1.
Inclusive business models
www.fao.org/economic/esa/ © FAO, 2017
Step 1: Understanding the business model
SESSION 7

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Inclusive business models
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Understanding the BM
Session 7
From Value Chains to Business Models
Value chain map ->
High-level view on the
system
Business model ->
Close-up on one
organization with a 360°
view
Business Model
Analysis
Input supplier Producer Buyer Wholesaler Retailer Consumer

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Inclusive business models
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Understanding the BM
Session 7
Farmers & Cooperatives
First buyer
How are they doing business?

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Inclusive business models
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Understanding the BM
Session 7
How to understand the BM
• Open interviews with:
– Producers
– Buyers
– Stakeholders & partners
• Speak to more than one person -> variety of
answers
• Ask broad questions & follow with more detailed
ones
• Keep discussions friendly and relaxed

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Inclusive business models
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Understanding the BM
Session 7
Tool: Business Model Canvas*
1. What does the organization do?
2. How does it do it?
3. Who does it?
• Who are the customers?
4. How much does it cost to do it?
• How much does it earn?
*Source: Material for BM Canvas tool is extracted from CIAT’s Link Methodology: a participatory guide to business
models that link smallholders to markets.

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Inclusive business models
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Understanding the BM
Session 7
Four questions

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Inclusive business models
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Understanding the BM
Session 7
How?
How much?
What?
Who?
9 Building blocks

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Inclusive business models
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Understanding the BM
Session 7
1. Understanding Producer Organization BM
• Organizational structure
• Members
• Resources
• Capacities
• Product characteristics
• Logistical process

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Inclusive business models
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Understanding the BM
Session 7
2. Understanding Buyers BM
• Why procuring from smallholders
• Final clients
• Needs
• Challenges
• Product requirements
• Risks

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Inclusive business models
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Understanding the BM
Session 7
Business Model Analysis
Customer or supplier? A matter of perspective

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Inclusive business models
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Understanding the BM
Session 7
1. Customers
• For whom is the organization creating value?
• Who are the customers paying for the product?
-> Without customers no business can survive
-> Important to understand their needs to satisfy
them

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Inclusive business models
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Understanding the BM
Session 7
2. Value proposition
• Products and services
• Reason why customers buy the product
• Specific characteristics
• Need or problem your product satisfies
• What value is offered to customers?
• Which customer need it satisfies?

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Inclusive business models
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Understanding the BM
Session 7
3. Channels
• How do products reach customers?
• What is the logistics chain?
• Through which channels is the product
delivered?
• How do channels work?

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Inclusive business models
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Understanding the BM
Session 7
4. Customer relationships
• How is the relationship with customers?
• How costly is the relationship?
• Is the relationship what customers want?
• How do we communicate with customers?

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Inclusive business models
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Understanding the BM
Session 7
5. Revenue Stream
• How is the organization capturing value?
• What are the pricing mechanisms?
• How is income created?
• For what do customers pay?
• How do customers pay?
• How stable is the income?

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Inclusive business models
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Understanding the BM
Session 7
6. Key Resources
• Infrastructure to create and deliver value
• Physical, intellectual, financial and human
resources needed for value creation
• Indispensable assets (e.g. machinery,
equipment, technology, knowledge, access to
credit)

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Understanding the BM
Session 7
7. Key Activities
• What does the organization do to function?
• Actions to create value
• Production, processing, marketing, logistics and
quality control

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Inclusive business models
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Understanding the BM
Session 7
8. Key Partners
• Who interacts with your business model?
• Direct partners: producers, transporters,
suppliers
• Indirect partners: financial institutions, research
centres, NGOs, public organizations

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Understanding the BM
Session 7
9. Cost Structure
• Cost for the creation of value
• Fixed costs
• Variable costs
• Economies of scale
• Economies of scope

20.
Partners
- Who are the
partners?
- Who are the
suppliers?
- What are the
activities the
partners
perform?
Key activities
- What are the key
activities for the value
proposition (production,
processing, marketing,
logistics, quality)?
- Who is responsible
for the activities?
Value proposition
- What is the product
offered to
customers?
- Why do customers
buy the product
(quality, reliable
supply, available
resources, price)?
- What is the
problem or need that
the product
satisfies?
Customer
relationships
- How does the
organization
communicate with its
customers?
- What is the type of
relationship with the
customers?
Customers
- For whom is the
organization
creating value?
- Who are the
customers?
- Who is paying for
the product?
Key resources
- What are the key
resources for the value
proposition?
- Are the key resources
available?
- How are the key
resources allocated
and distributed?
Channels
- How do products
reach the customer?
- What are the tools
to get products from
producers to
customers?
- Is there more than
one way to get
products from
producers to
customers?
Cost structure
-Fixed costs
-Variable costs
-Economies of scale
-Economies of scope
Revenue steam
- What is the selling price?
- How is the price determined?
- How do customers pay?
- How long does it take to receive the
payment?
- How stable is the income?