Business Model 09112021 105809pm 22032023 014716pm

Business Model
Readings:
•Osterwalder, A., & Pigneur, Y. (2010). Business model
generation: a handbook for visionaries, game
changers, and challengers (Vol. 1). John Wiley & Sons.
•Blank, Steve, and Bob Dorf. The startup owner's
manual: The step-by-step guide for building a great
company. John Wiley & Sons, 2020.
What is a startup
A temporary organization design to search for a

repeatable and scalable business model
What is a startup
A temporary organization design to search for a

repeatable and scalable business model
A Temporary Organization
• The Goal of startup is not to be a startup
• Aim is to become a company
• E.g. there is a no 10 years old startup

Designed to
SEARCH
• Search for something that is

• repeatable, and
• scalable
• Repeating processes such as sales,

marketing, engineering etc.
• Scalable such as getting higher and
higher returns
•Searching for a repeatable and scalable??
• BUSINESS MODEL
It describes the rationale of how an
organization creates, delivers, and
captures value
1. Value
Proposition
• What are you building and for who?
• It’s not about your idea or problem but solving a

problem or need of a customer
• Answer most pertinent question; Who are the

customers?
• It’s not about technology?
Cont.
• Technology is just part of value

proposition…
• Customers don’t care about technology
PROBLEM NEED
• Customers are just trying to solve a
problem or fill a need
Accounting Entertained
•Finding solution to a problem that also solve
need may have huge potential market Marketing Communication
Cont.
• Value may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience)
• Some elements that can contribute to value proposition:

• Newness (Satisfy entirely new need. Technology related Mobile phones)
• Performance (Improving performance. faster PCs, more disk storage, better graphics)
• Customization (Tailoring products or services to the specific need of individuals/segments)
• Co-creation (Rolls Royce jet engine manufacturing and service. Customers pay fee for every hour
engine run)
• Design (Product stands out becoz of Superior design, Fashion and electronic industry it plays major
role)
• Brand/Status (wearing a Rolex signifies richness)
• Price (offer similar values at lower price to price sensitive customers)
• Cost reduction ( Help customer reduce cost. salesforce.com manages CRM)
• Risk Reduction ( Pakwheel car inspection reduces risk of post-purchase car breakdown)
• Convenience/usability (easy to use. Install app from app store)
2. Customer
Segmentation
• Who are the customers? Why would
they buy?
• “Your customer do not exist to buy;

you exist for them”
• Identify their geographics,

demographics, social etc.
Cont.
• Mass market (focus on general public. Electronic sector)
• Niche market
• Segmented (slightly different
needs)
• Diversified (satisfy two unrelated
customer segment)
• Multisided platforms (serve two or
more interdependent segment)
3. Channels
• How does product (value proposition) is delivered to
customers?
• Distribution Channels
• Direct (Own store, website and sales force)
• Indirect (Partner stores, wholesales)
• Benefits
• Awareness (How do we raise awareness)
• Evaluation (How we help customer to evaluate)
• Purchase (How do we attract customer to purchase
a specific product)
• Delivery (How do we deliver )
• Aftersales (Provide aftersales services)
Cont.
• Pre-1990s there were only physical
channels;
• Sales teams visiting stores, getting
orders, vehicles delivering
products
• Since 1990s there are now virtual
channels;
• Websites, mobiles etc.
4. Customer
Relationships
• How does a company GET, KEEP
and GROW customers?
• How to acquire customers? How to

get them to my website? How to
activate them? After getting
customers, how to keep them?
How to make them spend more?
How to grow customers?
Motivations for Customer
Relationships
CUSTOMER CUSTOMER RETENTION BOOSTING SALES

ACQUISITION
Categories of Customer Relations
Dedicated
Personal
personal Self-service
Assistance
assistance
Automated
Communities Co-Creation
services
5. Revenue
Streams
• Cash company generates from each
customer segment
• A company must ask itself, what value

is customer truly willing to pay for?
• Each revenue stream may have a

different pricing mechanism
Cont.
• Transanction revenue
• Recurring revenue
• Ways to revenue stream:

• Asset Sale
• Usage Fee
• Subscription Fee
• Lending/Renting/Leasing
• Licensing
• The revenue model is different than pricing strategy

6. Key
Resources
• What are the Most Important Assets required
to make the business model work?
• Enable to create and offer a value proposition,

reach markets, maintain relationships with
customer segments and earn revenues.
• Key resources can be physical, financial,

intellectual or human.
• Owned or leased by the company or acquired

from key partners.
Key Resources (Cont.)
Physical Intellectual Human Financial

Physical assets such as Brands, proprietary Very important in Cash, lines of credit, stock
manufacturing facilities, knowledge, patents and knowledge intensive and option etc.
buildings, vehicles, copyrights, partnerships, creative industries
machines systems etc. customer databases are
increasingly important
components of a strong
business model
7. Key
Activities
• How to make business model work?
• Most important actions a business

must take to operate successfully!
Key activities main categories
Production Problem Solving Platform/Network

• Designing, making and • Coming up with new • Business model designed
delivering a product solutions to customers with a platform as a key
• Production activity problems resource are dominated
dominates business • Consultancies, hospitals by platform/networj
models of manufacturing and other service related key activities
firms organizations’ business • E-bay, amazon, Visa credit
models are dominated by card
problem solving activities • Key activities relates to
platform management,
service provisioning and
platform promotion
8. Key
Partners
• Who are the Key Partners and
suppliers to make the business model
work?
• What are the Key resources is being

acquired from partners?
• What Key activities are these going to

perform? And when?
Motivation for Creating
Partnerships
Optimization and economy of scale
• Optimize the allocation of resources and activities

• Reduce cost and often involve outsourcing or sharing infrastructure
Reduction of risk and uncertainty
• Help reduce risk in a competitive environment characterized by uncertainty
Acquisition of particular resources and activities
• Companies extend their capabilities by relying on other firms to furnish particular resources or perform certain
activities
• E.g. A mobile manufacturer may license an operating system for its handsets rather than developing in-house.
Insurer may choose to rely on independent brokers to sell its policies rather than develop own sales force
9. Cost
Structure
• Describes all costs to operate the BUSINESS
MODEL
• What are the most important costs? What are

the most expensive resources? What key
activities are most expensive?
• Fixed vs Variable Costs? Economies of Scale?

Economies of scope?
• Low-costs are important to some business

models than to others
Cost-Driven
Cost-Driven Value-Driven
vs. Value- Focus on minimzing costs wherever Less concerned with cost
Driven possible implications
Business Leanest possible cost structure Focus on value creation
Models Low-price value propositions Premium value proposition
Extensive outsourcing High degree of personlaization
No-Frills airline (budget airlines) Luxury Hotels

Business Model 09112021 105809pm 22032023 014716pm

Uploaded by

Copyright:

Available Formats

Business Model 09112021 105809pm 22032023 014716pm

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Model 09112021 105809pm 22032023 014716pm

Uploaded by

Copyright:

Available Formats

Business Model

A temporary organization design to search for a

A temporary organization design to search for a

• Aim is to become a company

• E.g. there is a no 10 years old startup

• Search for something that is

• Repeating processes such as sales,

• It’s not about your idea or problem but solving a

• Answer most pertinent question; Who are the

• Technology is just part of value

• Some elements that can contribute to value proposition:

• “Your customer do not exist to buy;

• Identify their geographics,

• How to acquire customers? How to

CUSTOMER CUSTOMER RETENTION BOOSTING SALES

• A company must ask itself, what value

• Each revenue stream may have a

• Ways to revenue stream:

• The revenue model is different than pricing strategy

• Enable to create and offer a value proposition,

• Key resources can be physical, financial,

• Owned or leased by the company or acquired

Physical Intellectual Human Financial

• Most important actions a business

Production Problem Solving Platform/Network

• What are the Key resources is being

• What Key activities are these going to

• Optimize the allocation of resources and activities

Reduction of risk and uncertainty

• Help reduce risk in a competitive environment characterized by uncertainty

Acquisition of particular resources and activities

• What are the most important costs? What are

• Fixed vs Variable Costs? Economies of Scale?

• Low-costs are important to some business

Business Leanest possible cost structure Focus on value creation

Models Low-price value propositions Premium value proposition

Extensive outsourcing High degree of personlaization

No-Frills airline (budget airlines) Luxury Hotels

You might also like