Maj Haider Ali Shams

ENTREPRENEURSHIP
MGT - 271
SEQUENCE– CLO 1

 ENTREPRENEUR STORY
 BUSINESS MODELS
 TYPES OF BUSINESS MODEL
 FORMULATING STRATEGY- PORTER’S MODEL
 PRODUCT LINE STRATEGIES
SHAN FOODS
SIKANDAR SULTAN, SHAN FOODS
SIKANDAR SULTAN – SHAN FOODS

 Sikandar Sultan founder of Shan Foods Limited was born in

Pakistan. He got his early education from local schools and for
higher education he went to St. Patrick’s College and Institute
of Business Administration.

 His entrepreneurial skills made him think of the potential of

spices in the country and its importance outside of the country.

 He launched a company in 1981. His company manufactured

simple and recipe-mix spices. After some time when this idea
became successful, he decided to convert that spices national
heritage into a complete enterprise of food.
SIKANDAR SULTAN – SHAN FOODS

 In 2000, Shan increased its market penetration in the

central and northern regions of Pakistan, and officially
launched in India in 2004 by organizing a cooking
competition in New Delhi.

 By 2008, Shan had become popular within Pakistan due to

its quality brands which were selling at affordable prices
for common people.

 Shan exports its products to over 52 countries, making it

Pakistan's largest exporter of packaged masalas, spices,
food, and rice mixes.
BUSINESS MODEL

MODEL
 A model is a plan or diagram that is used to make or describe
something.

BUSINESS MODEL
 A firm’s business model is its plan or diagram for how it competes,
uses its resources, structures its relationships, interfaces with
customers, and creates value to sustain itself based on the profits it
generates.

 The business model describes how the company is positioned

within its industry's value chain, and how it organizes its relations
with its suppliers, clients, and partners; in order to generate profits.
HOW BUSINESS MODELS EMERGE

 The Value Chain

 The value chain is the string of activities that

moves a product from the raw material stage,
through manufacturing and distribution, and
ultimately to the end user.

 Value chain analysis is also helpful in identifying

opportunities for new businesses and in
understanding how business models emerge.
EATALY BUSINESS MODEL

 TAG LINE
 Welcome to Eataly. The portal into the culture of authentic
Italian cuisine.

 Eataly is a large Italian marketplace comprising a

variety of restaurants, food and beverage counters,
bakery, grocery items, and a cooking school.

 The idea behind their physical locations is to mirror

the marketplaces of Italy; to give customers the
similar sensation of shopping in the street markets.
TYPES OF BUSINESS MODEL

 There are four basic types of business model

that any for-profit business will fall into:

 Manufacturer

 Distributor

 Retailer

 Franchise
MANUFACTURER

 A manufacturer takes raw materials and

creates a product or assembles pre-made
components into a product (E.g car
manufacturers). A manufacturer may sell its
products directly to its customers, or it can
outsource sales to another company.
DISTRIBUTOR

 A distributor is any business that purchases

products directly from a manufacturer for
resale either to retail outlets, or directly to
the public. For example, a car dealership
would purchase vehicles directly from the
manufacturer and sell them to the general
public.
RETAILER

 A retailer purchases product from a

distributor or wholesaler, and then sells those
products to the public. A retailer usually has a
physical location but may also be an online
retailer such as Amazon or Daraz.
FRANCHISE

 A franchise can be a manufacturer, distributor

or retailer, depending on what type of
franchise you purchase. Here the franchisee
adopts the business model of that franchise.
STRUCTURING YOUR BUSINESS MODEL
 Under these four types of business, there are various other ways of
structuring your business model.

 A company that integrates a physical and an online presence. An example

would be a retailer who allows customers to order products online but lets
them pick up their order at their nearest store.

 A company that deals with customers directly via the internet without
engaging an intermediary.

 Direct selling to consumers making use of product demonstrations in the

person’s home, for example. There are several cosmetic and jewelers that
use this model.

 The Freemium business model works by offering a basic Web service or

product, for free, while charging a premium for advanced or special features.
THE FREEMIUM BUSINESS MODEL
 Freemium is a combination of the words free and premium. Companies
following the freemium business model offer the most basic version of
their product or service for free to entice consumers to purchase the
more advanced features, capabilities, or add-ons of the product or
service in the future.

 The freemium business model works for new companies by cultivating

strong relationships with customers. It also works best for internet-
based service companies.

 Freemium business model examples:

 Dropbox
 LinkedIn
 Spotify
 Tinder
THE SUBSCRIPTION BUSINESS MODEL
 The subscription-based model allows companies to charge consumers monthly
or yearly subscription fees to access their product or service.

 This model depends on these consumers continuing to love and utilize the
service. To keep consumers satisfied and paying monthly subscription fees,
companies need to continually improve their products or services to keep up
with changing trends or competitors.

 The subscription-based model is popular with streaming services like Hulu,

Netflix, and Spotify. It is also popular among monthly subscription boxes for
beauty and fashion such as Ipsy or FabFitFun. The ideal profit margin varies
depending on the type of subscription.

 Subscription-based model examples

 Streaming services
 Netflix
 XBox Game Pass
PEER TO PEER BUSINESS MODEL
 In a peer-to-peer business model, a company acts as the go-between businesses
and the customers interested in purchasing their products or services.

 The companies using this model provide the platforms, navigate the regulations,
and set pricing for the products or services.

 A well-known example of this business model would be ride-sharing services such

as Lyft and Uber. These platforms allow people to receive rides to and from
requested destinations by those who apply to be drivers for the service.

 In a peer-to-peer business model, companies connect customers with businesses.

 Peer-to-peer business model examples

 Uber
 Lyft
 Airbnb
 eBay
AD SUPPORTED BUSINESS MODEL
 Advertising is a significant component in why some companies are
incredibly profitable and why some will financially fail.

 Failure to advertise a product or service can lead to people not even

knowing a company exists. The ad-supported business model emphasizes
the importance of advertising and the sales generated from it.

 Popular platforms to advertise products or services include print media,

online media, and television.

 Ad-supported business model examples

 CNN
 Fox News
 ABC
 The Nation (newspaper)
 A Sports
CONSULTING BUSINESS MODEL

 The traditional consulting business model is based on two

principal ideas

 Hiring people (top talent if possible)

 Charging clients, a fee per hour or day for gaining access to

this talent, its expertise and/or manpower

 For example, a client might ask if it would be better to

buy a component or to make it in-house. Alternatively,
the consultant could be asked to advise a CEO on whether
to abandon a line of business, acquire new business
interests, or redefine a marketing strategy.
FORMULATING BUSINESS LEVEL STRATEGY

• PORTER’S COMPETITIVE STRATEGIES

• PRODUCT LINE STRATEGIES
PORTER’S COMPETITIVE STRATEGIES

Small businesses can choose from many

business strategies. Michael Porter defines
three basic strategies.

 Cost Leadership
 Differentiation
 Focus
PORTER’S COMPETITIVE STRATEGIES
1. Cost Leadership Strategy
 A strategy in which a company
strives to be the low-cost
producer relative to its
competitors in the industry.
2. Differentiation
 A strategy in which a company
seeks to build customer loyalty
by positioning its goods or
services in a unique or different
way.
3. Focus
 A strategy in which a
company selects one or
more market segments,
identifies customer’s
special needs, wants
and interests, and
approaches them with a
good or service
designed to excel in
meeting those needs,
wants and interests.
WALMART
 One of the most popular
competitive advantage example
of companies is Walmart, which
sells branded items at low costs.
They rely on a cost leadership
strategy to minimize spending
and offer ‘everyday low prices.

 Low operational costs, low cost

of outsourcing and minimum
spending give them a
competitive advantage in the
industry.
LOUIS VUITTON
 Louis Vuitton creates an
advantage over competitors
using differentiation and
differentiation-cost strategy.
A leader among competitive
advantage examples of
companies in the luxury
market, they sell unique
luxury products at premium
rates that aren’t matched by
the competitors.
APPLE INC.
 Among its competitive
advantages, is its brand equity,
which enables it to compete
with others. The products and
services available from Apple
are known for being of the
highest quality. Since years
ago, the customer trust level
has been maintained. Despite
being very different from rivals
in terms of products, Apple has
always remained innovative.
PRODUCT LINE STRATAGIES

 PRODUCT LINE
 A group of products that are closely related
because they function in a similar manner, are sold
to the same customer groups, are marketed
through the same types of outlet, or fall within
given price ranges.

A product line is a group of similar products that

serve the same customers, are sold through the
same channels, and share common features or price
ranges
PRODUCT LINE DECISIONS

 Line Filling Decisions

 Line Pruning

 Line Stretching Decisions

 Upward stretching
 Downward stretching
 Two way stretching
PRODUCT LINE FILLING

 Adding a new product in the existing product

line to face competition and increase consumer
base. Under product line filling price of the new
product is normally same.

 For example, Suzuki introduced Alto when

Maruti Zen was already available in the same
range.
PRODUCT LINE FILLLING
PRODUCT LINE PRUNING

 Line pruning decisions refer to the removal of

unprofitable product from the product line.

 For example, Pepsi launched Pepsi Gold, but

the product was not successful in the market.
So, after some time it was removed from the
market.
PRODUCT LINE STRETCHING
 “A product line stretching occurs when a company wants
to lengthen its product lines beyond its current line”

 Line stretching implies increasing the length of product

line. When a company lengthens its product line beyond
its current market range (making additional products for
upper- or lower-class users).

 It can take place in 3 directions.

 Downward Stretching
 Upward Stretching
 Two-way Stretching
SHAN FOODS
 PRODUCT LINE STRETCHING
 Downward stretching
 Refers to addition of a new
product into existing
product line but at a less
price
 Upward Stretching
 Addition of a new product in
the current product line but
at a higher price than the
existing one.
 Two-way Stretching
 Addition of product in
product line in both
directions. A low priced and
a high-priced product at the
same time in product line.
UPWARD STRECTHING- HONDA
DOWNWARD STRECTHING
UNILEVER TWO WAY STRETCHING
LINE STRETCHING VS LINE FILLING

 Businesses and companies use both of these techniques to

expand their current or existing product line.

 The difference is that line filling is when you add more

product items within the present range of the product line.
On the other hand, line stretching is when you increase the
current product line beyond the current product range.

 Line filling is when you add more product items to the

existing products to exploit the market gaps and decrease
the competition. It could mean offering different colors and
designs of the same product.