5.1 Summary & Suggestions
This research attempted to integrate business model canvas (Osterwalder &
Pigneur, 2010), scenario planning, and the conventional prediction model valuation method (Damodaran, 2012) together. Based on the derived results and implications, this research divides its contributions into two categories: Scientific contributions and practical contributions. The scientific contributions are summarized in a paragraph whereas the practical contributions are summarized separately for four scenarios.
Scientific Contributions: Past researches have tried to integrate scenario planning with traditional strategy-decision-making approaches. Yet, no research combined scenario planning with the conventional prediction model valuation method (NPV method). This research looks forward to expanding the scenario planning study’s horizon by its attempt; this research also provided a novel perspective that has not been explored by combining scenario planning and financial modeling/valuation to the original business model canvas, therefore considering time and future uncertainties, and strengthening the cost structure and revenue streams.
Practical Contributions: The practical contributions are based on discussions and implications illustrated in Chapter 4. Explicit suggestions to the target company is identified and illustrated in bullet points. Different scenarios are separately discussed as follows,
Given Company X expanded customer segments and Taiwan’s 3rd party app market’s competition/failure rates are high, Company X would be generating
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significant positive net income and CFOs, and the financial leverage is low. Company X can maintain the same model or Company X could improve by:
1. Invest on the required key resources to gain economies of scale and independence from outsourcing partners.
2. Reduce or eliminate all the expenses that would not contribute to economies of scale and independence from outsourcing partners (Example: Distribution channels).
3. Lift profit margin reasonably.
4. Have their employees sign invention assignment agreements and noncompetition agreements.
5. Search for potential investors.
6. Build Company X’s intellectual property protection & prepare all the necessary due diligences and required documents in order to joint venture with 91APP.
Given Company X expanded customer segments and Taiwan’s 3rd party app market’s competition/failure rates are low, Company X’s SG&A expenses and liabilities are two overwhelming. Company X should:.
1. Invest on the required key resources to gain economies of scale and independence from outsourcing partners.
2. Reduce or eliminate all the expenses that would not contribute to economies of scale and independence from outsourcing partners (Example: Distribution channels).
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3. Lift profit margin reasonably.
4. Have their employees sign invention assignment agreements and noncompetition agreements.
5. Search for potential investors.
6. Build Company X’s intellectual property protection & prepare all the necessary due diligences and required documents in order to joint venture with 91APP.
Given Company X did not expand customer segments and Taiwan’s 3rd party app market’s competition/failure rates are high, Company X would be generating positive net income and CFOs, and the financial leverage is moderate. Company X can maintain the same model or Company X could improve by:
1. Invest more and only in their sales team in the purpose of exploiting clients in the publication industry directly and secretly.
2. Lift profit margin reasonably.
3. Have their employees sign invention assignment agreements and noncompetition agreements.
4. Invest in key resources if financially capable.
5. Search for potential investors.
6. Build Company X’s intellectual property protection & prepare all the necessary due diligences and required documents in order to alliance with 91APP when Company X has exploited enough publication clients someday.
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Given Company X didn’t expand customer segments and Taiwan’s 3rd party app market’s competition/failure rates are low, Company X would be lacking and would not be able to generating enough cash. Company X should:
1. Invest more and only in their sales team in the purpose of exploiting clients in the publication industry directly and secretly.
2. Lift profit margin reasonably.
3. Have their employees sign invention assignment agreements and noncompetition agreements.
4. Search for potential investors.
5. Build Company X’s intellectual property protection & prepare all the necessary due diligences and required documents in order to alliance with 91APP when Company X has exploited enough publication clients someday.
5.2 Limitations
Due to the fact that business model canvases that are prevalently used in the industry have always been evolving or changing. This research chooses Osterwalder
& Pigneur’s (2010) business model canvas to perform qualitative analysis, yet whether this business model canvas would still be legitimate for analysis in the future is still in question.
In reality, venture capitalists tend to value start-up companies using multiples illustrated by Damodaran’s (2012). Due to time limit, this research was not able to perform multiple’s analysis and compare the results.
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Due to limited resources, this research uses the CAPM to serve as the mean-variance model measuring risk. However, if arbitrage pricing model or multifactor model could somehow be used, the research may be more solid.
This research averaged the past ten years’ Taiwan 10-year treasury bond yields to represent this research’s risk free rate, and averaged the past ten years’ excess return spreads between Taiwan Stock Exchange Weighted Index (TAIEX) and the risk free rates to represent this research’s risk premium. If more previous years’ data could be accessed, the valuation would be more precise.
5.3 Recommendations for Future Research
Future researches can value the target company by using multiples and compare the results to those in this research. The comparison of the methods and results can be another thesis to be researched.
As this research is a case analysis and forecasts target company’s future cash flows, future research should see how this target company actually performed and how the facts deviated from this research’s results and why.
Industry most prevalently used business model canvas has always been changing and original business model canvases are always evolving. Therefore, future scholars should also keep updated to the state-to-the-art business model canvases.
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