Saimaa University of Applied Sciences

Business Administration
Master’s Degree
International Business Management

Aarne Kortelainen 1601540

Business Model Study and Evaluation

Case: Fipatek

Thesis 2019
Abstract
Aarne Kortelainen
Business Model Study and evaluation: Case Fipatek, 60 Pages, 2 Appendices
Saimaa University of Applied Sciences
Business Administration Lappeenranta
Master’s Degree Programme in Business Administration
International Business Management
Master´s Thesis 2019
Instructors:
Anu Kurvinen, Senior Lecturer, Saimaa University of Applied Sciences
Pekka Mirola, Project Manager, LUT University
Mika Kainusalmi, Development Manager, LUT University

When launching new products into existing business areas, formulating an ade-
quate business model is vital to success on commercialization process. The pur-
pose of the research was to study and evaluate available business models for
state-of-the-art paperboard packaging solution developed in Lappeenranta Uni-
versity of Technology. The research problem for the study was to determine the
best suitable business models for a solution in packaging industry by following
guidelines of the Blue Ocean strategy. One key aspect for business modelling
was analyzing the business environment by identifying related value chain and
actors.

The research was conducted as a case study by means of qualitative research

method because of its nature to generate deeper understanding of the topic and
tell the researcher how (process) and why (meaning) things happen as they do
(Cooper & Schindler, 2014). Literature review was used to study related topics
and to understand the variables of business modelling. To test the know-how
acquired by literature review, unstructured interviews and observations of the re-
lated business field were conducted at the same time.

The results showed that current business models in food packaging industry are
quite traditional and there could be a market space for innovative business mod-
elling. A key for effective business modelling is carefully considered value prop-
osition for each customer segment.

Keywords: Business Model, Value Chain, Value Proposition

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Table of contents

1 Introduction .................................................................................................. 4
1.1 Purpose of the research, delimitations and theoretical framework ......... 5
1.2 Research methodology .......................................................................... 6
1.3 Structure of the Thesis ........................................................................... 8
1.4 Key terminology ................................................................................... 10
2 Client and the innovated solutions ............................................................. 12
2.1 Press forming ....................................................................................... 13
2.2 Thermoforming .................................................................................... 13
3 Business model formulation ....................................................................... 15
3.1 Business Model ................................................................................... 15
3.2 B2B customers and value proposition.................................................. 17
3.3 Value Chain ......................................................................................... 18
4 Innovating Business Model ........................................................................ 19
4.1 Defining BM ......................................................................................... 20
4.2 Identified BM patterns .......................................................................... 21
4.3 Business Model Innovation .................................................................. 22
5 The Business Model Canvas ..................................................................... 23
5.1 Nine Building Blocks ............................................................................ 24
5.2 Value Proposition Canvas.................................................................... 28
6 A new way to look at business models - The Blue Ocean Strategy ........... 29
6.1 Origin and fundamentals ...................................................................... 29
6.2 Differentiation strategy ......................................................................... 31
6.3 How to reconstruct the market boundaries? ........................................ 32
6.4 Building a new Strategy Canvas .......................................................... 34
7 Conducting the Research .......................................................................... 37
7.1 Questionnaire ...................................................................................... 38
7.2 Interview results ................................................................................... 39
8 Observations.............................................................................................. 42
8.1 Existing suppliers and customers ........................................................ 43
8.2 Value Chain, actors and BM’s in use ................................................... 47
9 Analyses .................................................................................................... 49
9.1 Value Chain opportunities .................................................................... 49
9.2 Value Proposition and Business Model Canvas .................................. 50
10 Conclusions and recommendations ........................................................... 55
List of Tables..................................................................................................... 57
List of Figures ................................................................................................... 58
References........................................................................................................ 59

Appendices
Appendix 1 The 55 identified Business Models
Appendix 2 Questionnaire for un-structured interviews

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1 Introduction

A group of researchers in Lappeenranta University of Technology (LUT) have

developed a state-of-the-art paperboard packaging solution to replace plastics,
or other fossil-based raw materials, in different forms of heat-sealed tray-shaped
packages used in grocery goods. These kinds of trays are used in primary pack-
ages of different kind of daily fresh foods, semi- or fully prepared meals and fro-
zen foods. Currently trays are mainly made of plastic, but the demand for the
environmentally friendly solution is constantly increasing, whereas the paper-
board is renewable, recyclable, and in many ways a sustainable choice as a raw
material (Fipatek, 2017).

The purpose of the research was to study and evaluate available business mod-
els for the innovation. When launching new products into existing business areas,
choosing the correct business model is vital to success on commercialization pro-
cess. According to Csik et al (2014), a company’s long-term competitive success
depends upon its ability to create an innovative business model. They encourage
business strategists to find answers for following questions: How can my com-
pany become a game changer? How can it become a role model for its industry?
How, in a word, do I become a business model innovator?

The topic itself is interesting due the constantly changing business environment
even though the solution is targeted into quite traditional business area. Since
the solution is targeted into highly competed business area, the Blue Ocean strat-
egy was used as a guideline to separate from the others. Packaging industry,
especially in daily groceries has quite large presence in our daily lives and every
effort to reduce the amount of plastic waste is important. Since my previous stud-
ies and working experience are mostly related into Supply Chain Management
and After Sales, I believe that this research improved my vocational competence
on the strategy of Business Administration and Operations.

4
1.1 Purpose of the research, delimitations and theoretical framework

Heat-sealable tray-shaped paperboard packages are not as widely used as plas-

tic ones due the higher price of the raw material and usually more complicated
production process. The state-of-the-art paperboard packaging solutions devel-
oped by LUT consists of two different production methods which can be imple-
mented into existing packaging production facilities. Both the raw materials and
production methods are developed for a smooth implementation to existing pro-
duction lines to achieve cost savings and to ease the investment decision.

The research problem for the study is to determine the best suitable business
models for a new fiber-based packaging solution in packaging industry by follow-
ing guidelines of the Blue Ocean strategy. Purpose of the research is described
on the figure 1.

Figure 1. Theoretical framework (Csik et al, 2014)

The aim of the research is to determine and evaluate available Business Models
for the innovated fiber-based packaging solution on B2B environment in Packag-
ing Industry and, to suggest the best suitable models for the solution. To achieve
the objectives, the theory around the phenomenon, as well as all the aspects for
the following research question, must be carefully studied:

5
 What is/are the best suitable business model/-s available in the pack-
aging industry and how the solution can be implemented?

To find out the answers for the main research question, following investigative
questions about the B2B environment of packaging industry were to be solved:

Which kind of value chain/-s there are and who are the actors?

Which positions are available for the solution in the value chain/-s?

The research is limited into the business area of food packaging industry. Obser-
vations are limited into five to ten biggest companies. Interviews are limited into
five to ten carefully selected key persons in the relevant field. Financial calcula-
tions and monetizing models are excluded from the research due the nature of
the project in question.

1.2 Research methodology

A qualitative research method was used conducting the thesis because of its na-
ture to generate deeper understanding of the topic and to tell the researcher how
(process) and why (meaning) things happen as they do. (Cooper & Schindler,
2014)

As mentioned earlier, the purpose of the research was to determine and to eval-
uate the best available Business Models for the fiber-based packaging innovation
in question, in other words there was a case to be studied. Bryman & Bell (2011)
defines a case to be an object of interest where the researcher aims to provide
in-depth understanding of the chosen phenomenon, such as state-of-the-art fiber-
based packaging innovation in this case. According to Cooper & Schindler (2014)
the objective of the case study, implemented to case in question, is to obtain
multiple perspectives of placement processes to generate higher-value transac-
tions. Several tools, such as Business Model Canvas and Value Proposition Can-
vas, were used to fulfill this part.

Literature review was used as a tool to gather data from recent publications, re-
searches and theories, which were suitable for the case in question, to learn the

6
fundamentals of determination and evaluation of different Business Models. Bry-
man & Bell (2011) points out the importance of reviewing existing literature to
avoid ‘re-inventing the wheel’, and the way for a researcher to demonstrate ability
to engage and understand the work of others in the same business field. Since
the business environment is constantly changing, sources of literature were care-
fully considered to ensure up-to-date knowledge as well as to meet the academic
criteria of the research. Both observations of packaging industry business area,
as well as preparations for interviews were done at the same time with the litera-
ture review.

For acquiring data for analysis and tests according to the theory, two main types
of interview (unstructured and semi-structured) are probably the most widely used
methods in qualitative research (Bryman & Bell, 2011). According to Cooper &
Schindler (2014), the difference between un- and semi-structured interviews are
in preparation of questions. In a semi-structured interview there are a few specific
questions at the beginning, followed by the interviewer’s intuitions whereas at
unstructured interview everything is customized by participant.

To test the data acquired by literature review and observations, unstructured in-
terviews were conducted at the same time during observations. The preliminary
idea was to set up a sort of a mind mapping event between interviewee and in-
terviewer. The questionnaire for unstructured interviews was formed according to
attributes set by the Blue Ocean Strategy, Business Model Canvas and Value
Proposition Canvas.

The theory and the findings of the research were tested and analyzed by means
of the grounded theory, which has been defined as theory that was derived from
data, systematically gathered and analyzed through the research process (Bell &
Bryman, 2011). Since the fiber-based solution is going to be something totally
new on the markets, a natural choice for interpretation of the findings is the
method where the aim is to generate or discover a theory around the phenomena,
as Urquhart explained her findings. (Urquhart, 2013)

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The research process of the thesis is described in figure 2.

Figure 2. Research Process (Clow & Kenneth, 2014)

According to the author’s, the research purpose can be related into understand-
ing of current market situation, opportunities or a certain problem addressed by
firm or brand (Clow & James, 2014).

1.3 Structure of the Thesis

In first chapter, the purpose and background of the thesis is introduced by con-
ducting the problem statement and defining objectives, delimitations and re-
search methods. Client and the solutions are introduced on second chapter.

On chapters three to six, the key theories: Blue Ocean Strategy, Business Model,
Business Model Canvas, Business-To-Business, Commercialization, Value
Chain and Value Proposition Canvas are explained and described as a literature
review by studying recent publications, researches and theory. One of the core
authors of the studied literature was Osterwalder (2010) with associates. Their
models and theories about how to create a value proposition and business mod-
elling were suitable for the study both as a starting point for the interviews as well
as for the analysis of the research. Current publications about the topic, such as

8
Kestävät liiketoimintamallit 2030 (Huiskonen et al 2013), case studies and scien-
tific articles were also studied to widen the perspective.

In the chapters 7 and 8, which are the empirical part of the study, following areas
were studied by interviews and observations: the business environment of food
packaging industry and related value chain, actors, customer types, competing
factors, existing business models and possible business opportunities for the fu-
ture. In both chapters, at first the goals of data collection together with selection
methods are explained, and finally the actual work and findings for analysis are
presented.

In the 9th chapter, all the findings from previous chapters are analyzed and inter-
preted by following principles of grounded theory and constant comparative
method. Corresponding value chain, including the positions for the innovated so-
lutions, are identified both by words and figures. Based on positions on the value
chain, available business models are evaluated by creating a Value Proposition
Canvas and Business Model Canvas for each commercialization option. Strategy
Canvas from Blue Ocean Strategy is used as a guideline for the previous. Finally,
three approaches are recommended for innovated solutions based on the results
of analysis around the theory, observations and interviews.

The thesis is concluded in the 10th chapter by going through the high-lights of the
study and discussing about the most important findings pointed out by the author
of the study.

9
1.4 Key terminology

B2B Business to Business, a situation where

one business makes a commercial transac-
tion with another. (Fill & McKee, 2011)

B2C Business to Consumer, a situation where

commercial transaction is between com-
pany and consumer. (Fill & McKee, 2011)

BM Business Model, a company's plan for how

to generate revenues and make a profit.
(Slávik & Bednár, 2014)

BMC Business Model Canvas, a strategic man-

agement and lean startup template for de-
veloping new or documenting existing busi-
ness models. (Osterwalder & Pigneur,
2010)

BOS Blue Ocean Strategy, a marketing theory

which refers to the company’s creation of a
new, uncontested market space. (Kim &
Mauborgne 2005)

MAP Modified Atmosphere Packaging, a technol-

ogy to extend the shelf life of fresh food
packed to heat-sealable trays. (ScienceDi-
rect, 2019)

Paperboard A thick paper-based material. (ScienceDi-

rect, 2019)

Primary packaging Material that first surrounds the product and

holds it. A last piece between your product
and the end user. (Nefab 2019)

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VC Value Chain, a full range of activities that
businesses go through to bring a product or
service to their customers. (Kluyver, 2017)

VP Value Proposition, a promise of value to be

delivered, communicated, and acknowl-
edged to the customer. (Kluyver, 2017)

VPC Value Proposition Canvas, a visualization

tool for creating value propositions. (Ber-
narda et al, 2014)

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2 The Client and the innovated solutions

The study was conducted for an ongoing research project called Fipatek in LUT
University, where Saimaa University of Applied Sciences (SUAS) has a role on
looking for appropriate business models. The aim of the project is the commer-
cialization of innovated production methods for fiber-based packaging solutions.
The project started at the beginning of September 2017 and is planned to be
concluded in the end of August at 2019. The project is funded by Tekes, the
Finnish Funding Agency for Technology and Innovation. (Fipatek, 2018)

Currently under commercialization process there are two state-of-the-art solu-

tions for production of heat-sealable food-grade trays made of coated paper-
board. One example of suitable paperboards is Trayforma (Stora Enso 2019),
which is a product family offering barrier coating options for different tempera-
tures. Application areas can be tray packages of frozen, cold chain, hot and daily
fresh foods. Main benefits of the material compared to competitors such as plastic
and aluminum is printability, light-weight and reduced carbon footprint because it
is mainly made of renewable fiber-based materials and produced mostly with bi-
oenergy (Print & Media, 2009). Such trays support circular economy by being
recyclable with paper waste. In the following figure 3 there’s an example of printed
and pressed trays. (We are packaging, 2017)

Figure 3: Pressed food trays made of Trayforma. (We are packaging 2017)

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2.1 Press forming

A method based on press forming produce trays made of coated paperboard up

to 70 mm. Press-formed trays are usually produced from prepared tray blank
sheets on a single step process with one stroke (Eskelinen et al 2018). The pro-
cess starts from 1) positioning the blank sheet between moulding tools, 2) then
while blank is hold still against the female tool with rim tool, 3 - 4) the male tool
presses and holds blank against female tool while it is heated to melt coating and
the flange of tray 5) flattened by rim tool before 6) releasing the formed tray. The
final form becomes rigid when the tray is cooled down (Leminen et al, 2013).
Usually trays are pressed beforehand and then loaded and sealed on a different
process.

Figure 4: Press forming of paperboard tray (Leminen et al, 2013)

2.2 Thermoforming

Thermoforming is about shaping thermoplastic sheet into desired form by using

heat and pressure. Usually, the forming process can be divided to vacuum form-
ing where the heated sheet is pulled against the mold by vacuuming air between
the sheet and to pressure forming where the heated sheet is pressed against the
mold with air pressure and vacuuming air between mold and sheet, as shown in
figure 4. (Visualpak, 2019)

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Figure 5: Thermoforming process (Visualpak, 2019)
Thermoforming can also be seen as a packaging process where the trays are
made at the same line where the product is filled and sealed to package. (Scan-
divac 2019)

Figure 6: Thermoforming process (Scandivac, 2019)

As seen in the previous figure 5, packaging material is fed to the production line
from a reel, heated up to forming temperature and then formed with air and vac-
uum. In the next step, trays are loaded and sealed (Scandivac, 2019). According

14
to Kainusalmi (2018), the innovated paperboard thermoforming solution can pro-
duce low trays up to 20mm depth and is targeted into packaging machines where
the package is made at the same line where the product is packed.

3 Business model formulation

To understand the variables effecting to business modelling according to the

case, the concepts such as Business Model (BM), Business to Business (B2B)
customers and Value Proposition (VP) and Value Chain (VC) are studied and
explained first. Then two widely known business modelling methods are intro-
duced and finally the chapter is concluded with introduction to the Blue Ocean
Strategy (BOS) as a solution to differentiate. These theories are chosen and stud-
ied to find suitable tools and know-how for finding answers for the research ques-
tions described earlier. Supporting questions could be for example; which is the
certain industry to fit in, who to focus on and how to make customers happy in a
unique way?

3.1 Business Model

In their article Slávik & Bednár (2014) have concluded that a Business Model “is
a system of resources and activities, which create a value that is useful to the
customer and the sale of this value makes money for the company”. In their study,
they have analyzed business model theories of several authors, including Oster-
walder & Pigneur (2010) who have stated that “a business model describes the
logic of how an organization creates, delivers and control value and how money
are earned in a company. “

BM is literally a company’s “model to do business”, a description about how to

monetize the business idea and make it profitable through operations. A simple
triangle is often used to sketch BM and it starts by first identifying the three qual-
itative components; a value proposition as a base and starting point, all necessary
strategic resources and key assets on the right and all the dynamic capabilities &
processes on the left side to make the idea work. A proper combination of these
components is vital for a successful BM resulting appropriate profit formula in

15
relation to cost structure and revenue stream on the left and right corner of the
following figure 6. (Newth, 2012)

Figure 7. Components of a Business Model (Newth, 2012)

On his book Fundamentals of Global Strategy: A business model approach
(2010), Kluyver offers a more detailed view by adding the global dimensions and
dividing it to four components; The Value Proposition, Market Participation, Value
Chain Infrastructure and Management Model. He describes the business model
as a conceptual framework that summarizes how a company creates, delivers
and extracts value. In other words, the purpose of the business model is to show
who are the company’s customers, and how to reach and relate to them (market
participation), what is offered (value proposition) and how it is created (value
chain infrastructure) and how all operations are organized and managed (man-
agement model). In the following figure 7 these components of BM are shown
with explanations and relations to other dimensions by means of global strategy.
(Kluyver, 2010)

16
Figure 8. Components of a Business Model (Kluyver, 2017)

3.2 B2B customers and value proposition

Since the innovation itself is not targeted to consumers, the customers to focus
on are in the B2B market. The main difference between B2B and business-to-
consumer (B2C) market is on the length of buying process and who is consuming
the offered goods and services. Consumers are usually buying goods and ser-
vices for personal consumption by relatively fast decision whereas B2B buyers
are making purchases for organizations where making the final decision may in-
volve a group of people instead of one. The group involved can be for example
consist of senior management, financial director, purchasing manager, plant en-
gineer, production manager and consultants who all having different criteria. (Fill
& McKee, 2011)

Value proposition (VP) is basically what a company offers to its customers. It

consists of tangible and intangible benefits, goods and services to be offered for
customers in certain segment and it show how the company will differentiate from
its competitors. According to author, VP is a core of company’s BM and it is
shaped according to the current value creation strategy. In the book, three value
creation strategies are introduced, which effect different ways to value proposi-

17
tion; operational excellence, customer intimacy and product leadership. Exam-
ples of drivers and needs effecting to a value proposition by each value strategy
are presented in the figure 8. (Kluyver, 2017)

Figure 9. Choosing a Value Proposition (Kluyver, 2017)

On her article “Inside the mind of the B2B customer”, Ms. Morgan (2018) points
out the importance of approaching B2B buyer similar way as consumer. Accord-
ing to her findings, only 14% of B2B companies are customer-centric, which has
led to a situation where over half of the buyers prefer to search online what they
need instead of by meeting sales persons. Her claim is that since on an emotional
level there is no difference between B2B and B2C buyer, B2B companies should
recognize both rational and emotional factors of target markets and tailor value
propositions accordingly. (Morgan, 2018)

3.3 Value Chain

The concept of Value Chain (VC) was firstly introduced in Porter (1985) in his
book Competitive Advantage. He states that the purpose of the value chain is to
describe on how to increase the value of a product or service in its way through
the supply chain. His model of a company’s VC consists of nine activities, which
are divided into four supporting and five primary activities. Infrastructure, Human
Resource Management, Technology Development and Procurement are the sup-
porting activities to run the company in common. Inbound & outbound logistics,

18
operations, marketing & sales and service are presented as primary activities for
a product or service, as shown in the following picture. (Porter, 1985)

Figure 10. Value Chain (Porter, 1985)

As a component of a BM, VC describes at first which are the internal key re-
sources and capabilities that a company has created to support the value propo-
sition, secondly what is the suitable partner network to be assembled for the cho-
sen business model and finally how all these activities are organized for a coher-
ent value creation and delivery model. Value chains may differ whether they are
on local, national, regional or global markets. (Kluyver, 2017)

In other words, VC can describe product movement in a single company, but it

can be also a group of collaborating companies which are all working together
throughout the lifecycle of a specific product or service. The activities can cover
customer demand analysis, production, distribution, marketing and aftersales
services executed by variety of companies. Actors of the VC can be for example
suppliers, marketing companies, distributors, machinery- and service providers.

4 Innovating Business Model

The authors of The Business Model Navigator have gathered a large know-how
resource to an easy to understand business model innovation process. According
to their findings, 90% of most successful businesses are based on 55 identified
BM patterns (Appendix 1). Many examples of familiar global companies and

19
good descriptions demonstrates the identified patterns well. The idea is to com-
pare them to BM in use and to find new approaches for own operations. (Csik et
al, 2014)

4.1 Defining BM

One approach to understand on how company can create and capture value, is
to define BM by four dimensions; the customers for who we are selling, the value
proposition for what is the value created for the customer, the value chain about
how products and services are to be delivered and the profit mechanism why the
model is profitable. (Csik et al, 2014)

Figure 11. Business Model Innovation (Csik et al, 2014)

As seen in the simplified diagram of a business model innovation on figure 11,
customers are in the center of every business. The relevant customer segments
are to be identified to ensure correct addressing of products and services, offer-
ings. The next step, value proposition is about defining what are the problems or
needs that company’s offerings can solve – the created value for the customer.
Value chain describes all the processes and activities to produce offerings ready
for the delivery. In profit mechanism, the revenue model is defined on how com-
pany can capture value to itself and to be profitable. (Csik et al, 2014)

20
The successful BM requires good understanding of which customer segments
are relevant. In the VP it is described what is done and offered to satisfy the needs
of target customers and on the value chain how those are produced and deliv-
ered. On the revenue model it is explained why the business model is financially
viable. In this approach dynamics of the environment is considered by analyzing
both the important actors such as customers, partners and competitors as well
as influencing factors such as technologies, trends and regulatory changes. (Kohl
et al, 2016)

4.2 Identified BM patterns

The core idea of The Business Model Navigator by Csik et al (2014), is that ac-
cording to authors findings over 90% of existing business models are recombina-
tion’s from the past. They have identified 55 business models, such as Add-on
(Appendix 1) at Ryanair and Cross-selling (Appendix 1) at Ikea, which are widely
used and encourage companies to use them as a tool kit while innovating new
business models. All the identified models are described by four dimensions as
shown in the previous chapter to make it easy to compare them to the company’s
current business model, defined with the same principle. The big differences be-
tween the models are on which of the dimensions are highlighted. In the following
figure 12 there is a simplified example of differences between Add-on and Cross-
selling BM patterns by Ryanair and Ikea for consumers.

Figure 12. Add-on vs Cross-selling (Csik et al, 2014)

21
Ryanair’s Add-on BM pattern starts with a low-cost basic product which can be
tailored with a numerous amount of profitable priced extras. Customer benefits
from a cost-effective standard ticket and can customize service according to
one’s needs and wallet. In the Ikea’s Cross-selling BM pattern the idea is to offer
a combination of supplementary low- and high margin products together with their
main offerings, furniture’s. By this the existing resources are optimized. Ikea has
also another BM pattern in use for the same purpose, Self-service (Appendix 1)
where customers are doing part of the work, like finding the products both at the
shop and warehouse by selves as well as paying those on the self-service desk.
Added value for the customer is lower price and better offering due to cost sav-
ings in standard routines. (Csik et al, 2014)

4.3 Business Model Innovation

The authors behind the theory believes that tomorrow’s competitive advantage
will be the innovative BM’s instead of innovative products. Their justification for
the assumption is the fact, that many of the today’s successful companies are
selling already well-known products with a new way, just like Netflix reinvented
video rental business by combining several identified patterns through the years:
Digitization, Flat Rate, Long Tail and Subscription (Appendix 1). (Csik et al, 2014)

As noticed in the previous example, the idea is not only to identify and use only
one of the fifty-five BM’s, but instead to construct new success through creative
imitation and re-combination. According to authors (Csik et al 2014), understand-
ing fully the existing models is the key for transferring successful patterns to own
industry. Following figure 12 illustrates the process of the method.

22
Figure 13. Business model innovation process (Csik et al, 2014)
Kohl et al (2016) explained that the Business Model Navigator innovation ap-
proach, shown in figure 12, is a consist of four phases. The process will start form
the initiation phase where the current business model is described in a triangle
by four dimensions according to the method. The idea is to identify all the weak-
nesses and deviations of the current model as a foundation for innovation. In the
ideation phase, five to eight of the identified 55 BM patterns (Appendix 1) are
applied to the existing model according either by similarity-, or confrontation prin-
ciple. Suitable ideas are then transferred to a new coherent business models in
the integration phase by considering the internal requirements and external envi-
ronment of the organization. Finally, after testing prototypes at a small scale the
new business models can be implemented and measured by the defined SMART
objectives (specific, measurable, achievable, relevant and time bound).

5 The Business Model Canvas

In 2010 Alexander Osterwalder and Yves Pigneur (2010) introduced a new visual
method to describe, challenge, design and invent BM’s in a systematic way. They
named it Business Model Canvas (BMC), which consists of nine building blocks
in a table format canvas to show visually how a company intends to make money.
According to Bednar & Slavik findings (2014), “BMC is a powerful visualization
tool and clearly shows all the components and their interconnections”.

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5.1 Nine Building Blocks

According to the authors (Osterwalder & Pigneur, 2010), the first five blocks on
the right side of the BMC, shown in figure 13, are about to answer for questions
for whom and what is offered to create and deliver value, and then how to capture
value for a company itself. The following four blocks from the left side illustrates
how a company can do it and what is needed. Huiskonen et al (2013) described
BMC consisting of four basic elements which will give on answer for what, who,
how and how to gain. These are valuation (value proposition, products & ser-
vices), customer relationship management (customer segments, customer rela-
tionships and channels), organizing operations (key activities, partners and re-
sources), and financial management (cost structure and revenue streams) which
are divided into ten descriptive components.

Figure 14. Business Model Canvas (Osterwalder & Pigneur, 2010)

As it was in the previous method, the Business Model Navigator, also the BMC,
starts from the customers. The first block to fill is the Customer Segments, who
are the clients for products or services by using post-it notes on different colors.
It is about for example are they consumers in a certain geographical location or

24
just companies operating in a specific industry, or even both and several others.
Osterwalder & Pigneur (2010) gives a simple example of two customer segments
for a newspaper, shown in figure 15. Consumers are looking for information and
entertainment whereas marketing companies a way to reach an audience. Huis-
konen et al (2013) combined this block together with customer relationships and
channels under basic element called customer relationship management.

On the second block, Value Propositions, for each customer segment it will be
figured out on how the company’s offerings could solve their problems. Osterwal-
der & Pigneur (2010) explained that it is about how to get the customers jobs
done, pain relieved, or to receive some gains and Huiskonen et al (2013) com-
pleted that it is an answer for why the customers are choosing the company in
question. By referring to previous example shown in figure 15, the marketers get
the job done when a newspaper is publishing their advertisements and the con-
sumers (readers) receive gains by increasing their awareness through written in-
formation. Huiskonen et al (2013) described that the valuation is the core of the
business model canvas and is about what are the solutions (products and ser-
vices) which company offers to create value (value proposition) for the custom-
ers. Bednar & Slavik (2014) point out that the creation of primary value (value
proposition), mission statement and description of core product and services, is
the ground of the business.

The block Channels is the third, where the idea is to discover on how to reach
the customers to offer, sell, deliver and do after-sales (Osterwalder & Pigneur,
2010). Selection of distribution channels can be made between one’s sales net-
work (store, salesman, webstore etc.) or outsourced (indirect) sale (Bednar &
Slavik 2014). In a newspaper example shown on figure 15, it could be currently
for example, a printed or digital copy which are delivered for the readers through
retailers or subscription.

Customer Relationships, as a fourth block, stands for a strategy thinking about

what kind of a relationship each Customer Segment are going to expect and how
those are to be maintained, and how much these are going to cost as well as
these can be integrated with the other blocks of the BMC (Osterwalder & Pigneur

25
2010). Like on example shown on figure 15, there is no direct relationship be-
tween a company and readers, who buy their newspapers from retailers (self-
service) but it can be quite close with the subscribers who may receive travel gift-
cards etc. as being a loyal customer.

On Revenue Streams block it is time to speak about money, on how and what
each of the customer segments are willing to pay for the products and services
(Osterwalder & Pigneur, 2010). What kind of pricing models can be implemented,
perhaps like earlier mentioned subscription (Appendix 1) by a monthly fee or for
example a Cost-per-Click which is one of the pricing models used on digital ad-
vertising.

In the sixth block, all the Key Resources needed for the earlier described blocks
are to be defined. Estimations about what kind of physical, intellectual, human or
financial resources are necessary to put the Business Model into practice (Oster-
walder et al, 2010). These can be for example factories, patents, leading scien-
tists or investors.

The seventh block continues similarly than the previous, by defining all the Key
Activities needed for creation, delivery and capture of value. The authors (Oster-
walder & Pigneur, 2010) have categorized activities into three areas: Production
related on manufacturing firms, Problem solving on consultant type of business
and Platform/Network for a software and e-commerce companies.

On Key Partners, which is the eight block of the BMC, it is time to define which
are the earlier described resources and activities to be acquired for partners in-
stead of making them all by itself (Osterwalder & Pigneur, 2010). These can be
for example a key supplier, service provider or a well-known distribution channel.

The last, but not the least block is about Cost Structure. After defining those three
blocks on the upper left of the BMC, it can be calculated what it is going to cost
and to decide is the model profitable or does some blocks need to be fixed. (Os-
terwalder & Pigneur, 2010)

26
Figure 15. Business Model Canvas based on example of Osterwalder & Pigneur
(2010)
As seen in the first block at figure 15, for a newspaper there can be several cus-
tomer segments (1) which are added with different colors. Filling the BMC is con-
tinued then by defining value propositions (2) for each segment, then channels
(3) on how to deliver value and related customer relationship (4) actions to keep
customers. Related monetizing models, revenue streams (6) on how to capture
value for company are presented on the right down-corner and followed by defin-
ing the resources (6), actions (7) and partners (8) what a company needs to be
able to operate. BMC is concluded by defining the cost structure (9), in other
words how much operations are going to cost.

As seen in the figure 15, BMC is quite effective visual tool to design and evaluate
business models. The authors point out that the idea it is not to just concentrate
on one outcome but instead to design several different versions and then choose
the best option or options. (Osterwalder & Pigneur, 2010)

27
5.2 Value Proposition Canvas

In 2014 Bernarda et al introduced a new visual tool to support the first two blocks
of the BMC. This new tool is called the Value Proposition Canvas (VPC) and its
intention is to visualize, design and test how a company can create value for the
customers. It consists of two three-dimensional part, which are called the Value
Map and Customer Profile. The idea is that the VP is achieved when value map,
shown in figure 16, meets customer profile. (Bernarda et al, 2014)

Figure 16. Value Proposition Canvas (Bernarda et al, 2014)

By starting with the customers, Customer Profile gives an opportunity to define
more detailed Customer Segments by breaking them down into jobs, pains and
gains. According to the authors, one of the common mistakes is to mix several
profiles into same segment. At first the customer’s jobs are listed to understand
one part of the needs. These may be for example functional, social, personal or
emotional and supporting jobs, which customer needs to get done. Such as a car
repair or a delivery service. Then the pains which assumed customer may suffer
as well as the gains which might be required or un- and expected. These can be
some sort of problems and obstacles like too costly services or in the gains some
expected value rise of a property and better quality of living. (Bernarda et al,
2014)

When the Customer Profiles are defined, on the Value Map at first it is time to
make a list about all the products and services a company produce accordingly.

28
For example, a fresh food producer has some good products but no machinery
to pack them according to the healthy regulations. The profiling supplier may have
both machinery and packing service to offer in order to relieve pains and create
gains by solving packing issue and perhaps increasing sales of the food producer
with adequate packing.

6 A new way to look at business models - The Blue Ocean

Strategy

“The Blue Ocean Strategy is about how can a company or an organization both
create and capture uncontested market space that makes the competition irrele-
vant. It is about how can you stop competing and create products and services
as offerings that have no alternatives from the buyer’s point of view.” (Kim &
Mauborgne 2005)

6.1 Origin and fundamentals

The Blue Ocean Strategy (BOS), was introduced in 2005 by Professors W. Chan
Kim and Renee Mauborgne. It is the outcome of their findings for over fifteen
years of researches and analysis in more than thirty industries. While studying
several business strategies by both succeeded and non-succeeded companies,
they divided the imaginary market universe into red and blue oceans. The red
oceans represent existing markets, where boundaries and rules of competition
are well defined whereas the blue oceans represent uncontested market spaces
where it is possible to create and capture new demand. (Kim & Mauborgne, 2015)

In their article “Blue Ocean strategy for microenterprises” Au & Tucker (2018)
described the BOS as a method where companies can explore new markets with
new product offerings and pricing instead of competing directly in the red ocean.
According to their findings, for a microenterprise competition with similar products
and services at price in red ocean can be too challenging. Targeting to different
customer segments in blue ocean can help on creating own competitive ad-
vantage. Some of the differences between red- and blue ocean strategies are
shown on table 1.

29
Table 1. Red Ocean vs Blue Ocean Strategy (Kim & Mauborgne, 2005)

One good (Kim & Mauborgne 2005) example of successfully executed BOS is
the BM approach applied by Cirque de Soleil. Instead of trying to compete in
traditional manner, they started to develop an BM approach where to decrease
costs and increase profits by offering more sophisticated VP for the customers at
the same time. Their approach was about to step out from the traditional world of
Circus entertainment with animals and one well-known lead performer and sev-
eral small characters into more story-telling event, where all the less-known per-
formers are connected into one spectacular show. Csik et al (2014) on the other
hand described this BM pattern as Aikido (Appendix 1), where the product offer-
ing of a company is opposite compared to competition.

Kim & Mauborgne (2015) named this method as Value Innovation, shown on fig-
ure 17, and it being a starting point for the BOS. They point out to the idea of
focusing at creating a leap in value, both for the company and customers, instead
of trying to beat others with similar value propositions. According to their findings,
this new way of thinking makes the competition irrelevant.

30
Figure 17. Value Innovation (Kim & Mauborgne, 2015)

6.2 Differentiation strategy

To achieve better understanding about the method, it is worthwhile to take a

closer look about the key concepts behind it. As mentioned in the previous ex-
ample, the Value Innovation is the first step. The authors have described it by the
sentence “the simultaneous pursuit of differentiation and low cost”. In other
words, to achieve cost savings and create more value for the customer the differ-
entiation is needed to break out the competition.

To develop the Value Innovation, Kim & Mauborgne (2015) created an analytical
tool called the Strategy Canvas, shown on figure 18. It is a graphical canvas
where the offering levels of the industry related competition factors and invest-
ment targets, listed in the horizontal axis, are shown on a vertical axis. Value
curves are presented by connecting the value levels of competing factors sepa-
rately by each company.

31
Figure 18. The Strategy Canvas of Cirque du Soleil (Kim & Mauborgne, 2015)

6.3 How to reconstruct the market boundaries?

The whole idea of the BOS is to concentrate on market areas where the compe-
tition is irrelevant, as the authors have stated. To achieve or create such markets,
the blue oceans, there is a need to remove or reconstruct the existing market
boundaries. These can be, for example, geographical and customer- or industry
related. The differentiation covered in the previous chapter, was the first step and
analyzing the conventional boundaries of competition comes as a natural fol-
lower.

Kim & Mauborgne (2005) created a tool to support their findings and to help busi-
ness model strategists to reconstruct their markets. The authors call it the Six
Path Framework, where they have identified six basic approaches, paths, for the
creation of blue oceans:

Path 1: Look across alternative industries, such as restaurant instead of cin-

ema when the goal is to enjoy a night out. I.e. Cirque du Soleil moved
from traditional circus theme into more theatrical approach.

32
Path 2: Look across strategic groups within industries, such as Mercedes,
BMW and Jaguar are orientated into luxury and some other manu-
facturers into economy vehicles in car industry.

Path 3: Look across the chain of buyers, who are directly or indirectly in-
volved in the buying decision. They can be either purchasers, actual
users or influencers.

Path 4: Look across complementary product and service offerings, such as

an operating system and different kind of software for a computer
user.

Path 5: Look across functional or emotional appeal to buyers, rethinking the

orientation by either removing or adding features for the offering.

Path 6: Look across time, for creating a natural continuum for a widely known
phenomenon with already existing customers. Like Marvel did by de-
veloping from comics into movies.

According to Au & Tucker (2018), these same principles, shown and explained
on table 2 are suitable for small firms, even though the BOS was originally applied
to larger enterprises. When looking across alternative industries, small compa-
nies can first identify the competitors and discover what could be the alternatives
for products and services already existing in this sector? Since strategic groups
are determined by price and performance (Kim & Mauborgne 2005), small com-
panies must define what are the specific customer values and tailor products ac-
cordingly.

Looking across buyer groups the idea is to identify the chain of buyers (actual
users, influencers, intermediate purchasers and regulators) and locate blue
oceans by targeting different buyer groups. In the complementary scope of prod-
ucts and services, a small firm could consider for example on how to increase
their competitive advantage by offering additional services for the customers. The
functional or emotional appeal is about what a buyer receives. Finding balance
between functional and emotional appeal of products and services, such as in-

33
creasing emotional appeal in means of local business support, may lead into cre-
ation of blue ocean. By looking trends which have an impact in the industry across
time can also create blue ocean.

Table 2: The Six path framework explained (Au & Tucker, 2018)

PATH EXPLANATION CONSIDERATIONS

Across alternative Look beyond the current
industry sector and compete within
an outside industry.
Across strategic Strategic groups are
groups determined by price and
performance.
Across buyer groups Purchasers who pay for
the products or services
but may not be the actual
user.
Across complementary Understand how products
scope of products and and services are used
services prior, during, and after
purchases.
Offer products/services that
overlap several industries.
Add on services from
another sector.
Lower prices by removing
features customers do not
value.
Identify the chain of buyers
in an industry. Target
influencers instead of end
users.
Identify constraints, or pain
points customers
experience. Locate the
untapped value.

Across functional or Identify the emotional Balance the functional and

emotional orientation appeal and differentiate it
from the rational appeal.
Across time Look across trends that
are decisive to a business,
irreversible, and have a
clear trajectory.
emotional appeals of your
products or services.
Remove appeals that
customers do not value.
Identify trends in the
industry which are making
an impact.

6.4 Building a new Strategy Canvas

Filling the new canvas starts with identifying the key competing factors and de-
fining the value area for the offering levels. To help the process the authors of
BOS have identified some necessary approaches, such as the Six Path Frame-
work introduced earlier. Then, by analyzing the outcome by means of the Four
Action Frameworks (Kim & Mauborgne 2015), first effort for a new value curve
can be drawn as a new strategic profile.

34
Figure 19. Four Action Frameworks (Kim & Mauborgne 2015)
In the case of Cirque du Soleil, according to the principle of Four Action Frame-
works on the previous figure 19, a following table was identified as a result of their
differentiation strategy and accordingly final decisions are drawn into Strategy
Canvas. Kim & Mauborgne (2005, 37-39) use the name eliminate-reduce-raise-
create grid.

Table 3. Eliminate-reduce-raise-create grid (Kim & Mauborgne 2015)

35
To achieve a deeper understanding on formulating the new Strategy Canvas, the
authors have described it as the four steps of visualizing strategy by putting all
the previous phases into Table 4. (Kim & Mauborgne 2005)

Table 4. The four steps of visualizing strategy (Kim & Mauborgne 2005).

One key tool for creating blue oceans is the identification of a new market space
through three tiers of non-customers, shown in Figure 19. Kim & Mauborgne
(2017) developed this tool for organizations to find new customers and unlock
possible new demand. According to their findings, paying attention to non-cus-
tomers without such of framework can be too overall and potential markets may
not be discovered. The basic idea is that on the first tier of non-customers, all the
current customers, who are using products and services of the related industry
because there is not an alternative, are identified. As per their understanding,
most of the customers belong to this group and are ready to change the supplier
if an alternative could relief their pain points. On the second tier, all the customers
who reject on using products and services of the related industry are identified.
Reasons for rejection may vary through price and means of applicability. Finally,
all the customers who are most unlikely purchasing products and services from
the related industry, are identified on the third tier of noncustomers. (Kim &
Mauborgne 2017)

36
.

Figure 20: Three Tiers of Non-customers (Kim & Mauborgne 2005)

Bruni-Bossio & Sheehan (2015) write about the use of the strategy canvas for
diagnosing and improving value propositions. According to their findings, the
strategy canvas from the authors of BOS is a good visual tool for studying the
competitive landscape of the company. From the horizontal axis, all the main at-
tributes of purchase decisions by target customers can be seen, compared and
prioritized according to strategic decisions. (Bruni-Bossio & Sheehan 2015)

7 Conducting the Research

Conducting interviews was one of the chosen data collection methods for the
research. Interviews were conducted via phone, skype conference and e-mail
since most of the interviewees were located far from Lappeenranta. There were
two professional focus groups which were divided according to the business area
and individual’s area of expertise. The idea was to select interviewees so that half
of them were linked to the packaging industry and the other half were experienced
business developers of varying business areas. Interviewees were mainly located
across Finland expect a couple of international contacts. A questionnaire was
used as a basis for a semi-structured interview to create relaxed and innovative
atmosphere and gain as much information related to the research as possible by
means of a constant comparative method. As it was clear at this point that the
theories and methods created by Osterwalder et al and Kim & Mauborgne were
going to be used to find answers for the research questions, the questionnaire

37
(Appendix 2) for semi-structured interviews was formed accordingly. The goal for
the interviews was to find out all necessary details to find answers for the re-
search questions and to create accordingly Value Proposition Canvas, Business
Model Canvas and Strategy Canvas for both thermo and press forming solutions.

The interviews were started by introducing the purpose of the research and re-
lated innovations in common. It was also pointed out that the idea was to find
answers for questions in perspective of the packaging machinery supplier of the
both related technologies. If necessary, the main differences between the tech-
nologies were explained. While conducting the interviews, some modifications
were made to the original questionnaire to make the structure more simple, the
individual interview event faster and to gain more time for free conversation re-
lated to relevant business area. Since all the interviews were quite unique, it was
not possible to build any statistical tools for interpretation of the collected data,
but every memo had to be processed independently.

The results of the interviews were first used as a guideline for further observations
of the related industry to come, reported in the next chapter, and for further anal-
ysis on finding answers for the research questions and creating canvases men-
tioned earlier.

7.1 Questionnaire

To understand the business environment and value chains around sealable food-
grade trays regardless to used raw materials in common, the first question as a
starting point was “How would you describe the value chains and actors related
to food-grade sealable trays?”. The purpose of this question was also to identify
current actors of value chains and to estimate the possible level of participation
for the innovations.

The next two questions, “Who are the most usual customers of food-grade tray
machinery and what are their expectations for it?” and “What are the most crucial
competing factors between machinery’s raw material in use?”, were about to find
a starting point and example attributes of the current situation for customer pro-
filing and value mapping on Value Proposition Canvas to be created for the both
technologies.

38
The purpose of the fourth question, “What are the most common business models
in use by the packaging machinery suppliers?”, was to find out how the related
packaging machinery is usually sold to the customers in the food industry and are
there any other business models to be expected in the future.

In the fifth question, “Who would be the soon-to-be, refusing and unexplored non-
customers for packaging machinery producing food-grade trays made of renew-
able paperboard material?”, the idea was to explore possible new customers out-
side of the current markets according to the three tiers of the non-customers
method by BOS. Since machinery producing paperboard trays are not widely on
the markets, the first tier was modified into soon-to-be customers. During the con-
versation about this question, were also discussed the possible drivers and com-
peting factors which would help to achieve these customers, the attributes for the
coming Strategy Canvas.

The sixth and seventh questions, “What are the most important channels of seal-
able food-grade tray machinery suppliers?” and “What are the most important
resources, functions and who are the key partners for food-grade tray machinery
supplier?”, were about finding channel attributes of marketing, sales, distribution,
customer relationships and after sales for a BMC to be created for the both inno-
vations.

Interviews were concluded by questions “What else should be noted on market-

ing and business modelling of machinery producing food-grade trays made of
renewable paperboard?” and “Who should be defiantly interviewed about this
matter?” to achieve a wider understanding and some new ideas beyond the ques-
tionnaire.

7.2 Interview results

Almost every interviewee started to describe the value chain as a stranded net-
work due the complexity. There were no significant differences between individ-
uals, it can be said that each interview added one small dimension to the com-
pletion of the value chain. According to the interviewees, the actors of the value
chain/ net of food-grade trays produced both by thermoforming and press form-
ing, are shown in the following figure:

39
Figure 21. The Value Chain and Network of a food-grade tray
The most common customers are also shown in the previous Figure 21, for a
rough split between technologies it can be said that large operators at primary
food production and food industry have thermoforming machines and maybe
even press forming machines in use but usually they buy press formed trays from
a third-party packaging component supplier. Small operators usually do not have
thermoforming machines because of the high prices compared to the turnover,
but they can buy the packaging service from a third-party service provider as well
as the press formed trays and seal them with their own MAP vacuum sealing
machine. Expectations in general were; declaration of conformity on food safety,
material efficiency, small carbon footprint, easy adaption to existing production
line, smooth and safe production, reliability, modularity, good product support,
fast maintenance service and short payback period. These were also considered
as competitive factors. When asking about competing factors of machinery/ tool-
ing between different material usage, price, sustainability, recyclability, printabil-
ity, source reduction and good fit to systems of secondary packaging were added
to the previous list.

40
As for the question about business models, all the interviewees believed that both
thermo and press forming machines as well as related accessory tooling’s are
usually purchased directly. According to them, leasing might also be an option
but not so popular based on their experience.

Overall the interviewees stated that there is a huge demand for products like the
innovation due to the current consumer trends on packaging sustainability. They
assumed that small operators with high ecological values on their mission state-
ment would be the first “soon-to-be customers” and larger industries would follow
while launching a new product or full product line. A proof of the concept would
naturally be required especially in case of large food industry plants. They pointed
out that even though these innovations are most likely sold to machinery suppli-
ers, packaging component and service providers or directly to the food industry,
it is still important to follow consumer trends and find customers by “moving up-
stream”.

One assumption was that the small operators producing vegan food would be
easy to approach since to their clients the price is not such an important issue
compared to sustainability. In their opinion the most “refusing customers” would
be the producers of bulk food products, such as private labelled, where the price
is the most important competitive factor. About “unexplored customers” there
were a couple of suggestions for both thermo and press forming solutions. Due
to the long life-cycle of thermoforming machines one good opportunity could be
the markets of second-hand machines. By offering paperboard tooling to update
existing machines could also help the retailer to sell them faster. On press forming
one approach could be offering the machines for a packaging components and
services providing company that would have a plenty of opportunities with sus-
tainable machinery; small companies producing high quality gourmet products,
food services and on-the-go packages on supermarket service desks for exam-
ple.

Direct contact, professional publications, social media, web pages, food fairs and
other professional channels were considered to be the most important channels
on marketing and sales. It was noted that all channels to raise consumer aware-
ness are also important. At this point, in distribution, a well-known and capable

41
machine supplier or retailer with its own network would be ideal as well as for
customer relationships and aftersales.

Brand owners, R&D, visual design, marketing & sales, material suppliers, ma-
chine manufacturers and possible retailers were mentioned as most important
resources, functions and partners. The interviewees pointed out that when
launching new products to the food industry, the following areas must be carefully
prepared: proof of conformity and related certifications, value proposition, fit for
purpose, network and adequate piloting to ensure a proof of concept.

8 Observations

Another data collection method for the research was on-line observations of the
related packaging industry. The goals of the observations were first to find out
small sampling of the existing offering, suppliers and customers of both thermo
and press forming machineries in Europe. Related tooling and MAP tray sealing
packaging machinery were included, because during the interviews it was con-
firmed that usually press formed trays are purchased separately instead of pro-
ducing, filling and sealing at the same food packaging line. According to the in-
terviews, both thermo and press forming machineries have quite a long lifecycle,
so it was quite logical to find out the markets of second-hand machinery. Espe-
cially on thermoforming machines since the paperboard tooling can be installed
to an existing line and therefore update machinery to produce trays made of pa-
perboard. Similar technologies like the innovation were find out at the same time.

The second goal of the observations was to find out the nature of existing value
chains and actors involved on both thermo and press forming technologies in
Europe by following references and lead from the first goal. The results of the
second part were used to update the value chain/ net, created on the previous
chapter, for both technologies.

The third goal was to find out the most common business models in use for both
technologies by analyzing the offering discovered during the first goal.

42
8.1 Existing suppliers and customers

The following sources were used to find existing the suppliers of thermoforming
and press forming machineries of food-grade trays and related tooling both on
new and second-hand products as well as similar paperboard technologies as
the innovations:

• Europages, which is an international B2B platform and a database of over

2.6 million companies. Thermoforming, food-grade trays and food industry
packaging were used as key words for searches.
• Packaging directory provided by Finnish Packaging Association, which is
an online directory of packaging products sold in Finland.
• Thermoforming industry directory provided by European Thermoforming
Division, which is a division of Society of Plastic Engineers.
• Packaging Europe web sites, which is a platform of news and other re-
sources for packaging professionals, provided by Packaging Europe Ltd.
• Supplier directories provided by retailers of related machines.

Based on this small sampling, the offering of thermoforming machines is quite

large and relatively easy to find. Because the purpose of the findings was to sup-
port the following goals instead of making a complete directory, list of suppliers
to be studied closer was narrowed to eight by choosing companies operating in
different countries in Europe. Selections were made by choosing brands which
sound familiar and they were also based on how informative web pages the com-
pany had. There were no estimations made about the size and market share of
the company. The list of thermoforming machine suppliers included in the re-
search is presented in the following Table 5.

43
Table 5. Selected thermoforming packaging machine suppliers

Company Web pages

First Food Machinery, UK www.firstfoodmachinery.co.uk

GN Thermoforming Equipment www.gnplastics.com

Guelt Packaging, France www.guelt.com

Multivac, multinational www.multivac.com

Proplast Group, multinational www.proplast-group.com

Sealpac Gmbh, Germany www.sealpac.de

SIA Scandivac, Latvia www.scandivac.com

Veripack, Italy www.veripack.com

While studying web pages of selected companies, it was found out that many of
them have a solution in their product range for a thermoforming with related tool-
ing and MAP tray sealers, like GN and Scandivac for example have. On the fol-
lowing page there are a couple of products which Scandivac offers for small-and-
medium sized companies.

44
Figure 22. Thermoformer SC 140 (Scandivac 2018)
In Figure 22 there is an example of a packaging machine where the thermoform-
ing solution is applicable. In the figure there is an example of a MAP sealer for
trays produced with the press forming solution.

Figure 23. Traysealer TSS (Scandivac 2018)

45
Some companies with thermoforming machines and MAP tray sealers provides
also packaging components, like for example Proplast Packaging Group, which
has its own brands for thermoforming machines (Mecapack) and packaging com-
ponents (Nutripack). It was also discovered that many of the companies sell also
second-hand machines under their own brand.

Companies were offering thermoforming machines mainly suitable for plastic as

a raw material, but there was one company, Multivac, that was offering paper-
board-based packaging solutions. According to their web site, they have a pa-
perboard-based solution for both thermo and press formed trays made of card-
board and suitable for both skin and MAP packaging. Their package solutions
looked quite the same as a product of Finnish start-up company Jospak, that is
providing food-grade trays made of cardboard (Packaging Europe, 13 th Decem-
ber 2018). Even the recycling process was quite similar; plastic films both sealing
and next to cardboard tray can be teared off and then all parts of the package
recycled separately depending on the material.

Figure 24. Food-grade tray made of cardboard (Packaging Europe 2018)

With the sources described in the beginning, a plenty of companies offering food-
grade plastic trays and related sealing materials for MAP tray sealers but not any

46
suppliers, expect Multivac and Jospak, providing sealable food-grade paperboard
trays or machines for producing them were found.

Based on observations the customers of the related business field can be divided
into three groups according to their business sectors: food industry, food retailing
and catering services. Some of the typical customers are shown in the following
Table 6 as an example:

Table 6: Typical customers

Company Customer group Web pages

Atria Food industry www.atria.fi

HK Scan Food industry www.hkscan.fi

Sodexo Catering service www.sodexo.com

Rewe Food retailing www.rewe.de

All in all, findings showed that there are plenty of companies providing ther-
moforming machines and packaging components related to food-grade trays
made of plastic. Paperboard trays on the other hand do not have so many oper-
ators, so there can be a lot of business opportunities throughout the food related
business sectors.

8.2 Value Chain, actors and BM’s in use

As it was found out in the previous chapter, a value network is suitable to describe
a value chain together with actors involved due to the complexity of factors influ-
encing the valuation of food-graded packaging products. In the following figure
the value network, described in the previous chapter, is updated and actors rele-
vant to paperboard innovations in question are highlighted.

47
Figure 25. Updated Value Chain and Network
The value chain starts from material suppliers because without suitable materials
trays cannot be formed. Probably they support research and development as well
as marketing and sales to increase demand for their products. Next step, the
machine suppliers of both thermo and press forming machines make the produc-
tion possible and most probably they have an existing retailer and customer net-
work where to offer new paperboard-based products. As noticed during the ob-
servations, earlier identified value chain actors like tooling and packaging suppli-
ers usually can be found inside the same company together with the second-
hand machines. The food industry and brand owners have also a significant role
with their decisions for the types of packages to be used.

Observations confirmed the results from the previous chapter, there were no in-
dications for other than normal direct purchases to be in use. To be sure, it would
require direct contacting to the suppliers and customers.

48
9 Analyses

In this chapter all the theories and findings are combined to answer the remaining
research questions and to give some recommendations for the next steps. An
example of the value chain and actors, which was covered in the previous chap-
ter, will be used as a base for evaluating which positions of the value chain could
be available for the paperboard solutions in question. Available business models
are evaluated by first using strategy canvas as a base for value proposition, then
list of 55 identified BM patterns (Appendix 1) for ideation and finally BMC for put-
ting all together.

9.1 Value Chain opportunities

Referring to Figure 25 shown in the previous chapter, in a thermoforming tooling

solution, participation to the value chain could be between original thermoforming
packaging machine supplier and their existing customers. Customers can be ei-
ther direct end-users of thermoforming machines like Atria and HK Scan or im-
porters/ retailers like Finnvacum Oy and Orat Oy for example. In both cases co-
operation with the original thermoforming machine suppliers is required to assure
a good-fit of the paperboard tooling. In case of selling tooling directly to end-
users, it is necessary to check that there is no danger to weaken the warranty or
maintenance service of existing machines due to unapproved third-party tooling.

In a press forming solution, participation to the value chain could be wider due to
the nature of business around paperboard trays in question. As mentioned in the
beginning, pressed paperboard trays are assumed to be produced beforehand
and then filled and sealed in a separate process. During the interviews it was
discovered that these kinds of trays are usually purchased from a third party in-
stead of investing to a company’s own machinery. Based on these findings and
the fact that there was not much offering of similar products according to the ob-
servations, press forming solutions could be useful for a packaging component
provider as well as companies specialized to MAP tray sealers. Also, the material
supplier and printing service providers could increase their sales by providing ei-
ther press machines together with raw materials or finished trays from printing
service ready to use. In other words, the press forming solution could also be

49
between material, printing and packaging suppliers compared to the thermoform-
ing solution.

9.2 Value Proposition and Business Model Canvas

A method called 3-tiers to non-customers from Blue Ocean Strategy was used
for a rough customer profiling. According to interviewees, small companies with
high ecological values and premium products would be the “soon-to-be-noncus-
tomers” of plastic packages to be focused on first and followed by large food
industries, private labelling companies the “refusing noncustomers” and retailers
of second-hand thermoforming packaging machines the “un-explored noncus-
tomers”.

Since plastic as a raw material of food-graded sealable trays has a long history
and there is a strong network of related thermoforming machines and services, it
is worthwhile to use Strategy Canvas as a guideline for a value proposition. By
following the four steps of the visualizing strategy, at first the competing factors
must be identified for both materials, as taught in the theory of Blue Ocean Strat-
egy. Competing factors identified according to interviews were: carbon footprint,
food safety, good fit, maintenance, material efficiency, modularity, payback pe-
riod, price, printability, product support, recyclability, reliability, safe production,
source reduction and sustainability. Food safety was also left out because the
same regulations are valid for both materials. The list was simplified by combining
sustainability to carbon footprint, reliability and safe production to good fit, and
maintenance to product support. Since paperboard packaging solutions in ques-
tion are relatively new and not commercialized yet, the first parts of visualizing
strategy including “as-is” strategy and customer analysis were not formulated.
The next step according to visualizing strategy was to analyze strategic options
via noncustomer analysis, six-path exploration and four actions framework to
make a eliminate-reduce-raise-create grid.

Price (operational cost) was located to eliminate the section based on assumption
that currently competing with cost per tray is not an option since technology is
quite new and there is no mass production yet. A payback period was assumed
to be reduced since according to materials solutions are accessories to existing

50
machinery. Carbon footprint, good fit (markets), material efficiency and recycla-
bility were considered as factors to be raised because of the non-fossil raw ma-
terial usage. And finally, the modularity, printability, product support and source
reduction as created factors which the industry have not offered yet. The results
are shown in the following Table 7.

Table 7. Eliminate-reduce-raise-create grid based on interviews

In the following figure 26, the results are transferred into a new strategy canvas
to support the creation of value proposition with a clear visual tool.

Figure 26. Strategy Canvas for solutions.

51
According to the previous table and strategy canvas, an example of value prop-
osition, shown in Figure 23, for the food industry in general was gathered. Product
leadership, described in the theory of business modelling in the second chapter
in Figure 6, was chosen to be the strategic focus.

Figure 27. Value Proposition for food industry

First attributes to be added to the right side of the value proposition canvas are
customer needs, the jobs they want to get done. I this case customers want their
food products to be packed and labelled. The next step is to identify the current
pains, e.g. the consumers raising common opinion against plastic packages and
coming compulsory investments to solve it. A customer profile is concluded by
adding the gains customers achieve by choosing the offered product. According
to the findings these could be improved environmental image, visibility, product
leadership in the beginning and source reduction compared to competitive solu-
tions. Offered products together with explanations how the value is delivered for
pains and gains are on the left side of the value proposition canvas. On pains,
the non-fossil-based packages are the relief for customer demand and good fit to
existing machines which can be updated without costly investments. Gains are
created by offering totally new, printable and eco-friendly packages, when mate-
rials and working phases can be reduced from labelling.

BMC, shown in Figure 24, was completed at a general level according to the
findings and value proposition. Most of the attributes fit to both innovated paper-
board solutions in question.

52
Figure 28. Business Model Canvas for solutions.

Because financial calculations are excluded, both value propositioning and busi-
ness modelling for the case are quite general. As it was found out during the
interviews and observations, customers usually buy the machinery for them-
selves either directly from a manufacturer or through a retailer network. Some of
them had heard about leasing but they believed it is not widely in use. In other
words, based on the findings there where only two kind of business models in
use which means that there are plenty of opportunities for new approaches to
create Blue Oceans by offering something totally new. As per understanding the
innovations itself are already a part of blue ocean because being unique solutions
and a potential answer for current market demands. In Table 8 at the following
page, a few of the identified business models are evaluated for the solutions at
the general level.

53
Table 8. Suitable business models based on 55 identified BM patterns
BUSINESS MODEL DESCRIPTION
DIRECT SELLING Direct selling refers to a scenario
whereby a company's products are not
sold through intermediary channels but
are available directly from the manu-
facturer or service provider.
INGREDIENT Ingredient branding describes the spe-
BRANDING cific selection of an ingredient, compo-
nent, and brand originating from a spe-
cific supplier, which will be included in
another product. This product is then
additionally branded and advertised
with the ingredient product, collectively
adding value for the customer. This
projects the positive brand associa-
tions and properties on the product and
can increase the attractiveness of the
end product.
LICENSE Efforts are focused on developing intel-
lectual property that can be licensed to
other manufacturers. This model,
therefore, relies not on the realization
and utilization of knowledge in the form
of products, but attempts to transform
these intangible goods into money.
This allows a company to focus on re-
search and development. It also allows
the provision of knowledge, which
would otherwise be left unused and po-
tentially be valuable to third parties.
PAY PER USE In this model, the actual usage of a ser-
vice or product is metered. The cus-
tomer pays on the basis of what he or
she effectively consumes. The com-
pany is able to attract customers who
wish to benefit from the additional flex-
ibility, which might be priced higher.
RENT INSTEAD OF The customer does not buy a product,
BUY but instead rents it. This lowers the
capital typically needed to gain access
to the product. The company itself ben-
efits from higher profits on each prod-
uct, as it is paid for the duration of the
rental period. Both parties benefit from
higher efficiency in product utilization
as time of non-usage, which unneces-
sarily binds capital, is reduced on each
product.
54
CUSTOMER SEGMENTS
Food industry, machine man-
ufacturer, machine retailer,
second-hand retailer, mate-
rial supplier. Traditional way
of making business.
Gourmet food producers,
as it was mentioned by inter-
viewees, companies with
high ecological values on
their mission statement would
be the first “soon-to-be cus-
tomers”. This model could
work for both ways, either the
content or package being the
factor effecting purchase de-
cisions. Look across emo-
tional appeal, Blue Ocean.
Large machine manufactur-
ers, like it was found during
observations – there where
similarities between Jospak
and Multivac offerings. Also,
this could be a model which
would achieve global mar-
kets easier and eco-friendly
packaging products targeted
into high volume countries.
Primary food production, food
service, gourmet producers
etc. Especially for small com-
panies this model could help
investment decisions by first
trying the solution with re-
duced costs.
Primary food production, food
service, gourmet producers,
material suppliers. Same as
in the previous and material
suppliers could purchase
their own machinery to be
rented for their customers.
10 Conclusions and recommendations

When launching new products into existing business areas, formulating an ade-
quate business model is vital to the success of a commercialization process. The
purpose of the research was to study and evaluate available business models for
state-of-the-art paper-board packaging solution developed at the LUT University.
The research problem for the study was to determine the best suitable business
models for a new fiber-based packaging solution in the packaging industry by
following the guidelines of the Blue Ocean strategy. One key aspect for business
modelling was analyzing the business environment by identifying the related
value chain and actors.

The research was conducted as a case study by means of the qualitative re-
search method because of its nature to generate deeper understanding of the
topic and tell the researcher how (process) and why (meaning) things happen as
they do (Cooper & Schindler, 2014, 167). According to Cooper & Schindler (2014,
165) the objective of the case study, implemented to the case in question, was to
obtain multiple perspectives of placement processes to generate higher-value
transactions. Literature reviews of recent publications, researches and theories
were used to study related topics and to understand the variables effecting to
business modelling. To test the know-how acquired by the literature review, un-
structured interviews and observations of the related business field were con-
ducted at the same time.

The results of the study showed that business modelling with visualization tools
is a good way for formulating business models and to understand related strategic
processes. Customer segmentation gives a starting point to the value proposition
which can be used as a base for business modelling. Interviews and observations
showed that business models in the packaging industry are quite traditional and
there could be room for innovative approaches to achieve market space. Since
financial calculations were limited from the research, examples of both Value
Proposition- and Business Model Canvas are in quite a general level and gives
only a starting point for future strategic formulations. For completing them further
studies are required by persons directly involved in the project to find out all the
potential application areas as well as the financial competing factors.

55
The answer for the main research question, “What are the best suitable business
models available in the packaging industry and how the solution can be imple-
mented?”, based on 55 five identified business models (Appendix 1) are:

- Direct selling, for customers in the food industry, machine manufactures

and retailers, material suppliers etc.
- Ingredient branding, for both high-lighting the content or the ecofriendly
package.
- License, selling the idea and instructions e.g. on the global markets.
- Pay per use, for smaller operators who may not be able to invest in their
own machinery.
- Rent instead of buy, for smaller operators who may not be able to invest
in their own machinery.

Answer to the first investigative research question, “Which kind of value chains
there are and who are the actors?” is: As it was found out during the interviews,
at this case the value chain can be described as a stranded network due to the
complexity. The value chain of the paperboard package starts from the material
supplier and goes through the network of various actors and influencers before
consumer. According to the findings, the actors are material supplier, printing ser-
vice, machine supplier, tooling supplier, packaging supplier, primary food produc-
tion, food industry, logistics, wholesalers and retailers. Influencers can be asso-
ciations, brand owners, certifiers, consumers, design offices, disposal & recycling
and social media.

For the last investigative research question, “Which positions are available for the
solution in the value chains?”, it can be said that: according to the findings, in the
thermoforming tooling solution participation to the value chain could be between
thermoforming packaging machine supplier and their existing customers. In the
press forming solution, participation to the value chain could be expanded to po-
sitions between material, printing and packaging suppliers compared to ther-
moforming solution.

56
List of Tables

Table 1. Red Ocean vs Blue Ocean Strategy (Kim & Mauborgne, 2005) 30
Table 2: The Six path framework explained (Au & Tucker, 2018) 34
Table 3. Eliminate-reduce-raise-create grid (Kim & Mauborgne 2015) 35
Table 4. The four steps of visualizing strategy. (Kim & Mauborgne, 2005) 36
Table 5: Selected thermoforming packaging machine suppliers 44
Table 6: Typical customers 47
Table 7: Eliminate-reduce-raise-create grid based on interviews 51
Table 8: Suitable business models based on 55 identified BM patterns 54

57
List of Figures

Figure 1. Theoretical framework (Csik et al, 2014) 5

Figure 2. Research Process (Clow & Kenneth, 2014) 8
Figure 3: Pressed food trays made of Trayforma. (We are packaging 2017) 12
Figure 4: Press forming of paperboard tray (Leminen et al, 2013) 13
Figure 5: Thermoforming process (Visualpak, 2019) 14
Figure 6: Thermoforming process (Scandivac, 2019) 14
Figure 7. Components of a Business Model (Newth, 2012) 16
Figure 8. Components of a Business Model (Kluyver, 2017) 17
Figure 9. Choosing a Value Proposition (Kluyver, 2017) 18
Figure 10. Value Chain (Michael Porter, 1985) 19
Figure 11. Business Model Innovation (Csik et al, 2014) 20
Figure 12. Add-on vs Cross-selling (Csik et al, 2014) 21
Figure 13. Business model innovation process (Csik et al, 2014) 23
Figure 14. Business Model Canvas (Osterwalder & Pigneur, 2010) 24
Figure 15. Business Model Canvas based on example by Osterwalder & Pigneur
(2010) 27
Figure 16. Value Proposition Canvas (Bernarda et al, 2014) 28
Figure 17. Value Innovation (Kim & Mauborgne, 2015) 31
Figure 18. The Strategy Canvas of Cirque du Soleil (Kim & Mauborgne, 2015) 32
Figure 19. Four Action Frameworks (Kim & Mauborgne, 2015) 35
Figure 20: Three Tiers of Non-customers (Kim & Mauborgne 2005) 37
Figure 21: The Value Chain and Network of a food-grade tray 40
Figure 22: Thermoformer SC 140 (Scandivac 2018) 45
Figure 23: Traysealer TSS (Scandivac 2018) 45
Figure 24: Food-grade tray made of cardboard (Packaging Europe, 2018) 46
Figure 25: Updated Value Chain and Network 48
Figure 26: Strategy Canvas for solutions. 51
Figure 27: Value Proposition for food industry 52
Figure 28: Business Model Canvas for solutions. 53

58
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APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 1 (9)

Name BMc’s* Company examples Description

1 What Ryanair (1985), SAP (1992), The core offering is priced competitively, but
ADD-ON Value Sega (1998) there are numerous extras that drive the final
price up. In the end, the costumer pays more than
he or she initially assumed. Customers benefit
from a variable offer, which they can adapt to their
specific needs.

2 How Amazon Store 1995), Cyber- The focus lies in supporting others to successfully
AFFILIATION Value erotica (1994), CDnow sell products and directly benefit from successful
(1994), Pinterest (2010) transactions. Affiliates usually profit from some
kind of pay-per-sale or pay-per-display compen-
sation. The company, on the other hand, is able
to gain access to a more diverse potential cus-
tomer base without additional active sales or mar-
keting efforts.

3 Who Six Flags (1961), The Body Aikido is a Japanese martial art in which the
AIKIDO What Shop (1976), Swatch (1983), strength of an attacker is used against him or her.
Value Cirque du Soleil (1984), Nin- As a business model, Aikido allows a company to
tendo (2006) offer something diametrically opposed to the im-
age and mindset of the competition. This new
value proposition attracts customers who prefer
ideas or concepts opposed to the mainstream.

4 What eBay (1995), Winebid (1996),
AUCTION Value Priceline (1997), Google
(1998), Elance (2006), Zopa
(2005), MyHammer (2005)
Auctioning means selling a product or service to
the highest bidder. The final price is achieved
when a particular end time of the auction is
reached or when no higher offers are received.
This allows the company to sell at the highest
price acceptable to the customer. The customer
benefits from the opportunity to influence the
price of a product.

5 What Procter & Gamble (1970),
BARTER Value Pepsi (1972), Lufthansa
(1993), Magnolia Hotels
(2007), Pay with a Tweet
(2010)
Barter is a method of exchange in which goods
are given away to customers without the transac-
tion of actual money. In return, they provide
something of value to the sponsoring organisa-
tion. The exchange does not have to show any
direct connection and is valued differently by ach
party.

6 How American Express (1891),
CASH MA- Value Dell (1984), Amazon Store
CHINE (1995), PayPal (1998),
Blacksocks (1999), MyFab,
Groupon (2008)
In the Cash Machine concept, the customer pays
upfront for the products sold to the customer be-
fore the company is able to cover the associated
expenses. This results in increased liquidity
which can be used to amortise debt or to fund in-
vestments in other areas.

7 How Shell (1930), IKEA (1956), In this model, services or products from a for-
CROSS What Tchibo (1973), Aldi (1986), merly excluded industry are added to the offer-
SELLING Value SANIFAIR (2003) ings, thus leveraging existing key skills and re-
sources. In retail especially, companies can eas-
ily provide additional products and offerings that
are not linked to the main industry on which they
were previously focused. Thus, additional reve-
nue can be generated with relatively few changes
to the existing infrastructure and assets, since
more potential customer needs are met.

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 2 (9)

Name BMc’s* Company examples Description

8 How Marillion (1997), Cassava A product, project or entire start-up is financed by

CROWD- Value Films (1998), Diaspora a crowd of investors who wish to support the un-
FUNDING (2010), Brainpool (2011), derlying idea, typically via the Internet. If the criti-
Pebble Technology (2012) cal mass is achieved, the idea will be realized,
and investors receive special benefits, usually
proportionate to the amount of money they pro-
vided.
9 How Threadless (2000), The solution of a task or problem is adopted by
CROWD- Value Procter & Gamble (2001), In- an anonymous crowd, typically via the Internet.
SOURCING noCentive (2001), Cisco Contributors receive a small reward or have the
(2007), chance to win a prize if their solution is chosen for
MyFab (2008) production or sale. Customer interaction and in-
clusion can foster a positive relationship with a
company, and subsequently increase sales and
revenue.

10 What Sperry & Hutchinson Customers are retained, and loyalty assured by
CUSTOMER Value (1897), American Airlines providing value beyond the actual product or ser-
LOYALTY (1981), Safeway Club Card vice itself, i.e., through incentive-based pro-
(1995), Payback (2000) grams. The goal is to increase loyalty by creating
an emotional connection or simply rewarding it
with special offers. Customers are voluntarily
bound to the company, which protects future rev-
enue.

11 What Spiegel Online, WXYC
DIGITIZATION How (1994), Hotmail (1996),
Jones International Univer-
sity (1996), CEWE Color
(1997), SurveyMonkey
(1998), Napster (1999), Wik-
ipedia (2001), Facebook
(2004), Dropbox (2007), Net-
flix (2008), Next Issue Media
(2011)
This pattern relies on the ability to turn existing
products or services into digital variants, and thus
offer advantages over tangible products, e.g.,
easier and faster distribution. Ideally, the digitiza-
tion of a product or service is realized without har-
nessing the value proposition which is offered to
the customer. In other words: efficiency and mul-
tiplication by means of digitization does not re-
duce the perceived customer value.

12 What Vorwerk (1930), Tupperware Direct selling refers to a scenario whereby a com-
DIRECT How (1946), Amway (1959), The pany's products are not sold through intermediary
SELLING Value Body Shop (1976), Dell channels but are available directly from the man-
(1984), Nestle Nespresso ufacturer or service provider. In this way, the
(1986), First Direct (1989), company skips the retail margin, or any additional
Nestlé Special.T (2010), Dol- costs associated with the intermediates. These
lar Shave Club, Nestlé savings can be forwarded to the customer and a
BabyNes (2012) standardized sales experience established. Addi-
tionally, such close contact can improve customer
relationships.
13 What Dell (1984), Asus (2000), Traditional products or services are delivered
E- How Zappos (1999), Amazon through online channels only, thus removing
COMMERCE Value Store (1995), Flyeralarm costs associated with running a physical branch
(2002), Blacksocks (1999), infrastructure. Customers benefit from higher
Dollar Shave Club availability and convenience, while the company
(2012), Winebid (1996), Zopa is able to integrate its sales and distribution with
(2005) other internal processes.

14 What Harley Davidson (1903), The value of a product or service is increased

EXPERIENCE Who IKEA (1956), Trader Joe's with the customer experience offered with it. This
SELLING Value (1958), Starbucks (1971), opens the door for higher customer demand and

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 3 (9)

Name BMc’s* Company examples Description

Swatch (1983), Nestlé Nes- commensurate increase in prices charged. This

presso (1986), Red Bull means that the customer experience must be
(1987), Barnes & Noble adapted accordingly, e.g., by attuning promotion
(1993), Nestlé Special.T or shop fittings.
(2010)

15 What SBB (1898), Buckaroo In this model, a single fixed fee for a product or
FLAT RATE Value Buffet (1946), Sandals service is charged, regardless of actual usage or
Resorts (1981), Netflix time restrictions on it. The user benefits from a
(1999), Next Issue Media simple cost structure while the company benefits
(2011) from a constant revenue stream.

16 What Hapimag (1963), Netjets Fractional ownership describes the sharing of a

FRACTIONAL How (1964), Mobility Carsharing certain asset class amongst a group of owners.
OWNERSHIP Value (1997), écurie25 (2005), Typically, the asset is capital intensive but only
HomeBuy (2009) required on an occasional basis. While the cus-
tomer benefits from the rights as an owner, the
entire capital does not have to be provided alone.

17 What Singer Sewing Machine
FRANCHIS- How (1860), McDonald's (1948),
ING Value Marriott International (1967),
Starbucks (1971), Subway
(1974), Fressnapf (1992),
Naturhouse (1992), McFit
(1997), BackWerk (2001)
The franchisor owns the brand name, products,
and corporate identity, and these are licensed to
independent franchisees who carry the risk of lo-
cal operations. Revenue is generated as part of
the franchisees’ revenue and orders. The fran-
chisees benefit from the usage of well-known
brands, know-how, and support.

18 What Hotmail (1996), Survey- The basic version of an offering is given away for
FREEMIUM Value Monkey (1998), LinkedIn free in the hope of eventually persuading the cus-
(2003), Skype (2003), Spotify tomers to pay for the premium version. The free
(2006), Dropbox (2007) offering is able to attract the highest volume of
customers possible for the company. The gener-
ally smaller volume of paying ‘premium custom-
ers’ generate the revenue, which also cross-fi-
nances the free offering.

19 What Toyota (1975), Zara (1975), This pattern describes the strategy of a company
FROM PUSH How Dell (1984), Geberit (2000) to decentralize and thus add flexibility to the com-
TO- PULL pany's processes in order to be more customer
focused. To quickly and flexibly respond to new
customer needs, any part of the value chain - in-
cluding production or even research and develop-
ment - can be affected.

20 What NetJets (1964), PHH Corpo- Within this model, the availability of a product or
GUARAN- How ration (1986), IBM (1995), service is guaranteed, resulting in almost zero
TEED Value Hilti (2000), MachineryLink downtime. The customer can use the offering as
AVAILABIL- (2000), ABB Turbo Systems required, which minimizes losses resulting from
ITY (2010) downtime. The company uses expertise and
economies of scale to lower operation costs and
achieve these availability levels.

21 What JCDecaux (1964), Sat.1 The logic that the user is responsible for the in-
HIDDEN How (1984), Metro Newspaper come of the business is abandoned. Instead, the
REVENUE Value (1995), Google (1998), Face- main source of revenue comes from a third party,
book (2004), Spotify (2006), which cross-finances whatever free or low-priced
Zattoo (2007) offering attracts the users. A very common case
of this model is financing through advertisement,

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 4 (9)

Name BMc’s* Company examples Description

where attracted customers are of value to the ad-

vertisers who fund the offering. This concept fa-
cilitates the idea of 'separation between revenue
and customer'.

22 What DuPont Teflon (1964), Ingredient branding describes the specific selec-
INGREDIENT How W.L. Gore & Associates tion of an ingredient, component, and brand orig-
BRANDING Value (1976), Intel (1991), Carl inating from a specific supplier, which will be in-
Zeiss (1995), Shimano cluded in another product. This product is then
(1995), Bosch (2000) additionally branded and advertised with the in-
gredient product, collectively adding value for the
customer. This projects the positive brand asso-
ciations and properties on the product and can in-
crease the attractiveness of the end product.

23 What Carnegie Steel (1870), Ford An integrator is in command of the bulk of the
INTEGRATOR How (1908), Zara (1975), Exxon steps in a value-adding process. The control of all
Mobil (1999), BYD Auto resources and capabilities in terms of value crea-
(1995) tion lies with the company. Efficiency gains, econ-
omies of scope, and lower dependencies from
suppliers result in a decrease in costs and can
increase the stability of value creation.

24 How Dennemeyer (1962), Wipro A layer player is a specialized company limited to

LAYER Value Technologies (1980), the provision of one value-adding step for differ-
PLAYER TRUSTe (1997), PayPal ent value chains. This step is typically offered
(1998), Amazon Web Ser- within a variety of independent markets and in-
vices (2002) dustries. The company benefits from economies
of scale and often produces more efficiently. Fur-
ther, the established special expertise can result
in a higher quality process.

25 What Amazon Store (1995), New value is created by collecting customer data
LEVERAGE How Google (1998), Payback and preparing it in beneficial ways for internal us-
CUSTOMER (2000), Facebook (2004), age or interested third-parties. Revenues are
DATA PatientsLikeMe (2004), generated by either selling this data directly to
23andMe (2006), Twitter others or leveraging it for own purposes, i.e., to
(2006), Verizon Communica- increase the effectiveness of advertising.
tions (2011)
26 How BUSCH (1870), IBM (1920), Efforts are focused on developing intellectual
LICENSE Value DIC 2 (1973), ARM (1989), property that can be licensed to other manufac-
Duales System Deutschland turers. This model, therefore, relies not on the re-
(1991), Max Havelaar (1992) alization and utilization of knowledge in the form
of products, but attempts to transform these in-
tangible goods into money. This allows a com-
pany to focus on research and development. It
also allows the provision of knowledge, which
would otherwise be left unused and potentially be
valuable to third parties.

27 What Gillette (1904), Lego
LOCK-IN How (1949), Microsoft (1975),
Value Hewlett-Packard (1984),
Nestlé Nespresso (1986),
Nestlé BabyNes (2012),
Nestlé Special.T (2010)
Customers are locked into a vendor's world of
products and services. Using another vendor is
impossible without incurring substantial switching
costs, and thus protecting the company from los-
ing customers. This lock-in is either generated by
technological mechanisms or substantial interde-
pendencies of products or services.

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 5 (9)

Name BMc’s* Company examples Description

28 How Amazon Store (1995), Instead of concentrating on blockbusters, the

LONG TAIL Value eBay (1995), Netflix
(1999), Apple iPod/ iTunes
(2003), YouTube (2005),
main bulk of revenues is generated through a
'long tail' of niche products. Individually, these
neither demand high volumes, nor allow for a high
margin. If a vast variety of these products are of-
fered in sufficient amounts, the profits from result-
ant small sales can add up to a significant
amount.

29 Who Porsche (1931), Festo Know-how and other available assets existing in
MAKE MORE What Didactic (1970), BASF the company are not only used to build own prod-
OF IT How (1998), Amazon Web ucts, but also offered to other companies. Slack
Value Services (2002), Sennheiser resources, therefore, can be used to create addi-
Sound Academy (2009) tional revenue besides those generated directly
from the core value proposition of the company.

30 What Dell (1984), Levi's (1990), Mi- Customizing products through mass production
MASS Value adidas (2000), once seemed to be an impossible endeavour.
CUSTOMIZA- PersonalNOVEL (2003), The approach of modular products and produc-
TION Factory121 (2006), mymuesli tion systems has enabled the efficient individual-
(2007), My ization of products. As a consequence, individual
Unique Bag (2010) customer needs can be met within mass produc-
tion circumstances and at competitive prices.

31 How Ford (1908), Aldi (1913),
NO FRILLS What McDonald's (1948), South-
Value west Airlines (1971), Aravind
Eye care System (1976), Ac-
cor (1985), McFit (1997),
Dow Corning (2002)
Value creation focuses on what is necessary to
deliver the core value proposition of a product or
service, typically as basic as possible. Cost sav-
ings are shared with the customer, usually result-
ing in a customer base with lower purchasing
power or purchasing willingness.

32 What Valve Corporation In open business models, collaboration with part-

OPEN Who (1998), Abril (2008) ners in the ecosystem becomes a central source
BUSINESS Value of value creation. Companies pursuing an open
MODEL business model actively search for novel ways of
working together with suppliers, customers, or
complementors to open and extend their busi-
ness.

33 Who IBM (1955), Mozilla In software engineering, the source code of a

OPEN What (1992), Red Hat (1993), software product is not kept proprietary but is
SOURCE How mondoBIOTECH (2000), freely accessible for anyone. Generally, this could
Value Wikipedia (2001), Local be applied to any technology details of any prod-
Motors (2008) uct. Others can contribute to the product, but also
use it free as a sole user. Money is typically
earned with services that are complimentary to
the product, such as consulting and support.

34 How Procter & Gamble (1970), Li Within this model, the company's focus is on the
ORCHESTRA- Value & Fung (1971), Nike (1978), core competencies in the value chain. The other
TOR Bharti Airtel (1995) value chain segments are outsourced and ac-
tively coordinated. This allows the company to re-
duce costs and benefit from the suppliers' econo-
mies of scale. Furthermore, the focus on core
competencies can increase performance.

35 What Hot Choice (1988), In this model, the actual usage of a service or
PAY PER How Google (1998), Ally product is metered. The customer pays on the

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 6 (9)

Name BMc’s* Company examples Description

USE Value Financial (2004), Better basis of what he or she effectively consumes. The
Place (2007), Car2Go company is able to attract customers who wish to
(2008) benefit from the additional flexibility, which might
be priced higher.

36 How One World Everbody Eats The buyer pays any desired amount for a given
PAY WHAT Value (2003), NoiseTrade commodity, sometimes even zero. In some
YOU WANT (2006), Radiohead (2007), cases, a minimum floor price may be set, and/or
Humble Bundle (2010), a suggested price may be indicated as guidance
Panera Bread Bakery (2010) for the buyer. The customer is allowed to influ-
ence the price, while the seller benefits from
higher numbers of attracted customers, since in-
dividuals’ willingness to pay is met. Based on the
existence of social norms and morals, this is only
rarely exploited, which makes it suitable to attract
new customers.

37 What eBay (1995), Craigslist
PEER-TO- Value (1996), Napster (1999),
PEER Couchsurfing (2003),
LinkedIn (2003), Skype
(2003), Zopa (2005),
SlideShare (2006), Twitter
(2006), Dropbox (2007),
Airbnb (2008), TaskRabbit
(2008), RelayRides (2010),
Gidsy (2011)
This model is based on a cooperation that spe-
cializes in mediating between individuals belong-
ing to a homogeneous group. It is often abbrevi-
ated as P2P. The company offers a meeting
point, i.e., an online database and communication
service that connects these individuals (these
could include offering personal objects for rent,
providing certain products or services, or the
sharing of information and experiences).

38 What Rolls-Royce (1980), A product's price is not based upon the physical
PERFOR- Value Smartville (1997), BASF value, but on the performance or valuable out-
MANCE- (1998), Xerox (2002) come it delivers in the form of a service. Perfor-
BASED mance based contractors are often strongly inte-
CONTRACT- grated into the value creation process of their
ING customers. Special expertise and economies of
scale result in lower production and maintenance
costs of a product, which can be forwarded to the
customer. Extreme variants of this model are rep-
resented by different operation schemes in which
the product remains the property of the company
and is operated by it.

39 What Standard Oil Company
RAZOR AND How (1880), Gillette (1904),
BLADE Who Hewlett-Packard (1984),
Nestlé Nespresso (1986),
Apple iPod/ iTunes (2003),
Amazon Kindle (2007), Bet-
ter Place (2007), Nestlé Spe-
cial.T (2010), Nestlé
BabyNes (2012)
The basic product is cheap or given away for free.
The consumables that are needed to use or op-
erate it, on the other hand, are expensive and
sold at high margins. The initial product's price
lowers customers’ barriers to purchase, while the
subsequent recurring sales cross-finance it. Usu-
ally, these products are technologically bound to
each other to further enhance this effect.

40 What Saunders System (1916), The customer does not buy a product, but instead
RENT How Xerox (1959), Blockbuster rents it. This lowers the capital typically needed
INSTEAD OF Value (1985), Rent a Bike (1987), to gain access to the product. The company itself
BUY Mobility Carsharing (1997), benefits from higher profits on each product, as it
MachineryLink (2000), CWS- is paid for the duration of the rental period. Both
boco (2001), Luxusbabe parties benefit from higher efficiency in product

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 7 (9)

Name BMc’s* Company examples Description

(2006), Flexpetz (2007), utilization as time of non-usage, which unneces-

Car2Go (2008) sarily binds capital, is reduced on each product.

41 What CDnow (1994), HubPages Revenue sharing refers to firms’ practice of shar-
REVENUE How (2006), Apple iPh- ing revenues with their stakeholders, such as
SHARING Value one/AppStore (2008), complementors or even rivals. Thus, in this busi-
Groupon (2008) ness model, advantageous properties are
merged to create symbiotic effects in which addi-
tional profits are shared with partners participat-
ing in the extended value creation. One party is
able to obtain a share of revenue from another
that benefits from increased value for its cus-
tomer base.

42 What Bayer (1897), Pelikan (1994), This pattern refers to obtaining a competitor's
REVERSE Value Brilliance China Auto (2003), product, taking it apart, and using this information
ENGINEER- Denner (2010) to produce a similar or compatible product. Be-
ING cause no huge investment in research or devel-
opment is necessary, these products can be of-
fered at a lower price than the original product.

43 What Logitech (1981), Haier Simple and inexpensive products, that were de-
REVERSE Value (1999), Nokia (2003), veloped within and for emerging markets, are
INNOVATION Renault (2004), General also sold in industrial countries. The term ‘re-
Electric (2007) verse’ refers to the process by which new prod-
ucts are typically developed in industrial countries
and then adapted to fit emerging market needs.

44 How Aravind Eye Care System The same product or service is provided to ‘the
ROBIN What (1976), One Laptop per Child rich’ at a much higher price than to ‘the poor’.
HOOD (2005), TOMS Shoes (2006), Thus, the main bulk of profits are generated from
Warby Parker (2008) the wealthy customer base. Serving ‘the poor’ is
not profitable per se, but creates economies of
scale, which other providers cannot achieve. Ad-
ditionally, it has a positive effect on the company's
image.

45 What McDonald's (1948), IKEA A part of the value creation is transferred to the
SELF- How (1956), Accor (1985), Mobil- customer in exchange for a lower price of the ser-
SERVICE ity Carsharing (1997), Back- vice or product. This is particularly suited for pro-
Werk (2001), Car2Go (2008) cess steps that add relatively little perceived
value for the customer but incur high costs. Cus-
tomers benefit from efficiency and time savings,
while putting in their own effort. This can also in-
crease efficiency, since in some cases, the cus-
tomer can execute a value adding step more
quickly and in a more target-oriented
manner than the company.

46 Who Tim Hortons (1964), Tchibo Instead of opening new branches, a partner is
SHOP-IN- Value (1987), Deutsche Post chosen whose branches can profit from integrat-
SHOP (1995), Bosch (2000), ing the company's offerings in a way that imitates
MinuteClinic (2000) a small shop within another shop (a win-win situ-
ation). The hosting store can benefit from more
attracted customers and is able to gain constant
revenue from the hosted shop in the form of rent.
The hosted company gains access to cheaper re-
sources such as space,

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 8 (9)

Name BMc’s* Company examples Description

location, or workforce.

47 What Lantal Textiles (1954), Hei-
SOLUTION How delberger Druckmaschinen
PROVIDER (1980), Tetra Pak (1993),
Geek Squad (1994), CWS-
boco (2001), Apple
iPod/iTunes (2003), 3M
Services (2010)
A full-service provider offers total coverage of
products and services in a particular domain, con-
solidated via a single point of contact. Special
know-how is given to the customer in order to in-
crease his or her efficiency and performance. By
becoming a full-service provider, a company can
prevent revenue losses by extending their service
and adding it to the product. Additionally, close
contact with the customer allows great insight into
customer habits and needs which can be used to
improve the products and services.

48 How Blacksocks (1999), Netflix
SUBSCRIP- What (1999), Salesforce
TION (1999), Jamba (2004),
Spotify (2006), Next Issue
Media (2011), Dollar
Shave Club (2012)
The customer pays a regular fee, typically on a
monthly or an annual basis, in order to gain ac-
cess to a product or service. While customers
mostly benefit from lower usage costs and gen-
eral service availability, the company generates a
steadier income stream.

49 What King Kullen Grocery A company sells a large variety of readily availa-
SUPERMAR- Value Company (1930), Merrill ble products and accessories under one roof.
KET Lynch (1930), Toys“R”Us Generally, the assortment of products is large,
(1948), The Home Depot but the prices are kept low. More customers are
(1978), Best Buy (1983), attracted due to the great range on offer, while
Fressnapf (1985), Staples economies of scope yield advantages for the
(1986) company.

50 What Grameen Bank (1983), The product or service offering does not target
TARGET THE How Arvind Mills (1995), the premium customer, but rather, the customer
POOR Value Bharti Airtel (1995), positioned at the base of the pyramid. Customers
Hindustan Unilever with lower purchasing power benefit from afford-
(2000), Tata Nano (2009), able products. The company generates small
Walmart (2012) profits with each product sold but benefits from
the higher sales numbers that usually come with
the scale of the customer base.

51 Who Duales System Deutschland Used products are collected and either sold in
TRASH-TO- What (1991), Freitag lab.ag (1993), other parts of the world or transformed into new
CASH How Greenwire (2001), Emeco products. The profit scheme is essentially based
Value (2010), H&M (2012) on low-to-no purchase prices. Resource costs for
the company are practically eliminated, whilst the
supplier's waste disposal is either provided, or as-
sociated costs are reduced. This also addresses
customers’ potential environmental awareness
ideals.

52 What Diners Club (1950), A two-sided market facilitates interactions be-

TWO-SIDED How JCDecaux (1964), Sat.1
MARKET Value (1984), Amazon Store
(1995), eBay (1995), Metro
Newspaper (1995), Priceline
(1997), Google (1998), Face-
book (2004), MyHammer
(2005), Elance (2006), Zattoo
(2007), Groupon (2008)
tween multiple interdependent groups of custom-
ers. The value of the platform increases as more
groups or as more individual members of each
group are using it. The two sides usually come
from disparate groups, e.g., businesses and pri-
vate interest groups.

* Affected Business Model components

APPENDIX 1 – The 55 Business Model patterns (Csik et al, 2014) 9 (9)

Name BMc’s* Company examples Description

53 What Lamborghini (1962), This pattern describes the strategy of a company

ULTIMATE Value Jumeirah Group (1994), to focus on the upper side of society's pyramid.
LUXURY MirCorp (2000), The World This allows a company to distinguish its products
(2002), Abbot Downing or services greatly from others. High standards of
(2011) quality or exclusive privileges are the main focus
to attract these kinds of customers. The neces-
sary investments for these differentiations are
met by the relatively high prices that can be
achieved - which
usually allow for very high margins.

54 What Spreadshirt (2001), Lulu
USER How (2002), Lego Factory
DESIGNED Value (2005), Amazon Kindle
(2007), Ponoko (2007),
Apple iPhone/AppStore
(2008), Createmytattoo
(2009), Quirky (2009)
Within user manufacturing, a customer is both the
manufacturer and the consumer. As an example,
an online platform provides the customer with the
necessary support in order to design and mer-
chandise the product, e.g., product design soft-
ware, manufacturing services, or an online shop
to sell the product. Thus, the company only sup-
ports the customers in their undertakings and
benefits from their creativity. The customer bene-
fits from the potential to realize entrepreneurial
ideas without having to provide the required infra-
structure. Revenue is then generated as part of
the actual sales.

55 What Foxconn (1974), Richelieu A white label producer allows other companies to
WHITE How Foods (1994), Printing-In-A- distribute its goods under their brands, so that it
LABEL Box (2005) appears as if they are made by them. The same
product or service is often sold by multiple mar-
keters and under different brands. This way, var-
ious customer segments can be satisfied with the
same product.

* Affected Business Model components

Appendix 2 – INTERVIEW QUESTIONNAIRE - Fipatek

1. How would you describe the value chains and actors related to food-grade seal-
able trays?

a) Thermoforming b) Press forming

2. Who are the most usual customers of food-grade tray machinery and what are their
expectations for it?

a) Thermoforming b) Press forming

3. What are the most crucial competing factors between machinery’s raw material in
use?

a) Thermoforming b) Press forming

4. What are the most common business models in use by the packaging machin-ery
suppliers?

a) Thermoforming b) Press forming

5. Who would be the soon-to-be, refusing and unexplored noncustomers for pack-
aging machinery producing food-grade trays made of renewable paperboard
material?

a) Thermoforming b) Press forming

6. What are the most important channels of sealable food-grade tray machinery
suppliers?

a) Thermoforming b) Press forming

7. What are the most important resources, functions and who are the key partners for
food-grade tray machinery supplier?

a) Thermoforming b) Press forming

8. What else should be noted on marketing and business modelling of machinery

producing food-grade trays made of renewable paperboard?

9. Who should be defiantly interviewed about this matter?