Chapter 12 - Building a sustainable business model

Question 1

What is a Business model?

Answer 1

A business model is nothing else than a representation of how an organization makes (or intends to make) money. –> Look at the 9 Building Blocks of “Business model Canvas”

Question 2

Describe the Business Model Canvas!

Answer 2

The Business model canvas visualizes how to create a new or improve an existing business model by using nine building blocks.

1)
The front → Describes what value the company delivers to the customers

• Value proposition: heart of the business model; How do you want to create value for a given customer segment? - linked with customer segments
• Customer relationships: What type of relationships does the business maintain with its customers?
• Customer segments
• Channels: How will an organization market and sell its value proposition?

2)
The back → Describes the operating model

• Key partners: Who are the partners that will help the business in delivering value to the customers?
• Key activities: What activities are needed, and which of these are the core?
• Key resources: Resources that a company needs to perform, e.g. physical, financial, HR, …

3)
The revenue model → Describes how the company makes money

• Cost structure: All expenses that the business incurs in creating and delivering value to the customers, e.g. minimum turnover needed to make profit, economies of scale, fixed and variable cost
• Revenue streams: primary and non-primary revenue streams the business utilizes; How many customers does an organization need on an annual basis to generate a profit? How much revenue does it need to break even?