2. Business Model Radar and the Basic Platforms

Question 1

The five steps of the Business Model Radar

Answer 1

1. Determine relevant actors
2. Determine Value-in-Use for consumers
3. Determine components of value-in-use per actor
4. Determine production activities and processes per actor
5. Determine the flow of exchange between actors

Question 2

Business model definition example

Answer 2

“The business model depicts “the content, structure,
and governance of transactions designed so as to
create value through the exploitation of business
opportunities”

Question 3

Business models explain three different phenomena:

Answer 3

1. E-business
2. Strategic issues (value creation, competitive advantage etc)
3. Innovation and technology

Question 4

Business model concept: Increased focus on networked markets and the value of networks vs. the traditional era

Answer 4

The initial traditional era: Technical inputs leads to the business model (value chain, cost and profit, market etc), which leads to the economic output

Now: multilevel perspective at the ecosystem level. A set of companies together form an ecosystem, and the ecosystem itself also has a business model

The core task for the ecosystem managers is to make alignment between the ecosystem business model and the individual business models within the ecosystem. Need to spot aligned businesses and make exit strategies for the ones that are misaligned

Question 5

4 ways to create value in the new networked markets

Answer 5

1. Novelty (e.g., new product offerings, new transaction structures, access to new participants, new content)
2. Lock-in (e.g., switching costs such as social comfort, reputation, loyalty programs, customization etc. and positive network externalities such as personal reputation)
3. Complementarities (e.g., value adding services between products and services and activities)
4. Efficiency (e.g., the whole process of sending information and making sure that the processes are working smoothly, speed, simplicity, search costs, symmetric information (reduce uncertainty))

All four value sources can be addressed at the same time - if being a platform

Question 6

Digital platforms having multi-sided markets. What does that mean?

Answer 6

Often starts as a two-market company, but it grows to include many more. E.g., the example of eBay. The orchestrator is the platform, the end consumer is you and me, but there are multiple producers such as the seller, the payment service (e.g., PayPal), and the transport provider

Further, companies can depend on the same producer as a competitor (e.g., Intel at Apple and Lenovo). Further, they can be dependent on one another e.g., Samsung providing chips to Apple for their phones (even though being competitors)

Question 7

The 5 elements of a business model

Answer 7

1. Value-in-use offering (DIP offering, relates to the core interaction. Can only have one core interaction!)
2. Participants/actors: Consumer, producer, orchestrator, stakeholders
3. Components of value in use: Value unit, filter, and information
4. Production activities and processes (pull, facilitate, match)
5. Exchanges (information, goods, services, currency etc.)

Question 8

A business model defines a concrete value-in-use for a specific customer segment. What is value-in-use and customer segment?

Answer 8

Value-in-use: All customer perceived consequences arising from a solution that facilitate or hinder achieving the customer’s goal

Segment: Is a part of a customer base i.e., individuals that are similar in specific ways relevant to marketing such as age, gender, sexuality, interest, habits