business, identifying sources of revenue, the target customers and the details of financing
Business Model Canvas
Was proposed by Alexander Osterwalder. It's a visual overview of your entire business on a single canvas. BUSINESS MODEL CANVAS Why Use a Business Model Canvas?
Easy to understand Focused Flexible Customer Focused Shows Connection Easy to communicate 1. CUSTOMER SEGMENTS
• Who are your
costumers? • What do they think? See? Feel? Do? 2. VALUE PROPOSITION
• What’s compelling about the
proposition? • Why do customers buy, use ?
Some of the most common value
propositions -Newness -High Performance - Ability to customize - Design - Brand/status - Price -Cost Reduction - Risk reduction - Convenience 3. CHANNELS • Describes how a company communicates with and reaches its customers segments. Five Types of Channel Phase 1. Awareness - In your business, you need to think of ideas on how to reach out to your costumers to introduce your company’s product and services. 2. Evaluation - Before indulging into the process of manufacturing the products and finalizing the concept of the services that you can offer to the customers. It is a great plan to first conduct an evaluation so that the company will be able to access the organization's value proposition. 3. Purchase - There are customers that uses online shopping whether Lazada or shopee. In online shopping there are options on how to purchase the product. 4. Delivery - one value proposition to customers is the convenience and faster delivery of products. 5. After Sales - The after sales is where customers warranty in buying the products or using the services. 4. CUSTOMER RELATIONSHIP
• How do you interact with
the customer through their journey?
Good customer relationship
are based on customers experience – what it’s like for people to do business with you. According to BDC Client Experience Manager Chris Palin, that experience is all about how you exceed customer’s expectations. Benefits of Customer Relationship 1. Customer retention -Companies that do a better job on managing customers relations are more likely to see a higher customer retentions rates. 2. Customer Loyalty - Building positive customer relations drives customer loyalty because it creates an intangible incentive for the customer to return to the same business. 3. Customer Satisfaction - Positive customer relations give companies more insight into their customers relations because it creates an open channel of communication for relaying customers feedback. This leads to better individual interactions with customer which builds up trust over time and influences their buying decisions. 5. Revenue Streams
• How does the business
earn revenue from the value proposition. A Revenue Stream is the building block presenting the cash a company generates from each costumer segment . Most businesses need at least one great revenue stream to earn money. Ways on how to generate Revenue Streams Sale of physical product 1.
The customer pays in cash for the product and the customer is then free to do whatever she wants with it. 2. Usage Fee The customer pays a user fee for a particular service, the amount paid depends on the usage . 3. Subscription fee The customer pays, for example once a month , quarterly or maybe yearly for a particular service. 4. Lending/Renting/Leasing This revenue stream grants someone the right to use a particular product for a fixed period of time in return for a fee. Ways on how to generate Revenue Streams 5. Brokerage fees Through this revenue stream, your company gets its revenue from an intermediate service. This method is often used by real estate agents ( earning a commission every time the match the buyer and seller . 6. Advertising Your business may charge fees for advertising a product, service or brand. Some of the advertiser company are newspapers, media industry, website advertising and flyers. 7. Volume and unit selling Your company charges a fixed price for a product . However, if the customer choses to buy your product in a higher quantities , they could get a discount. 6. Key Activities • What uniquely strategic things does the business do to deliver its proposition 1. Based on our value proposition, what kinds of activities are key to our business 2. What kinds of activities are key to our distribution channels 3. 3. What kinds of activities are important if we want to maintain our customer relationship. 4. What kinds of activities are fundamental to our revenue streams Research and Development - the research and development department are required to liaise with all other functions of the company whether it is in production, marketing or sales.
New product research
New product development Existing product updates Quality checks Innovation Production
Selection of product and design
Selection of production process Selecting right production capacity Production Planning Production Control Quality and cost control Inventory control Maintenance and replacement of machines Marketing - the marketing department is responsible for the growth of the company by getting word of the company’s existence and the value it provides to its customers.
Strategy Market research Product Development Communications Sales Support Events Sales And Customer Services
assets must the business have to compete Types of Key Resources 1. Physical Resources - Physical resources are what we call tangible resources that the most companies or organization uses to creates it value proposition. It includes equipment, inventory, buildings, manufacturing plants and distribution networks that enable the business to function. 2. Intellectual Resources - these are non-physical, intangible resources like brands, patents, copyrights, and even partnerships. Customer list, customer knowledge, and even your own people, represent a form of intellectual resource. 3. Human Resources - Human resources are specifically the people behind the organization . The employees are the most important assets of an organization. 4. Financial Resources - Includes cash, lines of credit and the ability to have stock option plans for employees. All business have key resource in finance, but some will have stronger financial resources than other. 8. Key Partnership • What can the company not do so it can focus on its key activities?
Key partners are the
relationship that you have with other business, governmental, or non consumer entities that help your business model work. These can be the relationship that your company has with you suppliers, your manufacturers, business partners, etc. Types of Partnerships 1. Strategic alliances between non-competitors - This provide an idea where two companies will develop harmonious relationship. Your company and other company can partner if you have no direct competition with and together both will be benefited. 2. Coopetition - combination of competition and cooperation into one idea. 3. Joint ventures to develop new businesses - A company may join another company to create a different entity which may be more profitable for both of you than if you were to operate separately. 4. Buyer-Supplier relationship - In every business, the buyer and supplier should incorporate the characteristics of trust, quality, and commitment between the two to ,maintain amicable relationship to achieve success. 9. Cost Structure • What is the business major cost drivers? • How are they linked to revenue?
Cost structure defines all the
cost and expenses that your company will incur while operating your business model. This final step in the process is important, because it will help your team decide whether to pivot or proceed. Categories of Cost Structure
Value-driven -The focus of value-driven cost structures is to create more value in the product itself, not necessarily producing the product at a lowest possible cost.
Cost-driven -cost-driven cost structures focus on minimizing the cost of the product or services as much as possible. -Skype is a telecommunication application that is used by millions of people worldwide to communicate to their relatives, friends and business partners through video calls or a normal telephone usage. As we can see in the business model canvas skype has 2 key value propositions: (1) the ability to make calls over the internet , including video call, for free and (2) ability to make call to phones cheaply. -Skype operates a freemium business model that means the majority of skype users ( the free users customer segment ) use the service for free to make calls over the internet, with just 10% of users signing up to the prepaid services. It is also shows from the costumer relationship building block that customers typically have a help themselves relationship with skype by using their support website. -The channel skype uses to reach its customers are its website, skype.com and partnership with headset brands. On the other hand the key partnership , key activities and key resources is able to support its business model of offering cheap and free calls because it doesn’t have to maintain its own telecoms network and it doesn’t need that much infrastructure at all, just backend software and the servers hosting use accounts. .
