Filip Benjaminsson, forestry student at the Swedish University of Agricultural Sciences (SLU) in Umeå, presented in March 2018 his master thesis “Development of a tool to characterize business models for forestry services”. The thesis work was part of the FOBIA project, and the goal was to develop a framework for mapping and comparison of forestry service business models.
Business model – what is it?
A business model describes how a business intends to operate and consists of several components. These concerns, for example, which type of customers that are served, what products or services that are offered to them, how the product or service is produced and delivered, and what revenues and costs this brings to the firm.
In his thesis work, Benjaminsson took his approach from the “business model canvas”, developed by Alexeander Osterwalder and Yves Pigneur, who have described business models in terms of nine components. The aim of the thesis was to adapt this canvas to the forestry context, and then validate and evaluate its usefulness for characterizing business models for forestry service contractors. For this purpose, data was collected through interviews with experts in Finland, Scotland, Ireland, and Sweden.
After adaptation and evaluation of the business model canvas, Benjaminsson propose that characterization of forestry service business models can be done with a canvas consisting of seven components (Figure 1). He also identified a few questions that can be used to capture the relevant content of each component.
Figure 1. Business model canvas adapted to forestry services
Customers influence the business model design
One of the main conclusions of the study is that the forestry service contractors’ customers have a strong influence on the composition of their business models (Figure 2). This particularly concerns contractors who offer harvesting services. It is also noted that this may have a negative impact on the contractor’s innovative capabilities.
Figure 2. Illustration of how business model components affect each other.
In Sweden and Finland forest companies are the main buyers of harvesting services, while contractors in Scotland have a more diverse customer base. In Ireland the state owned Coillte is the main buyer of forestry services. The different customer bases is also reflected in the way forestry services are contracted, while pricing of the services generally is done in similar ways in all four countries.
The results also indicates that entrepreneurs who offer silvicutural services are a more diverse group than those who are specialized in harvesting services, and it is not uncommon that they also offer services within other fields than forestry. In Finland and Sweden the silvicultural contractors also have a broader customer base than the harvesting contractors, as also private forest owners hire them for silvicultural work. In Ireland and Scotland the customer bases are generally the same for both harvesting- and silvicutural contractors.
Forestry business model canvas – a useful tool
A conclusion of the comparisons made between the countries was thus that there are certain differences in the forestry service contractors’ business models, and they are most often identified in the details within each of the main components of the business model. The forestry business model canvas that was developed and evaluated in the master thesis is therefore, according to Benjaminsson, a useful tool for characterizations and comparisons of business models for forestry service contractors.
Text: Thomas Kronholm, SLU