MGMT20143 Business Model Deconstruction for Employment Hero Report Sample

MGMT20143 Business Model Deconstruction for Employment Hero

Task description

• You are required to prepare a business report that deconstructs the business model of a business and identifies the critical success factors that make the business sustainable.

• Your report should demonstrate your critical thinking skills and your ability to   professionally articulate your findings.

• Use the Business Model Canvas proposed by Osterwalder & Pigneur (2010) - https://assets.strategyzer.com/assets/resources/business-model-generation-book-preview-2010.pdf

• Copy of the Business Model Canvas template is given on Moodle under assessment 1.

• An assessment exemplar (average submission) is also given on Moodle.

• To achieve a result that meets your study objectives, please ensure the business report addresses each of the assessment criteria given on the next slide, which are included in the marking rubric.

Solution

1.0 Description of the business

Entrepreneurial development is very important within the economy as it helps to bridge gaps in markets. In many businesses, managing human resources are biggest issues for small and medium businesses, According to MBA Assignment Expert thus, a company named Employment Hero has created a software application that helps to manage different functions related to human resource management. 

1.1 Business 

Employment Hero has embedded functions within the application for managing payrolls, human resources and employee related benefits. It is one of the leading start- ups in Australia which helps small and medium sized business in managing employee related function through automation. The business works through cloud-based platforms and its owned websites (Employment Hero, 2022). 
 

(Source: Employment Hero. (2022)

1.2 Industry 

The company operates in HR industry through its IT product. Through its websites, in- app suggestion and features it also offers its readers and users insights on remote working, workplace culture, managing cultural challenges and others. 

1.3 Markets 

Since, it is software company, market expansion is much easier as users can use the portal or application by just a click. In recent times, it serves both national and international market namely Australia, New Zealand, Malaysia, United Kingdom and Singapore (Employment Hero, 2022). 

1.4 Products and Services 

The company offers SaaS to small and medium organizations in different international market as well. The software provides standard to premium services on which different pricing is charged.  The services are segregated on different functions which are listed below 

• HR- It includes HR standards, premium and platinum 

• Payroll- Payroll standard and premium 

• Bundles- Collection of Different HR functions (Employment Hero, 2022)

• Global teams- Employment Hero will act as (EOR) that professional organization for employment for the business that operate internationally. The company offers free demo and constant online support in case of issues. Pricing is charged per employee records while the services can be customised as per nature, and size of the business. 

2.0 Business Model Deconstruction 

The business model canvas developed by Osterwalder and Pigneur helps starts- ups to understand the business more vividly through allocating ideas in various business components. 

The business model deconstruction is explained below 

Key Partners

One of the founding partners of Employment Hero is Employment Innovations. Employment Innovation is a type of professional network that helps clients to access different HR consultant services and insights (Employment Innovation, 2022).  The company was established in 2014 and has raised many rounds of funding through exchange of equities which increase the partner count like Seek (online job portal), Insight partners (venture capitalist firm that helps tech firms to grow).  

Key Activities 

The key activities of the firm included SaaS that provides human resources functions through different subscriptions and service bundles. The back-office activities include developing promotional campaigns, customer support, upgrading software, website development and others. 

Value Propositions

The value propositions are listed below

• HR functions through simple and affordable software.
• High customization based on size and requirement of the business.
• Different pricing based on features; hence users pay as per function and services within each function 
• 24 x 7-hour customer support 
• Easing performance management (Employment Hero, 2022)
• Providing companies with real- time analytics by just a click
• Ease of managing national and international employees 
• Enabling companies to manage employee well-being, reward and recognition, conducting feedback and satisfaction surveys and others (Marler & Fisher, 2013) 

Customer Relationships

Employment hero maintains customer relation through online customer support, chat bots, free subscriptions (terms and conditions apply), free demos, convenient payments, high customization of features and others. The focus on strengthening customer relations has helped to generate revenue and sustain in extremely competitive market (Sparviero, 2019).  The company is putting efforts for improving customer relationship as it recently purchased a payment company named Key Pay which will help in improving payment options in more secure and efficient way (Busy Continent, 2022). 
Customer segments 

The company targets business- to- business clients that operate in small and medium sectors. The scale of software is limited, hence smaller businesses which operates on 10- 20 employee base are targeted. The pricing strategy of each service is highly dependent on per number employees. It also targets business that operate in international markets with smaller scale of operations. 

Key Resources 

The key Resources for Employer Hero are listed below

• Website and its software application (which is the main product and service)
• Human resources (developers, managers and other staffs)
• Financial resources (investments has helped the company in seeking growth in different nations also)
• Non- human resources like computer systems, office building, and other tangible products 
• Brand name and recognition- intangible resources

Channels 

The company only operates through cloud-based platforms; hence the channel is only one that is through internet. The company sells its software for different operations which could be used through desktop and mobile application as well. 

Cost Structure 

Majority of the cost is incurred on research and development for providing seamless experiences to the users. Also, to keep secured and smooth frequent upgradation becomes important. Thus, companies like Employment Hero will spend more than 15% of the earnings on R&D. Also, less than 5% of the costs will be spent on innovation (Wasserman et al., 2017). The company saved cost on marketing by using its website for marketing, it also makes use google analytics that helps to drive traffic which reducing overall promotional costs. 

Revenue Streams 

The company generates revenue by selling SaaS in different markets. Free demos, two-month free trail and other discount or offers helps to generate sales of its software. 

Interrelationships

The nine blocks of the business model canvas are interrelated. Employment Hero was established in the year 2014 from which it has raised four rounds of investments that has helped the business to maintain customer relationship, providing customised products, & features, research and development of its facilities, paying its developers. The funding helped to buy Key Pal which will help the company to improve revenue streams through developing secured and easy payment options for its clients.  The key partner of the company is employment innovation which has helped the firm to reap market opportunities and other insights. This has also improved value proposition of the firm from 2014 till now (J. Ojasalo, & K.  Ojasalo, 2018). The company has bagged huge investments worth $140 Million which will be used for maintaining costs of research and development, marketing and innovation. The company still saves costs by operating through virtual and digital modes. The investment and efforts on research and development will help in developing compatibility with all platforms that is iOs and other operating systems (Moroni et al., 2015).  Thus, all the activities or functionalities can be considered as combined effort for generating revenues which is currently more that 52.7 million. 

Critical Success Factors 

The critical success factors of the business are its software and customer relation, although the company will face stiff competition from existing firms and new start-ups. In addition, to cope with the competition the company will require increasing its scale of operations by customizing it software as per different sectors. The company lacks focus on any one sector or industry which creates a competition (Oliva & Kotabe, 2019). Also, technology and automation are critical factor for its success, thus, patenting or using trademarks will help from piracy.  In earlier round of investments, it had raised more than $45 million dollars while in its last series it was successful in raising approximately $140 Million which should be used for innovation, marketing and promotion to create a niche market of its products (Shu, 2021). 

Risks (downside)

The most prominent risk for Employment Hero is piracy of its software which can reduce its market opportunity and decline profits. In long- run, the company might face stiff competition in pricing, features and customization as technology will be ever evolving. 
Changes in the business model 

Since, the technology will be ever evolving, thus the cloud-based business model will be profitable. Also, the company is earning enormous profits along with cost reduction in operations, thereby no changes in business model should be made. Although, the company can increase its presence in various digital platforms like social media to improve brand recognition. 

Conclusion and Recommendation 

Employment Hero operates in IT sector for providing HRM related functions to companies working in different sectors. It helps to solve complex tasks of managing payroll, productivity, attendance, employee benefits and other HRM function.

The company is recommended to increase its scale of operations by targeting specific sectors which will also help in coping with the competition in IT HRM field. The company is also recommended to secure is its base code through research and other security measures for reducing the chances of piracy. Also, Employment Hero is suggested to improve its marketing by increasing its presence on social media platforms. 

References

Busy Continent. (2022). Employment Hero gains unicorn status with new funding, buys KeyPay. https://busycontinent.com/employment-hero-gains-unicorn-status-with-new-funding-buys-keypay/ (Accessed 27 March 2022).

Employment Hero. (2022). Employment. Made easy. https://employmenthero.com/ (Accessed 27 March 2022).

Employment Innovation. (2022). Our Partners. https://www.employmentinnovations.com/about-us/our-partners/ (Accessed 27 March 2022).

Marler, J. H., & Fisher, S. L. (2013). An evidence-based review of e-HRM and strategic human resource management. Human resource management review, 23(1), 18-36.

Moroni, I., Arruda, A., & Araujo, K. (2015). The design and technological innovation: how to understand the growth of startups companies in competitive business environment. Procedia Manufacturing, 3, 2199-2204. doi: 10.1016/j.promfg.2015.07.361

Ojasalo, J., & Ojasalo, K. (2018). Service logic business model canvas. Journal of research in marketing and entrepreneurship, 20 (1), pp. 70-98. https://doi.org/10.1108/JRME-06-2016-0015

Oliva, F. L., & Kotabe, M. (2019). Barriers, practices, methods and knowledge management tools in startups. Journal of knowledge management. https://doi.org/10.1108/JKM-06-2018-0361

Shu, G. (2021) .Employment Hero gets $140M AUD Series E led by Insight Partners, grows valuation to $800M AUD https://techcrunch.com/2021/07/20/employment-hero-gets-140m-aud-series-e-led-by-insight-partners-grows-valuation-to-800m-aud/#:~:text=Employment%20Hero%20is%20an%20automated,Asian%20and%20Western%20European%20markets.  (Accessed 27 March 2022).

Sparviero, S. (2019). The case for a socially oriented business model canvas: The social enterprise model canvas. Journal of Social Entrepreneurship, 10(2), 232-251. https://doi.org/10.1080/19420676.2018.1541011

Wasserman, N. (2017). The throne vs. the kingdom: Founder control and value creation in startups. Strategic Management Journal, 38(2), 255-277. DOI: 10.1002/smj.2478