Business Models Flashcards
what is a business model
A business model describes the rationale of how an organization creates, delivers, and captures value
Help achieve and maintain business viability
9 building blocks
buisness model stories
- precisely delineated characters
- plausible motivations
- plot that twists
9 building blocks
- customer segments
- customer relationships
- channels
- revenue streams
- value proposition
- key activities
- key resources
- key partners
- cost structure
9 building blocks cover three main areas of the business
- desirability
- feasability
- viability
desirability
- value
create value
desirability building blocks
- value proposition
- customer segment
- customer relationships
- channels
what is desirabilty
Creating customer demand – make the product attractive enough so they want it, creating value or customers – are they finding value in your products
viability
- value
capture value
viability building blocks
- revenue streams
- cost structure
what is viability
Funds you need to carry our actions, need to sustain the business, revenues need to cover costs
feasability
- value
deliver value
feasibility building blocks
- key resources
- key activities
- key partnerships
what is feasabilty
What the business needs in order to be successful
value proposition
Value proposition – what are you doing
Ex – a one stop shop to provide everyday low pricing for the mass market
customer segment
Customer segment – who are you creating value for
Ex – families with children, students, budget conscience consumers
channels
how a company communicates with and reaches its customers (physical stores, website)
Ex – physical in store, website, mobile app
customer relationships
the type of relationships a company establishes with customers – can be personal vs impersonal (automated)
Ex – customer service, rewards programs, greeters, employees (cahsiers)
revenue streams
how the business makes money/ generate from each customer segment (sales, tips)
Ex – consumer packaged goods, grocery items, clothes
cost structure
describes all costs/expenses incurred to operate a business
Ex – rent, salaries, inventory, advertising/ promotion
key activites
important things the company must do to make the business work (where they make/promote products)
Ex – Inventory control, customer service, distribution coordination, marketing/sales
key resources
important assets required to make a business model work, allow an enterprise to create and offer value to its customers
Ex – Employees, brick and mortar stroes, brand reputation, distribution system (logistics)
key partners
the network of suppliers and partners that make the business model work
Ex – third party vendors, manufacturing/ supply chain partners
integrative thinking between building blocks
They are all meant to fit together
Sell tickets and make profits on refreshments
Key resource = theatres
Placement of the refreshment stands, can buy your tickets there
Key activity = staff training
Teach staff to up sell
business model patterns
- bait and hook
- freemium
- servizing
- multi-sided platform
bait and hook
- Lock in customers with a base product (bait) in order to generate recurring revenues from a consumable (hook) that customers need to frequently in order to benefit from the base product
- Luring customers in with an inexpensive initial purchase
- Need a lock in
bait and hook examples
- Gillette Razors – bait is the one razor handle, hook is the frequent blade purchase – where they make the most money
- Nespresso – bait is the machine and hook are the pods
freemium
Offer basic products and services free of charge, then premium services and advanced product features for a fee
Need to be successful in order for them to sign up to become premium members
Best models acquire a large customer base and excel in converting a substantial percentage to paid users
freemium examples
Skype
Dropbox
Spotify
YouTube Premium
servicizing
Providing services
Providing functionality rather than selling products
Not exchanging ownership
Serviczing is harder to imitate
servicizing examples
HILTI
Xerox
multi-sided platform
Value is created by facilitating interactions between two or more distinct but interdependent groups of customers (distinct groups)
Of value to one group only if the other groups of customers are also present – grows in value to the extent that it attracts more users – network effect
multi sided platform examples
Uber
AirBnB
Facebook
Youtube
social business
Intent is not to make a profit by selling a product to a customer, but to create an organization that achieves a social goal in a manner that is self-sustaining
Profits are reinvested in the business
Mission driven for-profit enterprise
social business model canvas components
- value proposition
- segments
- revenue
- types of intervention
- channels
- surplus
- key activities
- key resources
- partnerships and key stakeholders
- cost structure
soical business – how many customer segments
There are two customer segments – the customers and the one who they are giving the funds to
types of intervention
what they are actually doing
surplus
the money left over what are they going to do with it
beneficiary
who are they helping
traditional charity
- primary driver is to achieve social value
- Look for government subsidies
- They are not self sustaining
- Purely charitable funding from grants, dontations or endorsements
- Additional market based revenue stream
tradtional business
- Primary driver is to achieve financial value
- Pure profit orientation; mainstream investors
