieved from https://www.udacity.com/us
YouTube.com. (2018). Udacity. Retrieved from https://www.youtube.com/channel/UCBVCi5JbYmfG3q5MEuoWdOw
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