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20170406195955777_1_1.pptxThe Business Model Canvas
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Institution
Introduction
According to Osterwalder & Pigneur (2009) “business model can be defined as the framework that takes a company’s technological characteristics and potentials built on key activities, key resources and key partners as inputs and coverts them through target customer segments, customer relations and markets as a distribution channel into economic outputs by means of value proposition (product or service offering) creation and delivery.”
This definition is the guiding principle of the key activities that are performed to achieve the corporate objectives of Pfizer
Pfizer is considered the world’s largest pharmaceutical company and happiest place to work due to the focus of its management on the activities required to achieve the over $67 billion revenue. One of the ways used by the company to achieve this feat on a annual basis in the past five years is the modeling of it business operations around job satisfaction through innovative policies that led to the creation of a conducive workplace and foster interpersonal relationships.
Questions on Key Activities Performed by a Business
What key activities should a company perform to accomplish its value proposition?
Are its Distribution Channels right and adequate?
How does the company manage its relationships with its Customers?
How does it ensure continuous flow of Revenue
The key activities component of the business model is necessary to determine the value that will be placed in its value propositions for differentiating it from its competitors. It describes the critical things that the company must do to implement its model. The right answers must be given to the question on what must be done to deliver the values proposed to its customers and other stakeholders.
Delivering Value Proposition
Determine the kind of value to be delivered to the customer
Identify the customer’s problems that require solution.
Align products and service offerings to meet the needs of each customer segment.
Consistently satisfy the needs of customers in the segment.
Utilize the information derived from implementing steps 1 to 4 to improve the quality of activities used to deliver value to stakeholders
The key activities performed by Pfizer in delivering the right value to its customers includes the discovery and test of the right solutions that comprise both better medication and a wide range of satellite services such as diagnostics. The overwhelming competition that exists within the pharmaceutical industry makes the alignment of the company’s products and services offerings suitable to meet the various needs of the consumer. Pfizer’s continued investment into R &D that are based on the results of customer survey programs have contributed to its capacity to consistently exceed the expectation of every market segments.
Distribution Channels
Pfizer reaches its customer segments through 90 plants in six continents; over 300 contract manufacturers; 175 distribution centers; over 30,ooo SKUs; 2000 worldwide logistics lanes; 800 unique country-lane pairs; more than 45,000 shipments; and 17,000 freight contract line items (SupplyChainBrain, 2012).
All channel are integrated so as to align with customer routines in a cost efficient manner
The implementation of the Logistics Delivery Platform enable the company to address the challenges of delivering logistics information and monitoring performance presented by the complex nature of its distribution network. This information management system that relies on cloud technology transformed the company’s supply chain network into “device independence” mode (SupplyChainBrain, 2012).
Customer Relationship Management
The implementation of Optima for managing enterprise-wide customer information.
Optima is Pfizer’s internally developed customer relationship management software that catalogues all sales team related data across the enterprise.
Benefits include identification of high-return areas, predict restock levels, market intelligence of competitor’s activities, reduce inventory space, and minimize wastages from damaged or expired goods.
Customer relationship management activities are designed to be proactive in responding to market and customer needs.
The focus of the activities in this segment of the business model of Pfizer is ensure that it remains the best at managing customer accounts and relationships through the cohesion of teamwork and alignment of competencies and skills to accomplish business targets required for growths of the company. The key component of Optima is that it modeled to fit the needs of the various units of the company in their respective markets and customer segment (Chesbrough, 2010).
Revenue Streams
Pfizer’s revenue sources are divided into three segments namely:
Global Innovation Pharmaceutical (GIP).
Global Vaccines, Oncology & Consumer Healthcare (GVOC).
Global Established Pharmaceuticals (GEP).
In fiscal year 2016, GIP segment generated over $25 billion through the rising sales performance of products such as Lyrica, Chantix-Champtix, Xeljanz, and Xalkori. On the other hand, injectable medications has powered the growth recorded in the GEP segment that drove its excellent sales revenue performance to over $20 billion
Integration of Key Activities for Customer Segment
The performance of the company as regards its business model is dependent on the efficiency of performing each of the segments in the key activities. Pfizer’s management has mastered the integration of these tasks and has allocated adequate resources to ensure their implementation and continuous improvements.
To become the top pharmaceutical company in the world, Pfizer recognized that the consistent delivery of value to every customer segment is key to generating revenue from them. Therefore, it has designed its distribution channels in such a manner that its products and service offerings reaches its consumers wherever they are in cost-effective manner.
References
Chesbrough, H. W. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2-3), 354-363
Osterwalder, A., & Pigneur, Y. (2009). Business Model Generation. NJ: John Wiley & Sons.
SupplyChainBrain (2012). Pfizer delivers total logistics, visibility and control. Retrieved from http://www.supplychainbrain.com/content/latest-content/single-article/article/pfizer-delivers-total-logistics-visibility-and-control/
