Overall of business model

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1. Introduction

This assignment is based on the scenario of a business consultant. It should provide the overall of business model to client who seeks to establish a business in Sri Lanka. The report is divided into six sections.

In this report, the natures of Sri Lankan businesses are identified into large, medium and small scale of production and the existing economy system is explained. And also, the contribution of public sector to the economy of Sri Lanka and the different market structures are analyzed. The market structure, factors of production and nature of supply and demand which is relevant to the client business are studied and provided. In case of ownership, the different forms of them are introduced into each strengths and weaknesses which are suitable for client business. Beside, a mission, vision and strategy are not only suggested to the client's business but the potential competitors are also identified for client.

Consequently, the final business model is designed and presented with organization chart, structural issues, transforming nature of organization, informal organization issues and policies and rules that would be relevant to the client's business.

2. Sri Lanka's Primary, Secondary and Tertiary sector

The primary sector can be clarified as the products of nature from the natural resources such as the products are obtained from the ocean or the land. Based on this definition the companies can be categorized into Primary sector such company as processing of rubber, tea, coconuts, tobacco and other agricultural commodities. Companies such as Ceylon Graphite Mining Company, Ceylon Tobacco Company and Dilmah Tea manufacture are shown as a good example of Primary sector.

The secondary sector of the economy manufactures finished goods. Which is converts natural resources into products for the marketplace. Activities are related with the secondary sector which includes automobile production, textile production and engineering industries. Companies such as Shan Textile Engineering Works, Mallika Hemachandra Jewellers Ltd and Sri Lanka Rubber Manufacturing Export Co.,Ltd are shown as a good example of secondary sector.

The tertiary sector of the economy is the service industry. This sector provides services to the public and to businesses. Activities are related with this sector which includes retail and wholesale sales, transportation and entertainments. Companies such as Dialog Telekom Ltd, John Keels Holdings Ltd, Grayline Namdo Transportation Lanka (Pvt) Ltd and ODEL (Pvt) Ltd are shown as a good example of tertiary sector.

( Rosenberg M, 2007 ) / ( Wikipedia, Economy of Sri Lanak, 2006 )

2.1 Large, Medium and Small scale of production

The term scale of production refers to the quantity or numbers of a product made. The quantity of products made depends on the needs of the customers. The company chooses the appropriate manufacturing process after making the products.

Its decisions will be influenced by the:

Volume or quantities of products required

Types of materials used to make the products

Type of product being manufactured

Number of employees

For instance, the companies which have more than 250 full-time employees such as Suntel Ltd and Lanka Electricity Company are shown as a good example of large scale of production. Moreover, the companies which are based from 50 up to 250 full-time employees such as Jinasena Pumps Limited, EDS Development (Pvt) Ltd and Tuffline Ltd are shown as a good example of medium scale of production. Besides, the companies which are based less than 50 full-time employees such as Logistics International Ltd and Colombo International Nautical & Engineering College Ltd are shown as a good example of small scale of production.

2.2 Economic system

Economic system is a basic set of rules used to allocate a society's resources to satisfy its citizens' needs. Although every economy fails with scarcity of resources, different economic systems develop and add-up different methods to overcome scarcity and maximize the economy welfare. For instance, the market economy system is the economic system in which the way people spend their money determines which products will be produced and what those products will cost. In addition, it is also referred to as a capitalist economy or private enterprise economic system. Besides, the market economy allocates resources and distribution of goods and services throughout the economy with minimal control and regulation. ( Vashist R, 2008 ) / ( Wikipedia, 2007 )

In addition, the five key elements which distinguish a market economy from other types of economic system are:

  • Private ownership
  • Decentralized decision
  • Self-interest
  • Allocation by price
  • Efficiency is valued

According to the economic system, Sri Lanka is the mixed capitalism in which operation of the free market is influenced to some degree by government involvement. In other word, it is the combine elements of market forces with state intervention and planning and it is also dynamic and constantly changing its structure with varying levels of government intervention and market characteristics. For instance, in the year 2007, they intervened in the import of widely used food items and drugs. Besides, in early 1970s, they intervened in agricultural marketing by offering guaranteed prices to farmers for selected food crops.

( Weliwita. A, Epaarachchi. R, 2003)

2.3 Public and Private sector

The public sector is the part of a national economy owned and controlled by the state. It includes nationalized industries, national and local government services, and public corporations. For instance, rail transport, electricity, gas, water services and telecommunications have all been government monopolies. Furthermore, the public sector can support the market in case of Sri Lankan economy is faced to the economical crisis when the market is affected by unpredictable factors. For example, Ceylon Electricity Board, as a government public sector intends to provide privilege to public society through supplying a proposed low rate of electricity. Whereas, private sector is an economy in which goods and services are produced by individuals and companies as opposed to the government.

Differences between Public and Private sectors

Public Sector

Private Sector


Part of a national economy

Controlled by the state

Goods and services are produced by individual

Companies as opposed to the government

Source of funding

Based on citizens' tax return through government policy

Foreign loan between nations

International organization

Based on sales, services, investment or loans from the nations

Foreign investment

Table1, Public and Private sectors

3. Market structures

Markets can be categorized into different structures depending on the number of competitors, entry and exit barriers and nature of product. The market structures can be categorized under four groups which are perfect competition, monopolistic competition, oligopoly and monopoly. ( Vashist R, 2008 ) / (Fraser.I,Gionea.J,Fraser.S,1999)

Differences between market structures


Perfect competition

Monopolistic competition



Number of suppliers



3 to 6 or 10


Entry and Exit

Free to entry and exit

Barriers to entry


Difficult to enter

Barriers to entry

(very difficult)

Nature of production

Homogenous product

Heterogeneous product

Close substitutes

Only one product



High advertisement



Price determination

Price takers

Limited price control

Interdependent price

Price maker

Examples of Industries in each market structures

Perfect competition

(Fruit and vegetable market)

Monopolistic competition

(Battery, soap and shampoo etc.)


(New paper, Banks and world car industry etc.)


(Tobacco and electricity board etc.)

Examples of

Industries in Sri Lanka

Ceylinco Midigama Fruit Farms (Pvt) Ltd

Sri Lanka Fruit & Vegetable Producers Processors & Exporters Association

BCC Lanka Ltd

Associated Battery Manufacturers (Ceylon) Ltd

Laxapana Batteries Ltd

Sampath Bank Limited

Commercial Bank of Ceylon Ltd

Wijeya newspaper Ltd

Ceylon Tobacco Company Ltd

Ceylon Electricity Board

Examples of

Industries in

South Korea

Seoul Vegetable & Fruit Market Co. Ltd

Kwang Il Rice Processing Complex

Rocket Electric Co. Ltd

Pyung-Hwa Soap Mfg. Co. Ltd

Samsung Electronics co. Ltd

Hyundai Motors co. Ltd

Korea Telecom Corporation

Korea Electric Power Corporation

Table 2, Market structure

3.1Identifying market structure

The market structure which relevant to client's business is a monopolistic competition and it is a type of market structure where a large number of firms produce close but not perfect substitutes. The producers distinguish their output and themselves through product differentiation or geographical fragmentation, Companies such as battery, soap industry, toothpaste and retail clothing industry which is relevant to client's business. Furthermore, when a firm that has many competitors or promotes, its products as being slightly different and somehow “better” than those of its competitors, it can establish customer loyalty and brand loyalty. The firm is then in a position to exert some influence over the price of the product. ( Vashist R, 2008 ) / (Fraser.I,Gionea.J,Fraser.S,1999)

4 Role of profit

Since 1946, Rocket Electrics established itself as prominent battery manufacturer. Through the role of profit, the company has ability to distribute networks in 100 nations worldwide to maximize the profit. Therefore, the company is committed to excellence and full satisfaction of its customers. Hence, Rocket Electric has taken stringent actions to meet the buyers' orders internationally while establishing itself as a prominent battery manufacturer globally.
While maintaining prosperous growth, Rocket Electric will inevitably become a moving force in the industry and a sought after battery manufacturer in the world.

On the other hands, the Associated Battery Manufacturers (Ceylon) Ltd is the largest manufacturers of lead acid automotive and motor-cycle batteries in Sri Lanka. The company produces batteries under the brand names Exide, Lucas and Dagenite. Exide Industries Limited is the largest battery exporter from India. Batteries manufactured by Exide are exported across the world to maximize profit. In addition, through the role of profit, the company could develop and produce stored electrical energy solutions to transportation, motive power and network power through the role of profit which help the company to expand the business in global market.

4.1 Factors of production

To launching a battery business in Sri Lanka, here are the necessary resources to provide goods and services.

Factors of production

Resources of Battery Business

( Foreign Trade )

Natural Resources

N / A


Manager for each department

Marketing & sales stuffs

Regional Expert for promotion




Seed money


Provide more goods and services available for the customer

Development of new markets

The ability to have great accomplishments

Table 3, Factors of production

4.2 Supply and demand

The model predicts that in a competitive market. Therefore, the price will function to equalize the quantity demanded by consumers and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity.

Q1 Q2 Q

5. Different forms of ownership

Ownership forms include sole proprietor, partnership and company. First of all, the proprietor this is a person who owns and manages a business on his or her own, either under a business name or their own name. Moreover, the partnership is an agreement between at least two and up to 20 people to contribute time, money and talent to make a profit from a continuing venture. They may trade under a business name or under the names of the partner. Lastly, the company is a form of business organization. In the legal field, the company is specifically a corporation or less commonly, an association, partnership, or union that carries on a commercial or industrial enterprise.

Furthermore, the public ownership refers to government ownership and operation of a productive facility for the purpose of providing some good or service to citizens. The government supplies the capital, controls management, sets prices, and generally absorbs all risks and reaps all profits-similar to a private enterprise. When public ownership displaces private ownership in a particular instance, it is called Nationalization.

Additionally, according to the client's business, making a contract with local authorize agent-ship is the best way to establish a business in Sri Lanka. Companies such as Samsung Singer Ltd and LG Abans Ltd are shown as a good example partnership. Besides, Sri Lanka is a geo-economically important region in Sothern Asia. Therefore, based on this opportunity the market can be expanded efficiently. Furthermore, the major fund is based on the company's sales, services, investment or invested by company Head Quarter from Korea. Besides, the part of total investment should be covered by local partner.

( Vashist R, 2008 ) / (Fraser.I,Gionea.J,Fraser.S,1999)

Strengths and weaknesses of operating business in Sri Lanka



Cheap, well educated labor

Good communication

Attractive investment regime and incentives

Legal system

Free Trade Agreement (FTA) with as India, Pakistan and Bangladesh

War / Security

Politically unstable

Limited local finance

Investment takes a long time

congestion on roads

Table 4, Strengths and weaknesses of operating business in Sri Lanka

Advantages and disadvantages in different ownership



Sole proprietor

Gives the owner total control of the business management

Simple and inexpensive to establish, needing minimal legal requirement

The business can be discontinued or sold easily without needing the consent of others

The business capabilities are limited to the expertise

Taxed at the marginal personal rate and may be liable to provisional taxation

Unlimited legal liability applies to the owner


Partnerships are simple and relatively expensive to establish

Can make more capital available from personal sources and financial services

A wider pool of expertise is available

Formal agreements can provide

Have a life which lasts only as long as the original partners agree to trade together

Death and bankruptcy dissolves a partnership

Difficult to operate if personal or partnership problems arise, or there are disagreements over management authority

Transfer of ownership is complicated and taking on a new partner requires the consent of all parties.


The liability of shareholders is limited

There may be taxation advantages

Company taxation is at a fixed rate.

Managed by appointed directors, secretaries and managers all of whom have set responsibilities

Transfer of company ownership may be a simple process

Company does not have to be wound up upon the disability, death or retirement of any one of the persons involved.

The formation of a company is complicated, may expensive and may take as long as six weeks to complete the legal requirements

There is greater regulation by government under the corporations

More record-keeping and reporting is required

Table 5, Advantages and disadvantages in different ownership

6. Mission, vision and strategy

The vision defines where the organization wants to be in the future. It reflects the optimistic view of the organization's future and the mission defines where the organization is going now, basically describing the purpose, why this organization exists. Furthermore, the strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis and PEST analysis.

Differences between Client's and competitor's company

Client's Company

( ROCKET Electric Co. Ltd )

Competitor's Company

( EXIDE Industries Ltd )


Marketing through overall Sri Lanka

Establishing distribution line

To serve society by delighting stake holders

Harnessing the full potential of employees

Pursuing our passion for excellence based on our core values


Expand the target market to worldwide

Expand the sales volume and accumulate the skill

To win our customers, stakeholders and employees bytransferring quality into a performance oriented business which will secure market leadership

Profitable growththrough

effective fulfillment of customers' needs



- advertisement tactics

- providing competitive price of product

- targeting on urban region

- making memorandum of

understanding (MOU) with


Technological changes are putting extreme pressure on Companies to innovate or decline.

Improving the product quality & consistency, production efficiency and material utilization.

Total Quality Management program in its office and factories.

Table 6, Differences between Client's and competitor's company

7. Organization chart

Formal organization is the design put in place management to complete the tasks needed to implement the plans that have been put in place to achieve the organization's goals.

Rocket Electric Limited Region Office in Sri Lanka

The characteristics of the formal organization

  • enduring, unless deliberately altered
  • top-down
  • static
  • excellent at alignment
  • plain to see
  • equates “person” with “role”
  • hierarchical
  • bound together by codified rules and order
  • easily understood and explained
  • critical for dealing with situations that are known and consistent

7.1 Structural issues

Through the organization chart, it shows that responsibilities of decision-making are made from the higher levels of authority to the lower levels. In addition, the span of management shows the dimension of organizational design measured by the number of subordinates that report directly to a given manager. Besides, it affects organization design in a variety of ways, including skill of the workers, the nature of the job, the motivation of the workforce, the manager's personal skills and ability to lead. ( Vashist R, 2008 )

7.2 Transforming nature of organization

The company started to export zinc carbon batteries in 1962

Developed the Alkaline Manganese Batteries & Mercury Batteries in 1970

Exported Battery Plants to Bangladesh in 1982

Commenced to sell Nickel Cadmium Rechargeable Batteries in 1983

Established Rocket Technical Research Institute in 1987

Established overseas factory of Rocket Thai in Bangkok, Thailand
Developed Mercury free Batteries of Zinc Carbon and Alkaline Manganese Batteries in1991

Exported Battery plants to U.K., China and Egypt in 1993

Established overseas factory of Rocket Poland Co., Ltd in Poland in 1997

Established Joint-venture of E Square Technologies Co. Ltd. In 2000

Established Joint-Venture Company of Xiamen Sunlight Battery Co. LTD. In China in 2003

Based on the company's historical data, since the company established it has been gradually transformed to a globalized company in the world.

7.3 Informal organization issues

The informal organization is the interlocking social structure that governs how people work together in practice. For instance, it consists of a dynamic set of personal friendship, school background, shared interests and membership of the same sporting or social club.

( Vashist R, 2008 )

The characteristics of the informal organization:

  • evolving constantly
  • grass roots
  • dynamic and responsive
  • excellent at motivation
  • requires insider knowledge to be seen
  • treats people as individuals
  • flat and fluid
  • cohered by trust and reciprocity
  • difficult to pin down
  • essential for situations that change quickly or are not yet fully understood

7.4 Policies and rules

The differences between policy and rule is, the policy defines a plan or course of action, as of a government, political party, or business and it is intended to influence and determine decisions, actions, and other matters. However, the rule defines directive, policy or procedure within an organization and it may also come from outside sources such as government regulations and membership association guidelines. Furthermore, here are the examples of policies which may be relevant to client's business

Company's Environmental Policy

  • Minimize the adverse impact of our activities, products and services by implementing an environmental management system.
  • Prevent pollution, through waste minimization at the source, recovery / treatment of emissions and releases, conservation of energy, recycling and optimum use of resources. (If the company operate a prospective manufacture business in the future market.)
  • Continually improve our environmental performance through setting and reviewing associated objectives and targets and periodic evaluation.
  • Comply with applicable legal requirements and other requirements related to our environmental aspects
  • Communicate with all interested parties and all people working for or on behalf of our organization.

8. Conclusion

According to client's request, the natures of Sri Lankan businesses and existing economy system are defined based on principle of business elements. And also, the contribution of public sector to the economy of Sri Lanka and the different market structures are analyzed. The market structure, factors of production and nature of supply and demand which is relevant to the client business are studied and directly applied into client's business. In case of ownership, the different forms of them are introduced in different point of business view. The mission, vision and strategy could be suggested and the potential competitors are identified for client. Beside the final business model is designed and presented with organization chart, structural issues, transforming nature of organization, informal organization issues and policies and rules that would be relevant to the client's business.

Consequently, I could not only gain knowledge of economical business concept but I also could directly apply such theories and business principles into practical business through this assignment. Beside, the establishment feedback system is designed for prospective establishment process. During the establishing procedure, there is lots of trial and error. However, those can be overcome by this kind of systematic activity which is shown above figure 6. It means the improved business can be only obtained by ceaseless analyzing efforts