Business Model Canvas Applied to Hanson Logistics Expansion
This paper applies Alexander Osterwalder and Yves Pigneur's Business Model Canvas framework to evaluate Hanson Logistics' proposed expansion into the Indiana and greater Chicago market. Hanson Logistics, a specialist in frozen food distribution, is considering a new state-of-the-art warehousing facility in Hobart, Indiana. The analysis examines each of the nine building blocks — customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key partnerships, and cost structure — to assess the viability of this expansion. The paper concludes that Hanson's existing relationships, operational capabilities, and strategic location choice collectively support a strong foundation for successful market entry.
- Introduction to the Business Model Canvas: Framework overview and Hanson Logistics context
- Customer Segments and Value Proposition: Target markets and Hanson's competitive differentiation
- Channels and Customer Relationships: Distribution role and key client relationship strategy
- Key Resources and Partnerships: Facility specs and strategic supply chain partners
- Cost Structure and Location Strategy: Hobart site advantages and Indiana tax benefits
- Conclusion: Recommendation for Indiana expansion site
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- The paper methodically walks through each relevant building block of the Business Model Canvas, maintaining a clear one-to-one correspondence between the framework and the company's specific situation.
- It grounds the abstract framework in concrete operational details — such as the facility's 227,678 square feet, 36 dock doors, and Indiana tax advantages — giving the analysis credibility and specificity.
- The paper acknowledges strategic tradeoffs (e.g., Illinois taxes vs. Chicago proximity) rather than presenting the business case as wholly positive, which strengthens its analytical balance.
Key academic technique demonstrated
The paper demonstrates applied framework analysis: taking a well-known theoretical model (the Business Model Canvas) and systematically using its components as analytical lenses to evaluate a real business scenario. Each section introduces a building block, defines or contextualizes it briefly, and then connects it directly to Hanson Logistics' circumstances, showing how theory translates into practical business planning.
Structure breakdown
The paper opens by introducing the Business Model Canvas and the company under study. It then moves sequentially through the relevant building blocks — customer segments, value proposition, channels, customer relationships, key resources and partnerships, and cost structure — dedicating a paragraph to each. A brief conclusion synthesizes the findings and recommends the Indiana site. The structure mirrors the framework itself, making the argument easy to follow and assess.
Introduction to the Business Model Canvas
The Business Model Canvas contains nine building blocks related to creating a business model that translates a good idea into a viable business. These nine building blocks are customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure (Osterwalder & Pigneur, 2009). The company in question is Hanson Logistics, a specialist in frozen food distribution. The company already exists and is successful enough to work for Walmart, so it could be argued that it does not need a new business model — it already has one. Nevertheless, several elements of the Business Model Canvas are used here to discuss a proposed new warehousing facility in Indiana.
Customer Segments and Value Proposition
The first building block is customer segments. There are only so many buyers of frozen food, but there are a couple of interesting segments worth identifying. Walmart is obviously the primary segment. As the nation's largest food retailer, Walmart already has an existing business relationship with Hanson. If Hanson can extend that relationship into the Indiana and Chicagoland area, that may well be sufficient to sustain the business from the outset (Leeb, 2013). However, other segments exist as well. Restaurants and catering services are also customers that Hanson can target. There are thousands of such businesses in the area, and by focusing on a handful of geographies — such as River North and River East — Hanson can build market share while simplifying its deliveries by keeping all customers within the same area. This represents more of a wholesale business model, whereas the Walmart relationship is more of a distribution model. Diversifying the customer base in this way is highly valuable.
Another building block is the value proposition. The value proposition is "a statement that summarizes why a customer should buy the service" (Investopedia, 2014). Hanson's value proposition centers on its high level of customer service. It works closely with its customers to deliver services tailored to their specific needs. This means that Hanson does not necessarily pursue positioning as a low-cost option, but rather as a provider capable of delivering on time, every time, at a reasonable price. The company relies on its operational proficiency to win business rather than simply being the cheapest option available.
Channels and Customer Relationships
With respect to channels, there are two dimensions to consider. First, Hanson itself functions as the channel — that is how it conducts its business, by serving as the channel of choice for many other companies. At the same time, Hanson is looking to enter the Chicago market as both a wholesaler and a distributor. This means it will need partnerships with high-quality, reliable providers, because those partnerships will help Hanson win business in Chicago away from existing competitors. Hanson must develop a clear strategy for this: will it bring its existing supply chain partners from Michigan, or will it seek out new supply chain partners for the Indiana facility? The evidence suggests that helping existing Michigan partners break into the Indiana and Chicago market is the most logical path forward.
Customer relationships represent another critical building block. The most important relationship here is with Walmart. As a major retailer operating on a high-volume, low-margin model, Walmart compels its suppliers to operate under similar constraints. For Hanson, the key to a successful entry into Chicago is ensuring that Walmart is on board. Its existing relationship with Walmart needs to be extended into this new market; if that occurs, Hanson will be able to build substantial capacity and establish a strong foundation for market entry. On the wholesale side, however, Hanson will need a dedicated sales force capable of quickly establishing relationships with chefs and managers across its target areas. Building a customer base large enough to drive operational efficiency will allow Hanson to develop two major revenue streams — a strong starting point for entering any new market.
Conclusion
Overall, if these elements are all in place, Hanson will be well-advised to proceed with the Indiana site. Cost is one key differentiator, and many of the other building blocks will be in place regardless of where the facility is located. Hanson appears to have all nine building blocks of a successful business model aligned for this new location.
References
Investopedia. (2014). Value proposition. Investopedia. Retrieved October 27, 2014, from http://www.investopedia.com/terms/v/valueproposition.asp
Leeb, S. (2013). Wal-Mart fattens up on poor America with 25% of U.S. grocery sales. Forbes. Retrieved October 27, 2014, from http://www.forbes.com/sites/greatspeculations/2013/05/20/wal-mart-cleans-up-on-poor-america-with-25-of-u-s-grocery-sales/
Osterwalder, A., & Pigneur, Y. (2009). Business model generation. Self-published.
Always verify citation format against your institution’s current style guide requirements.