2. Definition of a Business Model
"A business model is nothing else than a representation of how an
organization makes (or intends to make) money.“
The essence of a business model is that it defines the manner by
which the business enterprise delivers value to customers, entices
customers to pay for value, and converts those payments to profit.
what customers want
how they want it
how an enterprise can organize to best meet those needs, get paid for
doing so, and make a profit
3. Definition of a Business Model
Business Model vs Business Plan
Business Model vs. Business Strategy
Creating value vs. capturing value
Business value vs. shareholder value
Assumed knowledge levels
4. Importance of a Business Model
An important tool that can be used to augment
product and service innovations, to link innovation to
strategy, to co-ordinate activities within an
organization
A helpful unit of strategic analysis tailored to today’s
competitive business environment; to manage
continuous change and constantly adapt to rapidly
changing business environments
6. Components of a Business Model
Value Proposition – perceived value your products provide
as a solution to the consumer’s problem
Market Segment – target market
Distribution or Movement Channel - Getting your product
to its target market, from advertising to retail outlet, is the
distribution, or movement, channel. This establishes the
means by which your business relates to your customers.
7. Components of a Business Model
Consumer Relationship - How you establish
relationships with your various customer segments is
your consumer relationship. It defines how you gain
their trust and deliver your product.
Value and Resource Configuration - How you utilize
the activities, personnel, and resources necessary to
produce your product are your value and resource
configuration or value chain.
Core Competency – the basic knowledge, skill
set, abilities and expertise required to produce your
product.
8. Components of a Business Model
Network or Affiliation Partners – represents
agreements between your business and other
companies necessary to produce and market your
product
Cost Structure - expense required to manufacture a
product or provide a service is the cost structure.
Revenue Streams – the ways a company makes
income
10. * Four- Box Business Model
Four-Box Business Model Why would someone want
to buy something from you?
Customer Value Proposition
How will you make money
selling it?
Profit Formula
What, exactly, are the
important things you need
to do to pull off the plan?
Key Processes
Key Resources
13. Some Examples
Franchise Model
Opening a franchise is essentially buying a working business
model in a particular industry.
Recurring Revenue Model
The aim is to secure the customer on a long term contract so
that they are consuming your product or service well into the
future.
Freemium Model
Where the business gives away something for free in return
for your personal details so they can then market to you and
hope to build up a relationship so that you buy from them in
the future
14. Some Examples
GROUPON.COM
Exclusive deals limited in time made GROUPON the fastest
growing company in 2010, leading to hundreds of copy-cats
worldwide
GAP made $11M within 1 day
BUSINESS MODEL: A broker platform with exclusive discounts.
They use a no cure no pay strategy wherein they guarantee
that a minimum number of clients will take the discount that is
communicated. When enough people take the discount, the
deal goes on. Groupon takes a certain percentage of the
revenue resulting from this promotion
15.
16. Walmart
Founded by Sam Walton
BUSINESS MODEL: Low Cost Model
“Always Low Prices” tagline
Their stores include discount stores, super centers and
neighborhood markets
17. Amazon.com
BUSINESS MODEL: Growth First
Sold a wider collection of books than stores could carry.
Bezos bought warehouses to hold a vast inventory so
Amazon could offer direct-to-consumer service.
He and his investors had to postpone seeing profits
instead created a business that sought customer
convenience first and foremost
** The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.** A business model represents how a company makes or intends to make money by turning its innovation into profit.
Business model focus is on value creation while strategy further focuses on building a sustainable advantage thus capturing valueBM is an architecture of converting innovation to economic value howver it does not focus on delivering the value to its shareholdersBM assumes a limited envtl knowledge while Strategy depends on a more complex analysis of the environment
http://www.quickmba.com/entre/business-model/The targeted market is the group of consumers your plan to offer the value of your product to. Since different markets use the same or similar products, adding multiple segments can increase the potential gain for your company.
Network or Affiliation PartnersThe partner network represents agreements between your business and other companies necessary to produce and market your product. They include materials and parts suppliers, retail outlets, shippers, advertising agencies, and media outlets. Commercializing the value of your product relies on your partnershipsThis includes fixed costs such as leases or mortgage payments, and variable costs, such as research and development, marketing, shipping, and payroll. The ratio of fixed costs to variable costs represents the cost structure.Revenue Streams - Most often this is income due to sales. However, it can refer to bartered goods and value-added returns from consumers, partners or third parties such as unsolicited viral or social marketing.
Profit Formula – The economic blueprint that defines how the company will create value for itself and its shareholders. It specifies the assets and fixed cost structure, as well as the margins and velocity required to cover them.
By Alexander Osterwaldera simple graphical template describing nine essential components: Customer segments, value propositions, channels, customer relationships (such as self service or personal assistance), revenue streams, resources, activities, partnerships, and costs.
