Business Description, Intellectual Property, and Legal Considerations
The proposed business is a limited liability company that offers its consumers AI-assisted digital library services as well as physical library spaces where they can rent or purchase academic and non-academic material. The customers’ access to the content will be based on subscriptions that will be provided in multiple package options that include both digital access and physical study materials spaces.
The company’s mission statement is to empower individuals to enhance their knowledge through the intersection of innovative technological solutions and eco-friendly spaces that allow for concentration and contemplation. The organization’s intellectual property includes a proprietary AI system designed to aid users in accessing, using, and applying content from the company’s database. The company has partnered with suppliers of digital content by providing them with a ready market for their products. The services offered by the proposed company are designed to address the needs of students who do not have the resources to purchase expensive academic and non-academic materials.
Industry Analysis
The e-textbook rental market is a highly competitive space, given the high number of new entrants. The market is estimated to grow at a compound annual growth rate of 21.01%, while the market size is expected to increase by 534.56 million dollars (Technavio, 2022). North America is believed to contribute approximately 35% of global growth in view of the fact that the region hosts numerous startups and e-text rental service companies (Technavio, 2022). Numerous organizations have formed partnerships, strategic alliances, and mergers designed to increase regional market share (Technavio, 2022). The measures are designed to ensure that players in the industry remain competitive.
The e-textbook rental industry in North America is highly competitive. The major players in the sector include Amazon.com, Bibliu Ltd, BIGGER Words Inc., Bookfinder.com, and Chegg Inc. (Technavio, 2022). The concept of the distribution of curriculum-based content through digital platforms facilitates the implementation of adaptive and personalized learning. The increased penetration of mobile and internet technology in various parts of the world has created numerous opportunities to establish e-book rental services. Based on the presented data, the company’s projected sales are approximately 300,000 dollars in the first year of operation.
VRIO Analysis
Organizations must manage their resources to ensure that productivity is maximized. The resource-based view stipulates that an organization’s ability to compete is based on the value, rarity, inimitability, and organizational strategies applied to resources (Putu & Astawa, 2022). The value of the proposed company’s resources is the first element in the VRIO analysis. Organizational resources are categorized as either tangible or intangible in nature. The proposed organization’s tangible resources include physical spaces, equipment, a web network, and money. The intangible resources are expert administrative skills, intellectual property rights, and the nature of relationships with suppliers. The most valuable resources to the organization are human capital, finances, operations management, and marketing prowess.
The second factor to consider is whether or not the resources that have been identified as valuable are rare. If the aforementioned resources are not costly to attain, there is a high chance that competitors and new business entities will access them easily and provide direct competition to the organization (Putu & Astawa, 2022).
The third element of the VRIO framework is the imitability of resources. The threat of duplication is a reality in most industries in today’s business environment. It is worth noting that the core differentiation of the proposed business is difficult to imitate. The provision of physical working paces coupled with AI-assisted library services is unique. However, duplication can occur in one of two ways. Firstly, rival organizations may attempt to duplicate the primary product by developing their own AI systems, or competitors may create substitute services, which may result in a disruption of the current industry structure.
The final factor to consider is organizational competence and effectively utilizing available resources. The human resource element plays a critical role in ensuring that the company can maintain a sustainable competitive advantage. The organization intends to implement specific strategies with the help of a qualified management team focused on ensuring that all resources are utilized effectively. The focus will be on building strategic resources aimed at expanding capabilities through the judicious use of resources.
Porter’s Five Forces
The five forces framework provides a holistic view of the e-textbook rental market, which is essential when devising strategies to develop a competitive edge. The framework was first introduced in 1979 as a tool to help managers assess the attractiveness of an industry (Isabelle et al., 2020). The first element to consider is the threat of new entrants, which is high in the e-book rental sector. Advances in technology, such as artificial intelligence and the spread of the internet, make the provision of services and the sale of goods in digital platforms particularly attractive. The threat of new entrants will be addressed by prioritizing innovation, building economies of scale, and focusing on research and development to increase the company’s differentiation.
The bargaining power of suppliers is the second essential factor to consider with regard to gaining a competitive edge. Organizations in the e-book rental sector depend on numerous suppliers, many of whom have high bargaining power. The factors to consider include the number of suppliers, their locations, the uniqueness of the services they offer, and the cost of changing suppliers (Isabelle et al., 2020). The supplier’s bargaining power will be addressed by building meaningful relationships with suppliers and diversifying in terms of materials used to run organizational processes as a safeguard against unreasonably high prices from specific suppliers.
The bargaining power of buyers in the e-book rental industry is moderate. This is because most consumers seek low prices, which forces organizations to lower their offerings on various products and services. Consumers are highly price-sensitive and can find alternatives to suit their needs, given that the price of change is relatively low. The consumer bargaining power will be addressed by building a large consumer base, prioritizing the development of new products, and implementing measures to enhance consumer loyalty.
The threat of substitute services and products in the e-book rental sector is relatively high. Alternative services that offer value propositions that differ from existing products in the industry are a significant threat. It is also worth noting that the cost of change in the e-book rental industry is relatively low. The threat of new substitutes can be overcome by understanding and addressing core consumer needs and ensuring that the switching cost for consumers is increased significantly.
The final factor to consider is the degree of rivalry among existing industry players, which is high. This is because there are a high number of competitors, minimal quality differences between products, switching costs are relatively low, and customer loyalty is valued by all players. The competition among existing players will be addressed by developing sustainable differentiation strategies, prioritizing the cultivation of economies of scale, and forming partnerships designed to increase market share.
Operations and Management Team Plan
Location
The company’s headquarters and operations nerve center will be located in London. London provides numerous networking opportunities and infrastructure to host the servers that will be integral to the digital aspect of the business. London also provides a decent pool of talented individuals capable of running and managing technical artificial intelligence programs. In addition, the city provides numerous funding opportunities, given that it is populated by investors interested in exciting ventures.
Operations
The proposed business will adopt a limited liability company legal structure. This structure allows for the flexibility inherent in partnerships and the asset protection that characterized corporations. In addition, limited liability companies are separate entities from their owners, who have limited liability; thus, the risk of loss is limited to individual contributions. The digital and physical library spaces will be available twenty-four hours a day.
Access to academic and non-academic content will be based on subscriptions, and consumers will be offered a variety of packages that include digital access and access to physical study spaces. The revenue stream is designed in the form of varied offerings. The bronze package will include access to 25% of database material, and the silver package will include access to between 25 and 75% of the material, digital AI assistance, and access to the physical spaces. The gold package will include access to 100% of the database material, AI library assistance, and unlimited access to the physical spaces.
Management Team
The firm’s founder is an astute business-minded entrepreneur with the leadership skills required to make the business a success. The founder is also dedicated and innovative and keeps abreast with technological developments that are designed to increase efficiency and offer the organization a competitive edge. The managing director is a skilled professional with a wealth of knowledge in artificial intelligence. In addition, he has more than ten years of experience working at the highest levels of the e-book rental industry. The management team can develop strategies designed to ensure that the business achieves success.
Marketing Plan
The product offered is access to digital library services and physical spaces where students and other public members can access academic and non-academic material. The unique aspect of the services offered is the inclusion of artificial intelligence library services. The differentiation strategy includes using a digital assistant that helps users identify relevant texts, create content for a specific subject, and helps them to find solutions to complex academic and non-academic problems.
The most ideal promotion method for the services on offer is digital platforms and social media sites. The second element to consider is price, with the target being the proposal of an amount consumers will be willing to pay. The factors that will dictate price include the cost of supplies, competitor offerings, and overall retail markup. It is vital to offer consumers a discount because the market is highly competitive.
The consideration of place, which refers to the locations where the services will be available, is an essential aspect of the marketing mix. The physical library spaces will be designed to offer consumers the best options for reading comfort. The reading areas will be soundproofed, equipped with computers, comfortable chairs, and complimentary writing pads. The distribution strategy involves the provision of different packages to meet consumer needs. There will be easy access to the digital library through a user-friendly interface that provides secure access to the material.
The final aspect of the marketing strategy is promotion, which highlights the techniques that will be used to inform consumers of the availability of the services. Advertisements will be designed to meet the needs of students and other individuals interested in research through digital platforms. This will allow the company to position itself as a market leader in providing AI-assisted library services.
Financial Plan
Table 1 – Sources and Uses of Funds Statement.
Types of Financing
Various types of financing are applicable in the e-book rental sector. The first is venture capital, where private investors allocate resources to support organizations. Venture capitalists are often part of larger firms with boards that vote on the companies they support. The second source of financing is crowdfunding, where private individuals provide resources on digital platforms. Finally, incubators are a funding source provided by organizations that run accelerator programs designed to help new businesses access the market and get their services or products to consumers.
Market Research
The e-textbook rental market has been inundated with a variety of trends. For instance, applying cost-effective pricing models is a key stimulant of market growth. Students are often forced to spend large sums of money to buy textbooks only useful for specific segments of their schooling. The conversation of textbooks into digital formats that can be rented is the current trend because it facilitates the application of a cost-effective pricing model. The integration of software with digital texts has gained prominence in the industry (Technavio, 2022). This facilitates the inclusion of additional features that make the textbooks convenient for students. Open-source content is a serious threat to industry players due to low barriers to entry and technological advancements.
References
Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. (2020). Is Porter’s five forces framework still relevant? A study of the capital/labor intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6), 28–41. Web.
Putu, I., & Astawa, M. (2022). VRIO model as a framework for developing tourism competitiveness. Proceedings of the International Conference on Applied Science and Technology on Social Science 2021 (ICAST-SS 2021), 647, 173–178. Web.
Technavio. (2022). E-textbook rental market size, share & trends to 2027. Web.